It looks like it is starting with this mortgage debt is not being discharged through foreclosure and instead it is lingering on the ex-homeowners credit, adding up taxes and fees along the way. It should be called “zombie debt” as well as “zombie homes”.
Now with the fraudulent robo-signing scandal being settled and in some cases settled out of court. The banks are feeling like they have a free hand to collect or not on this inflated mortgage debt from the real estate bubble years. I advocated many times, this is why you needed to default this debt and let real estate prices fall to sustainable levels (1.5 – 2 times annual income of your area). We have not only kept real estate prices artificially high, now we have debt attached to people that is artificially high and accruing interest and fees.
Yes, the borrowers are not off the hook, because they did sign the paperwork and took on these bad loans, but in the same token, where did this bad credit for real estate purchases come from??? The banks and other financial institutions. Settling with the Department of Justice or state agencies is one thing, but also we need to settle with the common person, not only borrowers but people who did not engage is this type of borrowing that some day would like to own a home and not have to pay and artificially high price and interest on top of that over 15-30 years.
It is quite funny that the banks can give away bad loans to homes, jack up the prices, foreclose and claim title to the real estate, decide not too and instead stick it to the borrower and get bailed out by the same taxpayers through the government and central bank. This is why precedence is so important and now we have some that are so out of whack that the security of the entire system is at risk. People will at some point say enough is enough and that will be a day you will not want to be on the other side of that collective and popular anger. Greed is not always good.
The Globe and Mail - Joseph Keller doesn’t expect he’ll live to see the end of 2013. He blames the house at 190 Avondale Avenue.
Five years ago, Mr. Keller, 10 months behind on his mortgage payments, received notice of a foreclosure judgment from JPMorgan Chase & Co. In a few weeks, the bank said, his three-story house with grey vinyl siding in Columbus, Ohio, would be put up for auction at a sheriff’s sale.