When banks started getting hammered in Arizona with foreclosures, they immediately went to the legislature to get some protection. Instead of taking their lumps for poorly written loans and terrible underwriting decisions to investors, they decided to get the laws changed so that they could go after those investors.
But as typically happens, the law of unintended consequences showed up. The law says that banks can garnish your wages and go after all of your assets to repay the difference between the loan value and the actual selling price of the home if you have been foreclosed upon and have not lived in the home in a 6 month period. They were going after the investor class, even though they are safely protected by LLCs, but are now hitting the average citizen who may just be going through a rough time.
Farley of the Arizona Realtors Association admits the broader impact of the legislation was a surprise. “If you have a second home in Flagstaff,” he said, “and fall behind on payments because your spouse has lost their job, lenders can foreclose and garnish your wages and put liens on your bank accounts and your primary home.
“What about parents who buy homes for their children to live in while going to college? If something happens to them in this tough economy, they could lose both their homes. And really, how many second-home owners can show they have lived in their vacation home six months straight?” Arizona Republic.
Lets face it, if the banks had used common sense in underwriting loans, this never would have happened. Now they are looking to the legislature to fix their errors through lobbying and “campaign contributions” while potentially screwing the taxpayers of the state.
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{ 4 comments… read them below or add one }
This is why corporate campaign contributions are wrong. They are bribery and they are completely wrong for America. We need to get back to politics without profit.
-Tyler
I am just about to complete 2 short sales and I received letters from the lenders that stated the loan was satisfied in full. I hope the laws aren't changed here in Kansas for the problem you mentioned.
Ken
Its time the banks look to themselves for answers and stop forcing the people, the taxpayers and the legislators to correct their wrongdoings.
Now here's another insult to us. The bailout monies are being used to provide exorbitant bonuses to the very people who caused this disaster in the first place. According to the New York State Attorney General Andrew Cuomo, a great many of the bonuses exceeded the amount of profit generated by the banks! They are fiddling the books like crooks while Rome is burning.
Here is the final insult — well, for now anyway. Banks in states like Arizona are using their lobbying powers, greased with the bonus monies that saved their skins, to have laws changed to their advantage at the expense of the very people to whom they originally sold the dodgy loans, when times appeared to be booming — according to the media that is.
What a shock! Politicians being bribed by those with the 'big money grip'. I thought prostitution was illegal?
Please do two things immediately for your own sake, and do them quickly. Form an L.L.C. or Limited Liability Company to protect your assets, and then invest in Tax Defaulted lands for a fraction of their real worth through tax deed sales, to increase your assets at very little cost – usually for mere pennies on the dollar of their real value. At least then you will own some land, and can build again.