Kudos to the folks sent to do the unpleasant task for not being heartless.  That would have broken my heart, too.

It might set a precedent, or it might not.  Probably not.  It’s a dangerous precedent to set.  There are an awful lot of people behind on their mortgages, and some of them are bound to be very old.  Charity and business are not one and the same thing.  Businesses shouldn’t be prevented from being charitable, but on the other hand they shouldn’t be forced to, either.

Nor should they be shamed into doing so, either.  Business is business.  It’s far too easy to gang up on banks for being heartless.  Shouldn’t adults be held responsible for their actions, lack of planning, whatever?  Shouldn’t older people be wiser as well?

I’m glad Ms. Hall and her daughter can stay in their house for the moment.  Banks shouldn’t be forced to let them, though.

The borrowers have until the end of April, 2012, to request a review under the guidelines of the agreement.  The parties involved acknowledge that it will be a huge amount of work to process the potentially 4 million requests, but have pledged to do so thoroughly and fairly.

Much of the rest of the process and its consequences are unclear now but the sheer volume of reviews could aid the recognition of patterns in foreclosure processing based on just about any measure — income, racial background, mortgage servicer, credit history, etc.  It will be interesting to see.

It’s entertaining to see the tables turned on a bank for once.  After a bank wrongfully foreclosed on a homeowner who apparently never even carried a mortgage against the property, a judge ruled in the homeowner’s favor and ordered the bank to pay the homeowners’ legal fees.  When this didn’t happen for months, the homeowners’ attorney took motions to seize the bank’s assets — effectively, foreclosing on them.  Sweet music, no?

Commercial properties — yes, even banks — are not immune to foreclosure.  Many will be foreclosed on in this economic downturn.

That’s a bit of a smart-aleck answer, but there is reality to back this up.  In the United States currently (2011) there are programs to help homeowners in trouble, but relatively few are designed to extend help to homeowners with extended bouts of unemployment. From the linked article, here are where the shortfalls are:

• A Treasury Department program begun in 2010 allows qualifying homeowners to put off mortgage payments for three months, but the typical length of unemployment is three times that.  In addition, only slightly about 7,000 homeowners have participated.
• Loan modification incentives usually require some payments to be made.  This is a problem without income, so unemployed people don’t qualify for these programs.
• Some programs are targeted for subprime mortgages only.  Unemployment affects people holding all kinds of mortgages.
• The government can offer, but lenders aren’t compelled to take.  Whether aid is extended to borrowers or not is largely up to the lenders, and they have other considerations.

There is some aid available for homeowners battling unemployment, but it’s not enough. It’s impractical for all concerned for it to be enough.

That’s why it’s so important to protect income streams. Make yourself more valuable at your place of work. Use “free” time to start a side business. Build up an emergency fund to add a cushion so that the mortgage payments can be made for a while despite job loss.

Because when you’re looking for a bail-out, the best you get might be a thimble.

Getting to the point of a foreclosure auction doesn’t mean that the property is lost.  There’s usually the right to redeem the property more or less right up to the time of sale.  The owner of the mortgage in default has already taken a hit on their credit for being so late on the payments, but keeping the property out of foreclosure is far better than letting it go into foreclosure.

Granted, not everyone has a princely six-figure wad of cash to throw at a mortgage, but there always is a chance of redemption if your property is going to a foreclosure auction.

In a nutshell, a short sale is a sale of a property for less than what’s owed on it.  It’s meant to end up being less costly to the lender than foreclosure in the case of a default by the borrower.  Short sales, though, involve much more negotiation than foreclosures because legal title hasn’t yet been transferred to the lender.

The only people for which the process is remotely pleasant is the buyers and the real estate agents.  The buyer stands to get the property at below market value (one would hope) and the real estate agents stand to make commissions on the sale.  The lenders are hung out to dry because they’re losing, and the seller will have his credit trashed after the transfer.  But short sales often fall through because the parties cannot agree on the terms of the sale.  That can make it frustrating for prospective buyers.  Contrast this with buying foreclosures, which can move really fast — almost too fast — for the buyer.

Take Debt Kid’s story as a warning.

If you are a victim of foreclosure, you do not need to consider it as an endless suffering. Foreclosure does bring upon you financial disaster but it does not end your life. You can regain your financial condition, even after you have encountered a foreclosure. You can usually get a mortgage after 2 years of your foreclosure. A foreclosure does not impede you from getting a mortgage; you can buy a house even after you have faced a foreclosure. This article provides you with some tips you must follow in order to recoup your financial security after foreclosure.

Here are some tips you must follow in order to get a mortgage after you have encountered a foreclosure:

1. Improve your credit score.  Get a copy of your credit report and review it thoroughly. Find out if there are any dues on credit cards or loans. Pay off your dues as soon as possible. Negotiate with your creditors and try to get a reduction on your outstanding debt. You have to improve your credit score to minimum 580 if you want to secure FHA loan. If you need a conventional loan, you require a score of at least 680-700. Thus, improving your credit score is essential when you decide to get a mortgage after foreclosure. Mortgage lenders will review the last three years of your credit report, so it’s better to prepare a document in writing to explain the reason for your foreclosure.
2. Save for a down payment.  If you need to purchase a new home, you have to save enough for your down payment. Down payment after foreclosure may cost you outrageously. It may cost you almost 3 to 4 percentage points above the current rate.
3. Save for PMI.  If you can put 20% for your down payment, you can improve the terms of your mortgage and avoid Private Mortgage Insurance (PMI). If you are unable to do that, you need to save enough for PMI in order to buy your new home after foreclosure.
4. Plan a budget.  Create a budgeting plan as you need to save enough in order to buy your own home. The means to lower your monthly interest rate is to increase your savings. Draft a budget and find out your income and your expenses. If your find your expenditures are more than your income, immediately take steps to reduce your over spending habit. Stick to your budget as this will help you manage your finances in a better way and help you save more.

Apart from following the tips to secure your mortgage after foreclosure, you must also be a smart shopper. You must be careful to shop for the best mortgage loan, compare prices online and take out the loan that offers you with the best deal. Keep your spending in check and you will be able to overcome the stigma of your foreclosure as soon as possible.

I have to say, though, the seller jerked us around quite a bit throughout the whole process.  That wasn’t pleasant at all.  But we ended up getting the house, and they fixed the big thing that we asked them to fix:  the water heater.  So it wasn’t all bad.

But here are some of the big lessons I learned throughout the process:

• The seller’s addendum was extremely restrictive. There’s the part of the contract that we signed with our real estate agent, and then there was the part that the bank added on (an addendum) with their terms.  It was nine pages of very, very small print that gave every discrection to them and took all of ours away.
• We had to rush everything over to them, but they dragged their feet on their end. Games.  Nothing but games.
• We never met any of the parties on the seller’s side in the transaction. But that may be normal for foreclosure transactions.  I don’t know.
• We had to get an inspection, and have the report to them on very short turnaround, but they didn’t even have to acknowledge that they fixed anything. Again, very one sided, but they did let us know beforehand that they did fix the one thing we asked for.
• They called us the day of closing, after we had already given up hearing from them, at 2:30, expecting us to close that day. I still hadn’t done a walk-through, and the settlement agency’s office was 45 minutes away.  We got it done, but I was not amused by that little stunt.

The transaction moved quickly overall, but I did get the feeling that they were figuratively throwing the keys at us at the closing table.  But I’m probably not the only one who’s seen the very distanced view of banks and their foreclosed real estate.

It sticks a loss to the bank, of course, but banks aren’t taking this lying down.  Faced with over half a million borrowers (an estimate by Experian) banks are playing tougher:

• They recognize the likely patterns and encourage the at-risk-of-defaulting homeowners to tough it out.  This keeps the payments coming in.
• They go after defaulted borrowers with other legal avenues such as deficiency judgments to collect the difference between the sale price (after the foreclosure) and the amount owed.

Just because the foreclosure process is becoming more socially acceptable doesn’t mean that (a) there aren’t consequences, and (b) it’s not ethically wrong.  A house is a place to live first and foremost — not an investment first and foremost.  Cutting bait on paper losses is shortsighted, because the house still provides shelter.  It just hasn’t produced the double-digit gains investors were expecting.  Oh well.

Folks are buying St. Joseph (husband of Mary) figurines and burying them, upside-down, near the For Sale sign in hopes of bringing a quicker sale.

Prayer sure doesn’t hurt but this is a bit off the deep end.  I had heard about this practice several months ago as a woman in our home group knew someone who did this.  Heck, kits are available for sale just for this purpose!

About the only thing that will help sell a house in this kind of a down market is lowering the price and taking a loss, if needed, or holding out for a recovery.