I often wonder what makes people tick…..
My wife had a conversation with our neighbor a couple of weeks ago, and we found out the family was moving because the house was being foreclosed upon. Huh? The house next door with all the bells and whistles is going into foreclosure? We’ll go back to this later in the story.
The tenants moved into the area because of the excellent school district, paid $2,500 monthly rent, first and last month upfront, while they saved additional money for a down payment to be able to move into the neighborhood. This was April of 2007. Let’s follow the clock backward.
Essentially nine months later, no payments have been made, the sheriff puts up a notice announcing the bank is foreclosing, and the current tenants have 40 days to move out from the date of the sale.
You have to assume that something tragic must have happened to the family that purchased the home and the family was never able to make the payments.
You know what happened? Two people saw an opportunity to capitalize on the business of walking away. This will be a completely separate post.
The Mortgage Forgiveness Debt Relief Act of 2007, HR 3648, allowed homeowners to walk away, eliminating the federal taxable liability of the loss they would’ve received a 1099 for. Ahhh. Bet the politicians didn’t see that unintended consequence occurring, did they?
You see, the former owners (Mom and Dad) bought the property for $450,000 and “sold it” (to the kids) for $699,000. Can you say non arms-length transaction?
Or maybe we should call it what it is: equity stripping. You see, the kids have been in finance and mortgage for 10 and 20 years, respectively. Can you imagine $249,000 in gross profits, less transaction costs, going to the parents (or going to the kids through the parents)? Do you think they knew what they were doing? Should I mention that they walked away from two homes, not just one? The total loss to the bank is $1.3 million. And this is but one of countless stories playing out across America.
I believe in the adage “love thy neighbor”–until the neighbors show their true colors, at which time karma will deliver what they so rightfully deserve. I will not be the one to judge them, but I certainly will not be making an effort to make ourselves available for the next birthday party or special event.
I think the apple doesn’t fall far from the tree, and the last thing I want is to have my kids playing with their kids. I’m funny that way.
This entry was posted on Saturday, February 9th, 2008 at 8:02 pm and is filed under Foreclosure, landlording, foreclosure crime, shady lenders, mortgage brokers, criminals. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Leave a Reply
