Sunday, June 16, 2013
Just because they took your house
It doesn't mean that you don't have to pay for it. The Banksters, after having crashed the economy and thrown thousands out of their homes, are now seeking to collect deficiency judgements against their victims for all the leftover debt and accrued interest and fees.
It works like this: A property with a $500,000 mortgage might be worth only $300,000 following the housing crisis. The $200,000 difference, or what’s commonly referred to as the “underwater amount,” is known to lenders as a deficiency balance.And it's all legal.
It’s unclear how many people walk away from homes when they can still afford to pay the mortgage. Likewise, there is little publicly available data on how many people pay off their deficiency judgments. A recent government audit found the recovery rate at one-fifth of 1 percent. But for those hit with the judgments, it can seem like double-dipping on their pain.
“Deficiency judgments are absolutely devastating to the foreclosed home buyer both as a matter of immediate financial impact and income tax consequence,” said John Mixon, a recently retired professor at the University of Houston Law Center who has studied deficiency judgments for the past 30 years.
Among the lenders pursuing the judgments are Fannie Mae and Freddie Mac, the two quasi-governmental lending agencies that have long strived to open up home ownership to a wider segment of the population. Officials at those agencies said the judgments are necessary to recoup money lost in the crisis.
“Pursuing deficiency judgments has always been a remedy that we have looked at to mitigate our losses prior to the recent housing crash,” said Freddie Mac spokesman Brad German. “It is not a new thing.””
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