Spedog

Failed Short Sales Exacerbate Foreclosure Losses For All [Housing Tracker]

I'd also be curious to see if the Capiros had a second trust. If so, that could explain why Wells would bypass the short sale. It is so easy to make the lenders the bad guys in all of this, but they just reacted to market forces in making these loans. I am a loan officer and I did several "no ratio" loans to borrowers like the Capiros'. Absolutely no loan fraud there. The loans met guidelines (although the guidelines were insane). But, these people had voluntarily contracted to buy a house they could not afford. My job was to find them a loan. They paid a premium for the terms, although the premium was not nearly high enough to offset the risk in retrospect.

The real culprit in all of this, in my opinion, is ACORN. I distinctly remember the pressure being put on us to expand our lending to minorities and moderate income buyers. Till that time, the only factor we used in making loan decisions was risk/ability to pay back the loan. But, if you threaten lenders with fair lending lawsuits if you do not lend to low income borrowers, then your only choice is to develop lending guidelines that allow these borrowers to get the loans. This led to rediculous lending guidelines which in turn, opened the door to some unscrupulous lenders who specialized in selling Option Arms to the poor and uneducated. It has now snowballed to the prime sector.

I, too am in trouble and will likely have to file chap 7 or 13, have depleted my 401k and will at a minimum lose my investment property. I won't lose my home, but I'm about 70k upside down on it. But, I have nobody to blame but myself for this situation. I planned for a downturn and a reduction in income when the market changed, but did not plan for this drastic a change. This is not my lender's fault, it is mine. But, guess who the big loser is going to be. Not me, my lenders and ultimately the taxpayers.

So, when you see all of these hard luck stories on the news about the borrowers who have been taken advantage of, remember, there are just as many people out there who just made dumb decisions and are paying for it.