You have got to read this. It is a scary picture if there are a lot of people like this, even if to a smaller degree. http://iamfacingforeclosure.com/1/why-i-am-facing-foreclosure/
"From October 2005 to May 2006 I bought 8 houses in 4 different states, mostly with the help of 100% stated income loans (liar loans). ..." whole blog sound unreal, it read liked the composite of all house filppers.
I mentioned my x wife and her boyfriend had bought a home in Carlsbad in Oct 2005. For those who live in Carlsbad, it was in La Costa Greens, just east of El Camino Real and North of Alga Road. Her boyfriend only lost about 80K on it. They had bought for right at $1million and sold for about the same but had added the landscaping, upgrades after the close etc. I was sort of surprised it even sold. Some lady from the Bay area bought it using trust money from her Mother who had just died. I figured he was going to have eat the house. Poor bastard. That's the problem with San Diego. It seems like the only ones that can buy get the money from some crazy place. The jobs don't pay that much and there is zero job growth. I moved away in August and I don't know if it has gotten worst or better. Just wanted to share some first hand information. John
What was interesting to me is out vindictive some of the replys were. Man, there is some real hatred out there for the little guy who takes a shot at grabbing the brass ring...
I have few friends in the mortgage industry, and the staff they tell me that they see makes me believe that there are hoards of people that did something like this. I have no clue whether this guy is BS or not, but there are huge # of flippers out there with multiple properties, who are bleeding now, but so far are still holding on. They often use Trump as an example of some one who was able to dig himself out of massive debt. They do forget that when you owe a bank 1 million, they will come after you with everything they have got if you do not pay. When you owe a billion, you and the bank are partners. I have no sympathy for them, because their stupidity and greed bid up prices to astronomical levels putting any middle class earners with common sense out of most of the markets. It will be very interesting to see how this situation will unwind with next 2 years.
I have a question. If you buy a house for say $1 million with no money down, value drops to 800k and you sell it for 800k or you get foreclosed on and the bank sells it for 800k. Does the bank take the hit for 200k? Can they make you pay that 200k back to them? I assume not, since if you did have money, you wouldn't get foreclosed on in the first place.
No, the bank isn't going to eat the loss without a fight. Foreclosures can happen without a bankruptcy and even then, I'm not sure the bank is without recourse.
If you put down less than 20% you are usually required to buy mortgage insurance. I believe that would cover the bank for their loss. Edit: Of course that won't let you off the hook.