Philadelphia to suspend some foreclosure sales
Breaking news from Reuters: "Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments -- potential relief for tens of thousands of struggling debtors."
More: "Sheriff John Green said he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period. His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes."
The story raises questions: First, is this action legal? If I'm running a large bank and I'm trying to get my hands on houses so I can put them on the market before they fall further in value, I might want the houses now. Second, will other municipalities follow suit? My guess is that the answers are no and yes, in that order.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Philadelphia Mayor Michael Nutter, by AP.
That was my first question as well....is this legal and it's not. This is really incredible...yet again I'm speechless.
THESE PEOPLE ARE NOT ENTITLED TO OWN REAL PROPERTY. GO RENT. They can walk away from their "home" that they don't own or paid nothing for and rent. Why is that such a difficult concept to understand.
Since when do we in this country promise ownership of real property? Apparently today we do!!!
Amazing.
Posted by: mapletree | March 28, 2008 at 03:21 PM
Peter,
Can you find out (probably not) does this apply to all homes even in the 650K and up (million dollar homes) range?
Probably, can you imagine what this means to a responsible, honest non homeowner renting American citizen??? WOW.
Posted by: mapletree | March 28, 2008 at 03:24 PM
can i buy a porsche or ferrari in philly???
Posted by: mike | March 28, 2008 at 03:30 PM
Could the City of Los Angeles step in and stop the escalating price of gas and food? Those affect just about every person that lives here, either directly or indirectly.
Posted by: William Jones | March 28, 2008 at 03:32 PM
Hard to believe it would be legal...and harder still to believe lawsuits won't follow if it's put into effect.
I realize politicians want to capitalize on this PR opportunity, but voiding legal contracts? What's next? And what investor wants to put money into a system were the government might decide to freeze assets to the advantage of one subset of constituents?
Posted by: Giacomo | March 28, 2008 at 03:34 PM
I think that is fair. I mean the owners are still probably going to lose the house. The only difference is that they are going to live free for a couple or more months. I mean the only ones that suffer are the greedy banks. As they are forced to keep a depreciating asset for longer that they would like
Posted by: DS | March 28, 2008 at 03:41 PM
Yet another reason why Philly sucks...
Hmmm... I could go for a cheesesteak right now..... maybe Philly isn't so bad.
Posted by: Ace | March 28, 2008 at 03:55 PM
My prediction (and hope) is that this will get watered down to a "resolution" or some other degree of governmental claptrap in the end. Just like most of Paulson's efforts have been largely "voluntary" (=lenders doing whatever they were going to do anyway).
Posted by: Giacomo | March 28, 2008 at 04:04 PM
You don't get it DS the people living in the house didn't pay for it. The Bank gave the money and owns it, perhaps they aren't on title (although they may be at this point, east coast title transfer is different from west coast) regardless, these people own nothing, didn't pay anything for a house---DO YOU GET THAT????? They have no right to continue to live there.
If you are a renter and don't pay your rent can you just continue to live there for years and years, or months and months...no!
Posted by: mapletree | March 28, 2008 at 04:10 PM
I've been reading the comments on this blog for about three months now and have come to the realization that most of you are complete jerks. These are people we are talking about, families. Most of these people have sacrificed to make homeownership possible fo their families and in an instant it is gone. Shame on you. We all want and admire "a reasonable rate of return" but at what cost? I'm sure there are greedy speculators being hurt by the correction and they shouldn't be allowed to benefit or profit from any kind of government intervention. This doesn't discount the fact that real families, working families, are in the middle of the worst economic disaster of their lives. We need to work together as a community and find a solution to this as soon as possible and keep people in their homes. Equating governement help for people fending off foreclosure to forgiving a luxury car loan is petty and quite frankly not even witty.
Posted by: stevestevens | March 28, 2008 at 04:12 PM
What part of foreclosure do they not understand. Is that concept foreign to Sheriff Green ? That cannot happen
because then people would stop paying their mortgage all together and invoke Sheriff green who says it's ok not to pay and to re-negotiate the terms with your bank any time you have a problem. If banks start this process,then they will have to re-negociate all over the country with the people whose home value has gone down....There will be no end to the negotiations....this is really bad.
Posted by: CD | March 28, 2008 at 04:13 PM
Dear Mayor Villaraigosa,
My mortgage payment is too difficult. Please push the magic button and flush my legal obligations away…or at least hit pause so I can do some "retail therapy" before my wages are garnished.
You can always count on my vote, Santa...er...Mayor.
-SuperConsumer
Posted by: Pasadena'ed | March 28, 2008 at 04:14 PM
If I'm a bank looking to sell a property, and the local law enforcement tries to tell me to stop, my first question would be, "Well, who the hell do you think you are?", followed shortly by, "When did the City Council pass the law illegalizing property sales that you're here to enforce?"
Dasvedanya, and pass the borscht. It seems we're destined to become that which we've always feared the most.
Posted by: NoWayinLA | March 28, 2008 at 04:33 PM
I'm all for helping those in financial distress. And I don't believe those who bought a home with a difficult-to-service loan should be refuced any lower than they already have been. However, I agree with the consensus here. Stalling the foreclosure process is usually a waste of time. Every banker and bankruptcy attorney will confirm that.
What would be pretty cool is if there was some sort of counselor who was able to determine if the distressed homeowner understood all of their options. I know. It sounds too simple. And it probably is. Sigh. 'Tis a cold cruel world we live in.
Posted by: martin | March 28, 2008 at 04:51 PM
Stevestevens. WAKE UP, JERK !!!!!
Everyone of these "families" signed to
put themselves in these homes in what
amounts to nothing more than keeping up
with (or getting ahead of) the Jones.
Let your heart bled for this scum, I want
them at the end of the renters line. Now!
How's that for witty.
Posted by: ENOUGH OF THIS BLEEP !!! | March 28, 2008 at 04:54 PM
stevestevens: "Most of these people have sacrificed to make homeownership possible fo their families and in an instant it is gone."
Sacrificed? Since when is paying $800 a month on a 2000 sq-foot house a sacrifice? The rent on a 2-bedroom townhouse was 50% more than that!
They were renters during the bubble, they just didn't realize it. Homeownership on a $600k house with a $40k income is NEVER possible.
Posted by: NoWayinLA | March 28, 2008 at 05:04 PM
stevestevens,
Do you personally know any of these people in Philly who were not speculators? People earning $50K annually cannot afford a $400K house. Being foreclosed on means you cannot afford the house.
Sacrificed to own a house? How about sacrificing to save a downpayment and wait for this bubble to implode to buy an affordable house? Renting is not a bad option.
Posted by: formerlahomeowner | March 28, 2008 at 05:24 PM
AAAARRRRRGGGGGGG!!!!!!
Dear "Sheriff John," and SteveStevens,
All this does is make it that much harder and more expensive for everybody to get mortgages!!
Investors are already scared to death of mortgage backed securities, so now let's ditch all the excessive legal protections now in place & make it that much harder for the banks to get at least some of their money back.
Yes, many of these buyers were taken advantage of by unscrupulous lenders and yes, the banks should have been smart enough not to give 100% financing to subprime borrowers with no verification of anything when the market was obviously overvalued. . .
but--are we really ready to just throw out the concept of a legal contract!
I don't know about Philadelphia, but in California the borrower's usually 3 - 6 months behind before the lender starts foreclosure, which takes another 4 months and can be further delayed with a simple bankruptcy. The only thing that will happen during an additional 3 months is the house and the market will deteriorate more.
AAAARRRGGGGGG!
Posted by: SoCalRealEstateNews.com | March 28, 2008 at 05:24 PM
hey that's a great question, can government tell cops to stop enforcing certain laws? the heck if i know, but there is one thing for sure: nothing beats beautiful metro L.A.!! so just grab the family and grab a house while the supply is high; good luck everyone!
Posted by: lefty | March 28, 2008 at 05:27 PM
I'm not aware of all the legal issues but police powers are pretty broad.
But the real issue is.. if I'm a bank.. would I want to lend in Philly? It's called collateral based lending, what is collateral based lending without collateral? You'd get credit card rates for home loans because its huge money with huge risk. Housing values are going down either way in that area, if they stop foreclosures the lenders raise rates and house prices go down. If they don't stop foreclosures prices go down.
It's a stupid idea passed by an uneducated City Council. I imagine they are about to get a lesson in financing right quick.
Posted by: Cal | March 28, 2008 at 05:27 PM
I believe the law of unintended consequences will kick in with a vengeance.
1. It'll be impossible to get a mortgage in PhilaPa driving down the price of real estate to pocket change like back in the 70's. Can you say slums?
2. All of these over-stretched mortgagee's will default on the city property taxes owed
3. PhilaPa's credit rating will tank
4. All city services will get massive cuts
Sounds like a perfect storm for a hardcore localized recession
Posted by: WhatMeWorry | March 28, 2008 at 05:32 PM
WAS IT LEGAL FOR THESE INVESTMENT BANKERS, RATING COMPANIES, LENDERS AND BROKERS TO CREATE THE BAD LOAN PRODUCTS IN THE FIRST PLACE?
WAS IT LEGAL FOR THE JUSTICE DEPARTMENT TO BLOCK ATTORNEYS GENERAL IN 50 STATES FROM LEGISLATING AGAINST PREDATORY LENDING PRACTICES BACK IN 2005 WHEN ALL THIS WAS FIRST GETTING OUT OF CONTROL?
Posted by: Maggie Knowles | March 28, 2008 at 05:50 PM
So does this go for people that had affordable homes and then sucked the equity out to live high on the hog and now can't or won't pay? I'd like to know how many of the current default, foreclosure, walk aways and upside down, started out in a house they could afford and then screwed themselves by sucking out their equity or moving up to something unaffordable without an exotic/toxic loan.
Posted by: are they crazy | March 28, 2008 at 05:53 PM
"ACORN welcomed the move, saying it will give the borrowers more time to negotiate with lenders."
"ACORN" is worth googling. For a "community organization," it has an unusual number of links to voter registration fraud indictments, strongarming unions, and various far left groups. Probably just a coincidence, huh?
Posted by: Giacomo | March 28, 2008 at 05:54 PM
Mahatma Steven, the great one, when you given a man fish, you feed him for one day, but when you teach a man to fish, you feed him for life.
And the lesson of the day to be taught is self reliance...speficially Benjamin Franklin's self reliance. I don't think he would be eating any cheesesteack right now, but he must be turning over in his grave in, of all places, Philadelphia now.
Posted by: MyLessThanPrimeBeef | March 28, 2008 at 05:56 PM