Wednesday, August 25, 2021

Micro Economics

 For the past three years, to supplement social security, I’ve been working as an agent. Legally I’m a debt collector but none of my work involves money directly.

I’m seeing a surge of re-financing offers to be delivered.

The company who employs me provides various services to the mortgage industry. Most of my work involves going to the collateral address with a letter than, in essence, says, “Hey, you can’t keep missing payments and still live in this property. Contact us at the provided phone number immediately”.

Using a tablet I prepare a brief report, property description and three or more photographs. I’m seldom at the address more than 15 minutes. Pre COVID I made $800 - $1,000 for two to three hours work one or two days a week. With all the forbearance COVID programs that income dropped to 1/3 to ½ of what I was making.

As these programs expire, many of the mortgagees are way behind. I see deficiencies of $4,000 to $9,000+ on house payments under $1,200 a month. One lender we do work for if offering to refinance the homes clearing the deficiencies. Most of the lenders are demanding payment, period. More profit foreclosing and reselling in a hot real estate market would be my guess as to their motivation. On some of the upscale $800,000+ homes, the deficiencies are up to $40,000.

There is a lot of information floating around about hedge funds buying up homes and turning the country into a nation of renters. I don’t discredit any of this information but have not seen it in my little corner of the world.

Please don’t ask me for advice. The only pat answer I have is, if you are having problems making your payment, reach out to the lender first. Don’t wait for them to contact you.


Anonymous said...

Having worked in the mortgage business for 30+ years the lenders won't "forgive" the missed payment, late and lawyers fees. They will roll that into a new mortgage amount with maybe a slight drop in interest but only offer a 40 year mortgage. Haven't worked with one that didn't accept the terms.

Well Seasoned Fool said...

People make their choices. Probably better than losing their home. What strikes me, at many homes I visit, are the number of late model high end cars parked there (probably leased) and "toys" (RV's, ATVs, boats, motorcycles, etc).

LSP said...

I hate debt and don't have any. Then again, the church provides a house, so... How did we get into the mindset of borrowing way beyond our means, at interest, for basic necessities -- transport, roof over head. Greed has a way of collapsing in on itself.

That said, I know what you mean about those cars and toys. Huh. Maybe I'm jealous, but not of the debt.

Old NFO said...

Yeah, play stupid games (or toys), win stupid prizes (loss of house). I don't get it either... And yes in the major metro areas conglomerates ARE buying houses, lot of them are tract homes, thrown up in the last 3-5 years, or McMansions that people realized they couldn't afford/don't want to be 'out in the country'... LOL

Well Seasoned Fool said...

My vehicles I own andmy credit cards get paid off every month. I survive decades of working on commission by ruthless budgeting. Those months I made more than my target budget I put money away against the months that were lean. After my divorce, even as the custodial parent, I soon had six months budget target in the credit union.

Those toys cost money to enjoy. OK if your discretionary income is there. Too often, the "fun" goes on plastic with no plan on paying it off.

drjim said...

Or people use their equity in their homes as an ATM machine. The young couple across the street from us in Long Beach played that game, and then vanished, leaving the lenders on the hook for well over $900k, in an area where houses were $600k at the time. They drove modest cars, stayed home all the time, and spent ZERO money maintaining the house. And it looked like it. One day we noticed they'd been gone a week or so, and then a week or so later some people came by looking for them.

Within another month the house had the locks changed, and workers started showing up. We talked to the realtor when the place was finished and on the market, and she told us the couple had bled the place dry with HELOC loans, a second mortgage, and some other loans against the house, and then "Left The Country".

She said it seemed to be almost planned, unlike other prople who bought vacations, boats, motorhomes, etc with their HELOC money....

Well Seasoned Fool said...

2003 when the banks stopped financing used cars/trucks even for people with great credit, I took on a job preserving vacant homes in default. That couple doesn't surprise me.