For those who have mortgages with no hope of getting out of debt in time for y2k, should we all assume that the banks will take our homes ? Or did I hear something about a law being passed to keep that from happening if it is because of a y2k related problem ?[and what isn't]

-- john (jmattingly@mail.gcnet.net), September 04, 1999

Answers

John,

In the context of our "Humpty Dumpty" discussions on this forum, a lot of it will depend on just how bad the Y2K situation is. If it's only a "moderate" crisis, then I think there's a good chance that the banks will attempt to operate in the same way they did during the Depression -- i.e., they'll attempt to foreclose on your house if they think they can find a buyer. They may or may not be willing to be renegotiate the mortgage with you, depending on the circumstances.

If it's a more severe Y2K crisis, then (a) the bank that holds your mortgage might collapse, and it might take a while for whoever takes over their assets to figure out what's going with your house -- note that this was the situation with a lot of the bad loans associated with the S&L scandal in the mid-80s, and (b) there might be a lot more political pressure at the state or federal level to provide some kind of "moratorium" on mortgage foreclosures.

Ed

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), September 04, 1999.

How will "they"...arms of the IRA...defunct, have the muscle to foreclose, if it gets that bad...I think we of heavy mortgage need to sit where we are....if it goes THAT bad.....they will not, nor will anyone hgave means to foreclose.....Keep up your payments...get best financially as you can,.....sit tight....worry not....if it all goes south you have nothing to fear...LIVE YOUR LIFE. Prepare for flood, earthquake, ice storm PLUS....trust not the evil eyed government....you'll be fine.

-- Donna (moment@pacbell.net), September 04, 1999.

If it gets as bad as 8.5 and up on a scale of 10, the bankers won't be foreclosing on any unpaid mortgages. They'll be too busy ruinning from all the angry depositors who can't get their money back.

-- cody (cody@y2ksurvive.com), September 04, 1999.

This is one my wife and I have thought a lot about. Our conclusion was that it will be very likely that the banks will foreclose on a lot of people. However, as time goes on, the quantity of foreclosures (and public reaction) will likely slow or eventually stop the process. We decided that a minimum of 3 months worth of house payments in cash is essential, more would be better, we're shooting for 9-12 months. Depending upon how fast Y2K hits, i.e. how fast people loose their income, will set the pace on foreclosures. The people who live paycheck to paycheck will be the first to suffer. Any preparation that can extend your ability to make that mortgage past the next paycheck will put you better off than most.

-- BH (silentvoice@pobox.com), September 04, 1999.

"There is no safety for honest men but by believing all possible evil of evil men."

- Edmund Burke, Reflections on the Revolution in France

-- Stan Faryna (info@giglobal.com), September 04, 1999.

Years ago, when we bought our first home, someone suggested that we pay an extra payment to the bank. That way, we were always 1 month ahead. Since we were self employed, and our income sometimes dropped, it was very assuring to me to know that I always had an extra 30 days to figure out some way to come up with the next payment.

My idea is, and some may think this silly or even foolish, that if you can come up with the cash to pay an extra payment or two, why not go ahead and pay it to the bank now? Get it on record, in writing, that you're paid until June, 2000, or whenever? That seems safer to me than trying to come up with the cash and holding on to it in a safe way, and then trying to find a way to get it to the bank next spring, if things get troubling.

The fact is, if you owe money to a financial institution, you have to pay it one way or another, unless there is a total meltdown, and none of us want that. And if it's a situation for a few months that things are confusing, disruptive, etc. I think that there will be plenty to worry about and try to figure out besides how to get a payment to the bank on time.

Any comments?

-- Margo (margos.corner@mailcity.com), September 05, 1999.

The banks really don't want real estate. They aren't well-equipped to manage it, and it often costs them money to foreclose. In addition, it creates a lot of ill will.

If you are payed ahead on your mortgage it would be a plus. I understand that some contracts do not allow for paying ahead. In such a case, perhaps you could set up an escrow account in the bank, with an automatic bank draft to pay the mortgage. Then you would be covered in any case

We rounded up our mortgage payments for years, paying an extra 40 dollars against the principle, and were able to pay off the house several years early. It's a real relief to know that we don't have to worry about making payments on it anymore.

At least you have a bit of time left to prepare. Only a few months to go, and we will finally (for better or worse) get past all of this suspense.

blessings,

gene

-- Gene (ekbaker@essex1.com), September 05, 1999.

I know that this isn't an option for everyone, but we actually liquidated my husband's 401K, our IRAs, savings bonds, pop can deposits and everything else that we had or could put our hands on and paid off our mortgage. We have a seven-acre farm, goats, chickens, and a garden--and no money--but at least we'll eat. My husband works for a huge corporation which is being much too quiet about their Y2K remediation, and we decided to just play it safe. If nothing happens, we'll start working on the retirement again. If it's bad, we won't lose our home.

-- Ann M. (hismckids@aol.com), September 05, 1999.

From: Y2K, ` la Carte by Dancr near Monterey, California

I believe that most banks are not set up to be easily able to accomodate someone who wishes to make early payments. Such payments tend to go to principal reductions, and then you're still expected to make a payment again in 30 days. One suggestion that I have seen that seems to make some sense is to open a checking account at the same bank that holds your mortgage. If the banks become unable to transfer money between them, they could still get it from your checking account. If they can't get it out of the checking account... that's really their problem, then, isn't it?

-- Dancr (addy.available@my.webpage), September 06, 1999.

One good way to measure (estimate) the number of people who are not making their mortgage payments is to look at unemployment statistics (if they are still published).

One good reason I heard about making a payment ahead is in the hopes that it will help get your house further down the list.

One strategy, especially for those who have little money or have lost a job. Make sure that you are a "good neighbor" freely sharing some of what you have set aside and helping neighbors help eachother... Those people become good character witnesses if you are ever trying to convince a judge that you deserve to keep your home. It will be possible for any neighborhood to set up a small political group which "protects eachother from forclosures". If you have 100 homeowners who are all informed if any one of them is asked to go to court....

Also, although it may not normally be under the jurisdiction of a local judge, it can certainly be arranged that any bank which wants to forclose on any properties must do it through a local court.

-- Thom Gilligan (thomgill@eznet.net), September 06, 1999.

Thom,

Could you explain a little more on how pre-payment of a mortgage may get you down the list. Or did you just mean down the list of upcoming foreclosures?

Thanks.

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 07, 1999.

I know of no bank or mortgage company which will accept payments more than about 15 days early. If I pay my bank two payments this month, I will still owe a payment next month, but I will not owe the last few payments at the end of the term. In other works, the prepayment will go towards principle and will shorten the total number of payments, but will not affect the next payment other than change the amount that goes to principle and interest. If you want to have protect your self with having a few payments ahead, then open an account with the bank and have them auto withdraw the payment each month.

We are moving all of our IRAs and other retirement accounts to the banks that we owe mortgages. This way, if all hell breaks loose, then we will be able to go to the bank and tell them to transfer money out of our accounts to make the payment on the mortgage.

-- chicken farmer (chicken-farmer@ y2k.farm), September 09, 1999.

What you people all forget is that when Y2K is an 8 or more, the mail system will also be down. In fact, at this time they are NOT compliant! How are you going to mail your housepayment?

If electricity is down, how are you going to pump gas to drive your payment to the mortgage company?

If the mortgage company is closed how are you going to make your payment?

-- freddie (freddie@thefreeloader.com), October 10, 1999.