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I find the story from the landlord really, really hard to believe. It usually takes 9-12 months for the a house to go from first missed payment to going into f

I find the story from the landlord really, really hard to believe. It usually takes 9-12 months for the a house to go from first missed payment to going into foreclosure, to being sold to another owner. Things like the Notice of Default get posted on the actual property, so I wonder how the renter and/or the landlord could have missed this. The other part that I don't get is that if this home really is in such a nice neighborhood, why would the landlord give it up without lawyering up himself? If I had put equity into a house and owned it, and it somehow got foreclosed on, I would be mad as hell, and I would lawyer up to get my house back. "Brokenhearted" wouldn't be how to describe me, it would more likely be "spitting bullets." So it sounds like the landlord was collecting rent from the renters for a while, and not giving them a head's up that this foreclosure was going to happen. That's pretty freaking shady if you ask me.

nknight 15y ago
> I find the story from the landlord really, really hard to believe. I don't. Not for an instant. The landlord's story is the same story as thousands of other homeowners, right down to BofA "losing" paperwork repeatedly. I guess this is easy to miss if your only news source is HN and other tech-focused sites, but for anyone that has paid any attention to the mortgage crisis, you'd see this repeated again and again and again. It's not like the banks deny it, either. Sometimes they get called on a particular case by the press, and their response is one of the generic cop-outs -- "we're investigating", or "we can't discuss specifics due to privacy laws", or "ongoing litigation".
- Cieplak 15y ago
  "Her fate, an accidental foreclosure, or wrongful lockout, is becoming more common with major banks as foreclosure rates rise, experts say." http://abcnews.go.com/GMA/bank-america-apologized-accidentally-repossessing-home-taking-pet/story?id=10071658 http://abcnews.go.com/GMA/bank-america-apologized-accidental...
- deleted 15y ago
  [deleted]
  - nknight 15y ago
    It's not just BofA, that was just the bank specifically mentioned in the article, and of course one of the worst offenders in the general category of being a major pain in the ass. Most of the cases I read about begin either before the owner falls behind, or shortly after the first missed payment. They try to work with the bank on a loan modification, sometimes under the federal program that some qualify for, but paperwork just keeps getting "lost" -- sometimes they claim to have never received it, other times they freely admit that they "lost" it themselves. Edit: I'm not speaking generically here about all foreclosure cases. I'm speaking strictly about cases where loan modifications were sought, and the owners weren't turned down, and followed the bank's instructions, but one day the bank just decided to start the foreclosure process, and after that it was robo-bank time, nothing could be done.
    - deleted 15y ago
      [deleted]
      - nknight 15y ago
        As far as I could tell, the landlord wasn't claiming to be entirely blindsided, but blindsided by the actual foreclosure and auction when he'd been in communication with the bank seeking a modification. He absolutely should have told the tenant what was going on sooner, but I have no reason to doubt, and plenty of reason to believe, that the landlord was trying to fix it and wasn't expecting an immediate foreclosure when it happened.
- steve8918 15y ago
  I'm well aware of all the stories of people getting screwed over by banks while trying to renegotiate their mortgages, and I'm also well versed in foreclosures, since a few people that I've known have gone through this process via strategic defaults. I would hazard a guess that I know more about this process than you do. But I still don't believe that the reaction of the landlord makes sense to me, unless the author was missing some key facts. The article says that not only was he renting the house for several years, but the landlord also raised his family in it. So, depending on how long the landlord owned it, there must be considerable equity built up in the house. To let something like this slip away without fighting it would be ridiculous. If the account of the author is accurate, then it sounds like the landlord walked away from the place. It just doesn't make sense that he would be apologetic to the renters, but instead he should be steaming mad, and would be trying to protect his investment. If this were me, and I just lost a house that I put a few 100k into it, and I had good renters, I would tell my renters "Don't move anywhere, I'll handle everything." But it sounds like he hung he renters out to dry. Remember, in order to get a loan mod (which the landlord claims he was in the midst of), the landlord at some point must have stopped paying his mortgage, so he definitely was collecting rent without paying the mortgage. Landlords letting their rental units slip into foreclosure, which collecting rent is even more common than banks screwing up and accidentally foreclosing on homes, so to me this is the more likely scenario.
wtvanhest 15y ago
Agreed, I worked with large institutional clients who were loosing their properties in 08-09. That story is what we often heard from sophisticated investors which is never true.
RockyMcNuts 15y ago
Sounds like the owner might have been underwater on the mortgage, decided his best bet was to keep collecting rent and stop paying the mortgage, and hand over the property to the bank, unless by some miracle they gave him a mortgage modification. It's a messed up situation. A mod to reduce the mortgage amount in line with market value might have been better for everybody. But another wrinkle is the bank might have sold the mortgage and just be servicing it on behalf of bondholders, and there's no way to get all the bondholders to agree to start doing mods. And it's a bad precedent to do mods every time the borrower thinks he's underwater, even if he has the ability to pay. Even if the bank still owned the mortgage, they are not well equipped to deal with situations like these. They're not professional property managers who can take over the property and deal with a renter. It's also a PR nightmare if they foreclose and then try to kick someone out so they can sell it at full value. So they end up selling it at a lowball price to someone who is willing to do the dirty work. I think the writer might be confused about TARP. Mostly TARP was buying stock in the banks, most of which was paid back. There were some programs to buy and guarantee assets. I guess if TARP had somehow bought that mortgage it could apply. Not saying TARP was a great idea or not, just that it wasn't a blank check for banks to no longer care if they got value from the property. The latest administration proposal is to let mortgage owners refinance no questions asked, even if they're underwater, if they've been paying on time. That seems like a good idea. http://www.calculatedriskblog.com/2011/10/few-comments-on-harp-refinance-program.html http://www.calculatedriskblog.com/2011/10/few-comments-on-ha...
- nknight 15y ago
  > They're not professional property managers who can take over the property and deal with a renter. Neither are most rental property owners. I think you'll find most landlords who have many tenants either engage the services of a property management company, or end up effectively building one themselves. I think the major banks could dedicated a few of their middle managers and staff attorneys to finding and contracting with some reputable management companies for a while.

nknight 15y ago

> I find the story from the landlord really, really hard to believe. I don't. Not for an instant. The landlord's story is the same story as thousands of other homeowners, right down to BofA "losing" paperwork repeatedly. I guess this is easy to miss if your only news source is HN and other tech-focused sites, but for anyone that has paid any attention to the mortgage crisis, you'd see this repeated again and again and again. It's not like the banks deny it, either. Sometimes they get called on a particular case by the press, and their response is one of the generic cop-outs -- "we're investigating", or "we can't discuss specifics due to privacy laws", or "ongoing litigation".

Cieplak 15y ago
"Her fate, an accidental foreclosure, or wrongful lockout, is becoming more common with major banks as foreclosure rates rise, experts say." http://abcnews.go.com/GMA/bank-america-apologized-accidentally-repossessing-home-taking-pet/story?id=10071658 http://abcnews.go.com/GMA/bank-america-apologized-accidental...
deleted 15y ago
[deleted]
- nknight 15y ago
  It's not just BofA, that was just the bank specifically mentioned in the article, and of course one of the worst offenders in the general category of being a major pain in the ass. Most of the cases I read about begin either before the owner falls behind, or shortly after the first missed payment. They try to work with the bank on a loan modification, sometimes under the federal program that some qualify for, but paperwork just keeps getting "lost" -- sometimes they claim to have never received it, other times they freely admit that they "lost" it themselves. Edit: I'm not speaking generically here about all foreclosure cases. I'm speaking strictly about cases where loan modifications were sought, and the owners weren't turned down, and followed the bank's instructions, but one day the bank just decided to start the foreclosure process, and after that it was robo-bank time, nothing could be done.
  - deleted 15y ago
    [deleted]
    - nknight 15y ago
      As far as I could tell, the landlord wasn't claiming to be entirely blindsided, but blindsided by the actual foreclosure and auction when he'd been in communication with the bank seeking a modification. He absolutely should have told the tenant what was going on sooner, but I have no reason to doubt, and plenty of reason to believe, that the landlord was trying to fix it and wasn't expecting an immediate foreclosure when it happened.
steve8918 15y ago
I'm well aware of all the stories of people getting screwed over by banks while trying to renegotiate their mortgages, and I'm also well versed in foreclosures, since a few people that I've known have gone through this process via strategic defaults. I would hazard a guess that I know more about this process than you do. But I still don't believe that the reaction of the landlord makes sense to me, unless the author was missing some key facts. The article says that not only was he renting the house for several years, but the landlord also raised his family in it. So, depending on how long the landlord owned it, there must be considerable equity built up in the house. To let something like this slip away without fighting it would be ridiculous. If the account of the author is accurate, then it sounds like the landlord walked away from the place. It just doesn't make sense that he would be apologetic to the renters, but instead he should be steaming mad, and would be trying to protect his investment. If this were me, and I just lost a house that I put a few 100k into it, and I had good renters, I would tell my renters "Don't move anywhere, I'll handle everything." But it sounds like he hung he renters out to dry. Remember, in order to get a loan mod (which the landlord claims he was in the midst of), the landlord at some point must have stopped paying his mortgage, so he definitely was collecting rent without paying the mortgage. Landlords letting their rental units slip into foreclosure, which collecting rent is even more common than banks screwing up and accidentally foreclosing on homes, so to me this is the more likely scenario.

wtvanhest 15y ago

Agreed, I worked with large institutional clients who were loosing their properties in 08-09. That story is what we often heard from sophisticated investors which is never true.

RockyMcNuts 15y ago

Sounds like the owner might have been underwater on the mortgage, decided his best bet was to keep collecting rent and stop paying the mortgage, and hand over the property to the bank, unless by some miracle they gave him a mortgage modification. It's a messed up situation. A mod to reduce the mortgage amount in line with market value might have been better for everybody. But another wrinkle is the bank might have sold the mortgage and just be servicing it on behalf of bondholders, and there's no way to get all the bondholders to agree to start doing mods. And it's a bad precedent to do mods every time the borrower thinks he's underwater, even if he has the ability to pay. Even if the bank still owned the mortgage, they are not well equipped to deal with situations like these. They're not professional property managers who can take over the property and deal with a renter. It's also a PR nightmare if they foreclose and then try to kick someone out so they can sell it at full value. So they end up selling it at a lowball price to someone who is willing to do the dirty work. I think the writer might be confused about TARP. Mostly TARP was buying stock in the banks, most of which was paid back. There were some programs to buy and guarantee assets. I guess if TARP had somehow bought that mortgage it could apply. Not saying TARP was a great idea or not, just that it wasn't a blank check for banks to no longer care if they got value from the property. The latest administration proposal is to let mortgage owners refinance no questions asked, even if they're underwater, if they've been paying on time. That seems like a good idea. http://www.calculatedriskblog.com/2011/10/few-comments-on-harp-refinance-program.html http://www.calculatedriskblog.com/2011/10/few-comments-on-ha...

nknight 15y ago
> They're not professional property managers who can take over the property and deal with a renter. Neither are most rental property owners. I think you'll find most landlords who have many tenants either engage the services of a property management company, or end up effectively building one themselves. I think the major banks could dedicated a few of their middle managers and staff attorneys to finding and contracting with some reputable management companies for a while.