New law makes homeowners liable in foreclosure (sales, foreclosures)

[roosevelt]

This is an Arizona law that is a disaster for people who cannot afford their homes but rented it out for a few months, or didn't live in it full time. Plus there is the federal law that renters can live free for 3 months after foreclosure. Will this all be charged back to homeowners in addition to being liable for the difference between the mortgage and foreclosed selling price? You will see an incredible number of bankruptcies if this law stands, which will hurt credit card companies and banks because in bankruptcy, everybody will get stiffed. I see in the news that lenders are already starting to put off foreclosures in Arizona waiting for the law to kick in Sept. 30th. Even the New York Times has an article about this.

New law triggers fear for housing

[Boompa]

Originally Posted by roosevelt

This is a disaster for people who cannot afford their homes but rented it out for a few months, or didn't not live in it full time. Plus there is the Obama law that renters can live free for 3 months after foreclosure. Will this all be charged back to homeowners? You will see an incredible number of bankruptcies if this law stands, which will hurt credit card companies and banks because in bankruptcy, everybody will get stiffed.

New law triggers fear for housing

This is an Arizona Law passed by Republicans, how is Obama to blame?
What is an Obama Law?

[roosevelt]

Originally Posted by Boompa

This is an Arizona Law passed by Republicans, how is Obama to blame?
What is an Obama Law?

The renter law is federal. I assume Obama is the president and gets all the credit.

I clarified my post, thanks for pointing this out and thanks to the Forum for the edit feature.

[poolgirl51]

This is such a complex situation but I think I support this law below is from the link posted by the OP:

"The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six straight months. This might include landlords, second-home owners and investors who bought homes hoping for quick resales and big profits. Once the home is sold in foreclosure, the homeowner would have to pay back the remaining value of the loan, minus the proceeds from the foreclosure sale. Currently, Arizona homeowners, including investors, who lose a house to foreclosure take a big hit on their credit scores but aren't usually required to pay back lenders."

I live in a community that had several spec homes built by wealthy investors. The investors walked away and these homes have gone into foreclosure. They have now sold for much less than they would cost to build and certainly way less than the mortgage. The community is hurt, the bank and it's depositors lose significant dollars and the investors still live in their primary residence (which are multi million $$ homes). We have also had a couple of second home owners walk away from their homes here after pulling all their $$s out. They also continue to live in their million $$ primary homes. I have a huge issue with folks who can afford their mgt walking away just because the home is no longer a good investment. They should be held accountable for the difference between their mgt and what the home ultimately sells for.

[roosevelt]

Originally Posted by poolgirl51

This is such a complex situation but I think I support this law below is from the link posted by the OP:

"The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six straight months. This might include landlords, second-home owners and investors who bought homes hoping for quick resales and big profits. Once the home is sold in foreclosure, the homeowner would have to pay back the remaining value of the loan, minus the proceeds from the foreclosure sale. Currently, Arizona homeowners, including investors, who lose a house to foreclosure take a big hit on their credit scores but aren't usually required to pay back lenders."

I live in a community that had several spec homes built by wealthy investors. The investors walked away and these homes have gone into foreclosure. They have now sold for much less than they would cost to build and certainly way less than the mortgage. The community is hurt, the bank and it's depositors lose significant dollars and the investors still live in their primary residence (which are multi million $$ homes). We have also had a couple of second home owners walk away from their homes here after pulling all their $$s out. They also continue to live in their million $$ primary homes. I have a huge issue with folks who can afford their mgt walking away just because the home is no longer a good investment. They should be held accountable for the difference between their mgt and what the home ultimately sells for.

If I didn't have a relative that is impacted with this I would not care so much. What happened is she bought a house before selling her old house and got hit with falling prices. She could never afford the new home because her old home sold for half as much; she was going to put the cash into the new home. She rented out the new home and sent all the rent (less than mortgage payment) to the lender but they started foreclosing anyway. Now the renter will not move out even though the lease was up last month. What a mess. She certainly was not an evil speculator.

Again, this is going to make Arizona the bankruptcy capitol of the world.

[poolgirl51]

Originally Posted by roosevelt

If I didn't have a relative that is impacted with this I would not care so much. What happened is she bought a house before selling her old house and got hit with falling prices. She could never afford the new home because her old home sold for half as much; she was going to put the cash into the new home. She rented out her home and sent all the rent (less than mortgage payment) to the lender but they started foreclosing anyway. Now the renter will not move out even though the lease was up last month. What a mess. She certainly was not an evil speculator.

Why on earth would she buy one home before selling the other if she could not afford both? That is quite risky and never a good idea in any market.

[Boompa]

Originally Posted by roosevelt

The renter law is federal. I assume Obama is the president and gets all the credit.

I clarified my post, thanks for pointing this out and thanks to the Forum for the edit feature.

That law was designed to keep the tenet from being thrown out without notice. I don't think it means they get to live there free.

[roosevelt]

Originally Posted by poolgirl51

Why on earth would she buy one home before selling the other if she could not afford both? That is quite risky and never a good idea in any market.

What you said is exactly why the incredibly easy mortgages pushed by the government is such a disaster now. She could not even afford the payments on her old house and bought a new one for even more money. The sales person told her that they would sue her if she did not go through with the sale. It was actually in the contract. Personally, I had never heard of a person being able to have two first mortgages before.

[roosevelt]

Originally Posted by Boompa

That law was designed to keep the tenet from being thrown out without notice. I don't think it means they get to live there free.

This tenant knew for months the house was in foreclosure. Lease was up last month and they won't move out, not paying rent either. The government passes bills too fast without vetting to the public first.

[poolgirl51]

Originally Posted by roosevelt

What you said is exactly why the incredibly easy mortgages pushed by the government is such a disaster now. She could not even afford the payments on her old house and bought a new one for even more money. The sales person told her that they would sue her if she did not go through with the sale. It was actually in the contract. Personally, I had never heard of a person being able to have two first mortgages before.

First of all what ever happened to personal responsibility? Folks should understand what they can afford and the terms of any loan before they proceed. If she couldn't even afford the payment on her old home why in the world did she sign the contract on the new one. Folks need to take responsibility for their own actions.