Comments on: Mortgage workouts of the day, short-sale edition A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: sagreer70 Wed, 08 Feb 2012 23:50:11 +0000 This is why it will be 2016 before housing gets back to positive growth in the boommainia areas. What a disaster – – banks write mortgage values down to zero, then negotiate up. So, I guess, the money they take in will be all profit.

So look for JP Morgan to start having record quarters, based on all the money they are making on mortgages that they are now subsidizing the demise of.

Whoo-hooo-piiee! I love bank-subsidy accounting!

By: Sechel Tue, 07 Feb 2012 23:34:54 +0000 The waters have become muddied now that banks service 1st liens they don’t own and have second liens that aren’t part of the discussion and left whole. It’s not clear the banks are acting ethically and are potentially conflicted.

By: FinanceChicken Tue, 07 Feb 2012 21:55:23 +0000 Short sales (as long as they are arms length transactions) could be the fastest/best way out of this mess, so any increase is a good thing.

Waiting for the courts to get though all the foreclosures will take forever (mostly due to the banks and their incompetent and/or intentionally negligent document transfer and recording… MERS)

Short sales get underwater owners out, and get a new owner who would like to be in the house in. The old owner looses any paid in principal and down payment, and the bank takes a loss on the portion of the loan that is underwater. That is a pretty fair way to split the loss, especially considering the cost of foreclosure (in time and money). Plus, if the bank wasn’t smart enough to take a down payment, then they loose extra… poetic justice, no?

How about a law that forces banks to accept any offer of a short sale on loans made before 2008 as long as it’s an arms length transaction?

By: realist50 Tue, 07 Feb 2012 18:28:47 +0000 It also would help if our legal system functioned well so that the time to foreclose on a home doesn’t rival or exceed the time required for a complex Chapter 11 reorg. From the same Bloomberg article – “Lenders spend an average of 348 days to foreclose in the U.S. and an additional 175 days to sell the property, according to RealtyTrac. In New York, a state that requires court approval for repossessions, it takes about four years to foreclose on a home and then resell it, the company said.”

And, as for Felix’s idea of offering homeowners a modification or principal reduction as soon as they default, I can’t see how that incentive works once it’s widely known that missing 1 or 2 mortgage payments results in a principal reduction. He acknowledges in the last paragraph that the incentive of a big check is likely to be a problem, and the same issue applies to principal reductions.