Home: Fight or Flight

Back in the 1980's, during the last real estate bust, two things bugged the banks: 1. assumable loans.  2. mortgages.

With an assumable loan, you could sell you house with the loan attached, so someone could buy your equity and then continue to make the payments on your mortgage.  Well, hard to trap homeowners when there is an assumable loan, hard to make money if a loan is assumed and you cannot charge for a new loan.  Assumable loans disappeared.

It was almost impossible to get a mortgage in the last decade or so...  what you got was a deed of trust.  With a mortgage there is a pile of common law rules and regs, a judge has to review the case, you get a homestead allowance of prox $20K if you are foreclosed on, and the loss is limited to the house.  Can't trap people with that... so banks wrote deeds of trust, not mortgages.  So then, banks can fast track the sale of your home and you get nothing, but in most states you gt stuck with a "deficiency."

Well when things are so assymetrical, something will go wrong.  Since it was a "no lose" situation for the banks, they wrote endless junk paper, and split it up and sold it over and over.  Now people are finding out the foreclosures in many cases are not proper.  I heard about this three years ago.  Like paying taxes, losing your home to banks is probably voluntary.  This article isn't the hald of it...

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