The story, however seems to be that the bank is taking the prudential step of spending up to $1,000 to get the people who are in trouble to move out early.  Their debt isn't being forgiven and they face a stark future with no place of permanent residence, ruined credit, and failed dreams.  It's easy to point the finger of blame at people who get caught up in messes like this and perhaps they should have more seriously pondered whether to jump for that ARM or sub-prime mortgage.  I'm thankful I've never found myself in similar straits.  But how many of us would be in similar circumstances if, say your job fired you or laid you off?  How many of us live one or two pay checks away from not being able to keep up with our mortgages?

It seems that the federal government has no problem in acting quickly to grease the skids lubricating the Merrill Lynch purchase of Bear Stearns.  And Henry Paulson churned out a whole new set of rules giving the Fed more authority to act quickly the next time financial companies decided there was a get rich quick scheme open to them that was going to wreck the economy.  But, in spite of what Bush, Paulson et al have said about getting help to those set to lose their houses and futures to the sub prime shell game, things look bleak.  As we speak Congress is set to debate over whether to shovel $400 billion towards home owners in distress.  True to form, the banking industry wankers are saying that'll be a bit too late for most of them which, I guess, translates to "why waste it on them; feather our beds a bit more."

Illegitimi non carborundum.

"They got into a mess they can't get out of, and instead of manning up and dealing with it, they're acting like purile infants."

I witnessed that happen right across the street from me.  The guy who lived there was laid off from the Ford plant, and the bank foreclosed on his house.  He was bi-polar, and when he was in a bad mood, he was in a BAD mood.  There have been contractors there for two months now replacing drywall and doors, trying to get the place saleable again.  

I feel sorry that he lost his job, but there's no excuse for ruining the house.  I do not, however, miss him, and I'm sure no one else around here does, either.  He was a first-class nut job.  

there's only one way to find out...

I've heard reports of neighborhood associations banding together to purchase empty houses/bail out their neighbors simply so that their home values won't depreciate so far.

It is easy to buy small plaster models of what you think life is like.

Your information is seriously garbled, as is the news story you took it from.  Here's a better explanation.

Either you have title to the property or you don't.  If you don't have the title you can't ever sell it later.  No, this is not good for the bank, since they lose all of their outstanding loan balance.

What it is about is usually the bank saying that they will foreclose in order to get paid and never actually doing it, because they don't see the auction results as being worth the legal fees of foreclosure.  Legally, the house still belongs to the borrower, who has usually moved away, assuming his house will be taken by foreclosure.

Foreclosure doesn't normally ever transfer the title to the bank.  What happens is that the property is put up for cash auction (where the bank can usually bid, but is not obligated to).  If the amount raised is less than the mortgage, the bank takes all of it, otherwise the borrower gets the remainder.  The other way this process could fail, I suppose, is if the nobody bids at all and the lender refuses to take title.

In any case, that either of these things happen at all is an indication that property prices are in some cases going for pennies on the dollar.

Anyone want to move in next door to PO157?  You can probably get a house really, really cheaply.

In any case, what do people think, that with our growing immigrant population nobody's ever going to build houses again?  Everyone is planning on living in teepees?  With housing prices dropping below what is needed to build new housing in most areas, it's a sure thing that prices will rebound somewhat from current levels.

Does a home foreclosure work like a car repo?

It is similar...except you need a really powerful tow truck.

It's the end of the world as we know it, and I feel fine

It varies based on jurisdiction:  http://en.wikipedia.org/wiki/Mortgage_loan#Foreclosure_and_non-recourse_lending .  Until recently, even if you had the benefit of a friendly jurisdiction, you had to pay taxes on the difference between the outstanding loan amount and the foreclosure sale price.  It was essentially taxed as a gift.

Apparently they can generally only get the house if it's a non-judicial foreclosure.  Laws vary by state as to whether that is generally the case or not.  I can't seem to find anything preventing a mortgage company from claiming fraudulent fees and then using non-judicial foreclosure on houses not in legal default and absconding with the money.

I always found it stupid that investors would come to a town -buy a property and then lease it for less than their mortgage payments. It happens all the time.  Perhaps now renters should ask their landlords - "you going to be able to pay the bills right?"

My understanding (at least in my state) is that if you have a lease, it must be honored by who ever owns the building.  Also in my state, money that is paid for deposits and such go into an escrow account that the landowner can't dip into for day-to-day operations.  I have lived through a property sale and except for a couple of people looking through the apartments I would have never had known what was going on.  The new landlords didn't even raise the rent when the lease came due which surprised the hell out of me.

That being said, I agree with you in the scenario you described.  But then, I would be so busy looking for a new place that I might not have time to trash it.

But I definitely wouldn't clean.

It's the end of the world as we know it, and I feel fine