posted 11-16-2008 12:03 PM ET (US)            

I know the folks that run one of the marinas up here. Come November 1, there were still 8 boats sitting in the marina, with no appointments for haul out.

The tried calling the numbers they had for the owners, and no return calls, and in several cases the numbers were disconnected.

So they hauled them and put a mechanics lein on the boat for the cost. Owner said eventually, someone from the bank holding the paper will call and say "is our boat there?"

This used to happen every couple of years, but 8 in one season in unprecedented.

posted 11-16-2008 09:32 PM ET (US)            

I'll bet the lien holders are looking for the boats and will
be happy to be contacted.

Question for the lawyers on the board: Which gets paid first,
lender's lienholder or mechanic's lienholder. IMHO, mechanic,
because the lender gets the benefit of the work the mechanic
did.

Chuck,
who doesn't owe anybody anything except this month's
master card bill, which hasn't come yet.

posted 11-17-2008 05:31 AM ET (US)            

You're wise beyond many in your generation. Hell, and some older age brackets too.

posted 11-17-2008 11:38 AM ET (US)            

Your question: which lien has a higher priority -- bank/lender or marina/artisan's lien; the answer: depends on state law. There is no uniformity to laws in this area. Generally, the marina's lien will not "prime" (i.e. step in front of) the bank's lien, however, so long as the marina has possession of the boat the marina's lien must be paid before the marina can be forced to give up possession.

The practical effect is the marina's lien is paid first.

A lot of lender's want to repossess a boat so they can clean and prep it for auction. Sales occur in lots, or select boats are moved to states with higher demand. Frequently banks work with marinas, and pay hauling and storage charges. Time is money, and bank's don't want to waste time fighting marinas over hauling/storage fees.

Graph

posted 11-17-2008 12:45 PM ET (US)         

And, if someone defaults on a boat loan, can't the bank go after his other assets, as well they should be able to?

posted 11-17-2008 03:14 PM ET (US)            

From where Ryan started when he first started posting (gosh Ryan, how long has it been?) his writing skills and attitude development has really been great to watch.

And everyone gets a break sometime!

posted 11-17-2008 03:18 PM ET (US)            

We had dinner recently with the guy who works at our dealership. He said that currently, the credit score needs to be above 700 in order to write a loan. And when the guy comes in upside down on his 05 Mark Whatever and has a home equity loan of $40,000 from paying off his five credit cards, well there is not much there to work with.

The following link pretty much sums it up:

http://www.youtube.com/watch?v=P5_Msrdg3Hk

posted 11-17-2008 03:34 PM ET (US)            

From what I understand, there used to be personal income tax owed to the IRS for the amount of debt that was relieved. Now I understand that has been waived, so that means the taxpayers are the ones paying for the relief of debt because the banks write off the loss.

Example. Borrower obtains loan for $300,000. The bank repossess the property and sells it for $200,000. The bank writes off $100,000 as a loss and we (the taxpayers) absorb the loss. The borrower used to have to pay tax on the $100,000 that was forgiven.

posted 11-17-2008 05:26 PM ET (US)            

quote:

---

And, if someone defaults on a boat loan, can't the bank go after his other assets, as well they should be able to?

---

No. Secured loans are secured only against the assets that are written into the contract. It is always the borrowers responsibility to pay that loan, but it is still the responsibility of the lender to protect themselves against loss by accurately estimating the value of that secured asset.

posted 11-17-2008 06:09 PM ET (US)         

A guy with a Million dollars cash in the bank buys a 100,000 SeaRay and takes a 90,000, 20 year loan on it, putting down 10%. He has good credit, and seems like a good risk.

After three years, in this market the boat is only worth $50K, and he still owes 87K on the loan. So he is upside down, can't sell it, stops making payments, and lets the bank have it.

posted 11-17-2008 07:16 PM ET (US)            

http://www.irs.gov/individuals/article/0,,id=179414,00.html

This single act has made it easier to walk away from your home loan and is making the housing crisis worse. Which makes everything else worse.

posted 11-17-2008 07:32 PM ET (US)            

I've worked for 15+ years as a Credit Manager for a division of a bank that wrote indirect installment loans for manufactured housing. Once the dust settles from a repossession and the costs of reconditioning, marketing, resale, commissions, legal fees, etc., are determined we sent someone to court, got our judgment and gave collecting & garnishment a try.

posted 11-17-2008 08:35 PM ET (US)            

It starts with the assumption that the real property lender is more knowledgeable about the real estate market and is much better equipped than a home buyer to accurately appraise the value of a dwelling which the lender is willing to accept as security for a loan. Let's say a bank or mortgage lender agrees to lend what it perceives to be 85% of the value of a half-million dollar Sonoma County home--$425,000--on a 30-year fixed loan at 6.5% interest, with the buyer coming up with an initial down payment of $75,000 + closing costs. Soon after, since the poor guy bought at the height of the bubble a couple of years ago, the value of the home begins to fall precipitously, and is now only worth $300,000. Well, if the home buyer decides to walk away from the home (and from the loan), anti-deficiency laws would prevent the lender from going after him for anything other than the home itself. The lender could foreclose the home and evict the buyer, since the loan was secured by the real property, but the borrower would not owe anything over and above to the lender, even if the current value of the home was substantially less than the amount still owing on the loan.

A good law, IMO, which finds its historical basis in the literally millions of foreclosures during the 'Great Depression.' It does not apply to autos, boats, planes, and other suchlike toys, so beware--walk away and lose your Whaler or Ford 150 through repossession and you'll find yourself owing a huge 'deficiency' as well as suffering the loss of the item, since after repossession such items are frequently crookedly 'auctioned' and the phony auction price establishes the value-to-lender of the repo'd goods...you owe the difference between this insignificant amount and the paper value of your loan, plus interest, plus attorney's fees, plus costs, etc, etc.
Anti-deficiency laws only pertain to real property primary residences.

posted 11-17-2008 11:06 PM ET (US)            

If a lender can't sue its borrower for a deficency, why wouldn't the borrower always purchase the most expensive house his/her budget would allow. If the market goes up the borrower sells for a profit. If the market goes down, the borrower has no incentive to pay the mortgage (or taxes), defaults, lives in the house rent free until he/she is evicted following a foreclosure, and then buys another house with the money saved by not paying the original mortgage. The lender's shareholders under-write the borrower's real estate speculation, or if enough borrowers fail and the government seizes the lender tax payers clean up the mess.

No wonder California housing prices sky rocketed during the bubbles of the late 90s and the 2000s. With little to no downside risk (damaging your credit score), and a lot of upside risk (market appreciation or rent free living until eviction), eventually everyone will play the game, which will slowly destroy the housing stock and mis-allocate limited resources.

posted 11-17-2008 11:14 PM ET (US)            

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/05/REKL1388N3. DTL

If I were a lender I would scrutinize the information provided by the borrower on the loan application. It may be a federal offense to provide false information on the loan application.

If the applicant's stated income was erroneous I would go after him criminally. Or perhaps we could make a deal? :-)

posted 11-18-2008 01:18 AM ET (US)            

Most people even with poor credit are not stupid. But most people are greedy.

posted 11-18-2008 01:23 AM ET (US)            

This is a general situation in which the people in common try to perform a good work, for the common good, and individuals, acting in private, operate in that same framework to maximize their profit, which is really quite normal, too. The result is not the outcome that was intended

What has happened recently is precisely the same thing that happened in my neighborhood on the west side of Detroit in the 1960's. The federal government decided to socialize the risk of home ownership by offering to insure the loans made to sub-standard buyers of homes. The risk of default was to be shared by the whole nation through our government. It is a nice idea, and many people will support it, and in an altruistic society it might work. Some low-income families were able to buy homes in our neighborhood because of the federal guarantee of the loan. People moved into a perfectly nice little house in our perfectly nice little neighborhood, and their stake was about $200 of investment. The "great society" program was intended to give them dignity and a chance of home ownership. Yes, those were lofty goals.

What happened, and of course this was not universal but did happen with astonishing frequency, was people moved in for $200, then went on a rampage of gutting the house, selling off everything they could remove like copper wire, plumbing, electrical fixtures, and so on, earning themselves much more than their $200 investment. After a month they moved out. The loan went into default. The government paid off the lender. Everyone was happy. Except in about three year's time our neighborhood was destroyed. The house next door to ours was gutted and abandoned. It still is to this day, 50-years later.

The cost of this was borne by the government, but also a huge hidden cost was borne by the other home owners, who saw the value of their homes dwindle--who wants to live in a neighborhood of abandoned homes? My dad lost probably $50,000 in value in his house, and that is in 1960's dollars--quite a bit more in today's dollars.

posted 11-18-2008 10:06 AM ET (US)            

our philosophy on buying boats/motors has always been, if you can't write a check for it, you can't afford it. for us, boats are a luxury, and you shouldn't finance your toys.

posted 11-18-2008 04:53 PM ET (US)            

That guy in the new Porsche is just as likely one payment away from repossession as anything else.

There is a repo lot not far from my old house and everyday one could find a new BMW, Jaguar, Mercedes, Volvo, Hummer or whatever. And this was during the good times. I learned a lot looking at those vehicles and how they got there.

posted 11-18-2008 08:10 PM ET (US)            

Yep, it's tough to pigeonhole or stereotype any one of us when you closely examine our individual social/political beliefs. Thoughtful folks from all sides of the political spectrum claim many of the same virtues and oppose many of the same evils. It's the truly ignorant and the demogogues who try to lump any number of American citizens into one stereotypical group and label that group as "enemies" or "un-American" or "un-patriotic." Thankfully that unpleasant tactic didn't appear to work too well recently, but that's another story ;-)

posted 11-18-2008 10:29 PM ET (US)            

How right you are as far as stereotypes. I find it hard to believe that all self proclaimed conservatives or liberals alike live without some internal conflict of what they preach. Everyone has a skeleton in their closet

You and I are on the same page about 95% of the time. I am unfamiliar with the term 'armour propre'.

I am just greatfull that I live in the greatest country of all and everything She has to offer.

In the mean time you just keep posting those terrific pictures and videos and I will ponder how you have time to make a living while creating them;)

Bob

posted 11-19-2008 08:38 PM ET (US)            

So a guy, who got into his house for no money down and 103% LTV mortage (closing costs also financed) and a adjustable loan that will reset in 3 years to a monthly payment he will never be able to afford, goes to a boat show with his buddies.

Having a couple of beers while cruising around the boat show he comes across a real beauty of a boat. He and his buddies start to talk of all the fun they will have and all the chicks that will be falling over them to get on this go fast machine.

Despite the fact the guy has never been on, much less driven, a twin screw boat that goes 80mph (how's this for stereotyping) he plops down his credit card, for which he was just approved, because he owns a home, for the down payment. They then sit down to finish the paper work where the big question to get the boat loan is also: Do you own a home?

Then some bright guy on wall street realized all the commissions to be had from the sale of the swaps to insure the home loan, the boat loan and the credit card loan.

Our Wall Street guy then placed the loans in bonds which in some cases were purchased by the institutions making the original home, boat and credit card loan. Why did they buy these bonds, hey they were insured.

What surprises me is one of the really bright Wall Street guys with half a consciounce(sp) at sometime didn't say: "Uh, guys, this just smells like a disaster waiting to happen."

All that being said, my Dad has a great line. "When there's good times you never think they're going to end and when they're bad times you never think they're going to end."

posted 11-19-2008 11:24 PM ET (US)            

I was just explaining my use of the phrase 'conservative ethic', which I had used earlier describing my own buying habits and apparently those of your hypothetical Porsche owner. As for my reference to the grace under pressure shown by President-Elect Obama, get used to it, pal. There's a new world a-bornin', change is in the air, and it's damn well time, don't you think, with the mess we're in right now?

It's amour propre, RJG, and it means self respect, self regard, or self esteem. I use the phrase myself as 'conscience', which one definition has as "the awareness of a moral or ethical aspect to one's conduct together with the urge to prefer right over wrong." Buddhists strive for "mindfulness", again sorta the same thing, where they try to examine their conduct and strive for awareness of right acts and wrong acts. Maybe look at the phrase "amour propre" this way--when we're about to do something bad which we know will never be discovered by others, the only thing stopping us is our "conscience", our "self respect" or "self esteem". People totally without these tools of self-examination and self-criticism are known as sociopaths.

posted 11-20-2008 08:14 AM ET (US)            

It does seem to get bigger, does it not?

And it is all done with "other peoples money".

Remember, they all flew in on private jets!

posted 11-20-2008 10:07 AM ET (US)         

quote:

---

As for my reference to the grace under pressure shown by President-Elect Obama, get used to it, pal. There's a new world a-bornin', change is in the air, and it's damn well time, don't you think, with the mess we're in right now?

---

Really Tony, after months of us asking what exactly is this "change" that has become the mantra for Obama, it is finally beginning to show itself.

Tom Daschle - HHS Sectary. Kicked out of the Senate by his own constituency, a few drops of holy water from Obama now has this worn out, tired ole ex-Senator from the Clinton era reincarnated as HHS Secretary? Huh?

Eric Holder - Deputy Atty General under Janet "nuke those religious freaks" Reno, also from the good ole Clinton Years. And the infamous mark on his resume...barging into a private residence in the middle of the night, pointing an M-16 rifle in the face of a 4 year old boy, and taking him by force, after declaring unequivocally to Tim Russert the day before he would do no such thing. When Challenged by Russert the day after, his response was "hey, we waited until an hour before dawn. It wasn't like it was the middle of the night".

Hillary Clinton - Secretary of State. Although not official, the fact that she appears to be the front-runner says it all.

That's a hell of a start to the cabinet appointees for someone bantering "change, change, change". Can't wait to see what other new faces re-appear. Maybe Sandy Burgler is hanging upside down somewhere to make sure no more classified documents fall out of his shorts before he is given some national security post.

And when he closes Gitmo and has a couple hundred hardened terrorists on his hands without a place to go. Oh, that's right, they will be brought onto American soil, given American attorney's and access to American courts, and have the taxpayers subsidize their respective fight for freedom, and then probably set free because the American soldiers who captured them did not read them their Miranda rights.

posted 11-20-2008 10:58 AM ET (US)            

It's a little early to begin the right wing assault against the President-elect, don't you think, even though the fat fool of hate talk radio has already dubbed the current economic crisis as the "Obama depression." Why not wait and see what happens (but put on your seat belts, some of you status quo enthusiasts...it's gonna be a different ride for a while now that we have a president with a three-digit I.Q. and a willingness to view the world as something more than a giant oil field).

posted 11-20-2008 11:18 AM ET (US)            

They have nothing to do with the site, the message board or the thread!!! Send your opinionated banter via private email.

The election is over. The die is cast. Let's all pray for the best and do our individual parts to make it happen - without continually polluting the CW with the ultra-personal political opinions.

posted 11-20-2008 11:42 AM ET (US)            

I do wish we had Meta back so some of this stuff could be sequestered over there, but then again, if I don't want to read some one's comments about anything and everything, no one's holding a gun at my head...I just skip the commentary.

posted 11-20-2008 11:50 AM ET (US)            

For you guys who get pissed off at some of my comments here, stand by for my upcoming thread, with pics, wherein I get busted at sea by a combined force of Coasties, NOAA reps and the Sonoma County sheriff's department...no kidding, just happened yesterday.

posted 11-20-2008 12:10 PM ET (US)            

I hear ya.

Excerpt from article in Washington Post today:

quote:

---

…But the executives were not helping their own case. When Rep. Paul Kanjorski (D-Pa.) tried to find out when GM would run out of cash, Wagoner hemmed and hawed until the lawmaker protested that "I don't quite understand what the hell you just told me." When Rep. Ed Perlmutter (D-Colo.) asked about GM's outlook for the quarter, Wagoner informed him that "we don't provide financial guidance in earnings."

So it was hard to feel sorry for the executives when Rep. Peter Roskam (R-Ill.), late in the hearing, reminded them again that "the symbolism of your private jets is difficult," and mischievously asked the witnesses whether, in another symbolic gesture, they would be willing to work for $1 a year, as Nardelli has offered to do.

"I don't have a position on that today," demurred Wagoner (2007 total compensation: $15.7 million).

"I understand the intent, but I think where we are is okay," said Mulally ($21.7 million).

"I'm asking about you," Roskam pressed.

"I think I'm okay where I am," Mulally said.

---

posted 11-20-2008 12:39 PM ET (US)         

In any event, the GM, private jet symbolism unfortunately runs ramped in our society. In a previous life, as a commercial real estate lender, I was often presented with this mentality when the going got tough. One particular borrower of mine, to the tune of $10M, was not enjoying the success of this particular project for which the loan was made. He calls a meeting at the bank to plead his case for a reduction in interest rate, and forgiveness of a portion of the loan. He arrived at the bank early for the meeting and I happened to be walking back to the office from lunch. I was 3 blocks from the office, and I saw 2 large stretch limo's pull up, and an entourage, including my borrower get out of the limo's. It was clear they did not want to be seen by the bank getting out of limos only to come cry the blues with me and other bank management-that is why they were being dropped off 3 blocks away. However, I made it a point to greet him there and then, and walk him to the office. His expression was priceless.

In another recent example, I am putting together a small investment group to buy distressed properties for long term investment and eventual development. One of the individuals that was invited to participate began telling me of his plans with his current mortgage holder. Apparently, he was upside-down on his mortgage and the value of his home had decreased some $250,000. He had contacted his attorney to present the bank an ultimatum. Either reduce the interest rate on the loan and the loan balance to the current home value, or he will very likely walk from the loan. Now keep in mind this guy had the where-with-all to make his mortgage payments, but just felt "wronged" for some reason and was choosing not to. I asked him if, when the value of his home increased, he would be willing to have the bank arbitrarily reset his loan balance at a higher number, using the logic he shared with respect to asking the bank to lower the loan balance. He had no response, and was dismissed from consideration from the investment group.

It seems "character" needs to make a comeback, and not just the economy.

posted 11-20-2008 12:40 PM ET (US)            

Some more retreads for that roster of change:

Rahm Emanuel is headed back to the White House.

How fresh and new.

posted 11-20-2008 01:09 PM ET (US)            

Talk about tired retreads, it really gets old hearing these knee-jerk attacks against someone who hasn't even been sworn in yet. We've just been part of an incredibly important historic sea-change in this nation...how about giving it a rest, at least until January 20th at 12:01 p.m. ;-)

posted 11-20-2008 01:54 PM ET (US)            

On the other hand, The big three, in my opinion can take a hike. Producing vehicles that no one wants or can afford to buy is a pretty good way to insure your demise.

Where will it end? The Landscape industry is facing bad times also. Should I expect a handout because rich people may be forced to cut their own grass? For the first time in almost 29 years of being a landscape contractor, my business plan is changing. It does not include expansion or upgrading equipment. It will probably put three more people on unemployment compensation. I'm scared of Obama's plans to pile more taxes on me and require health insurance for employees that I have never been able to afford even for me and my family.

I have worked ever since I was 11 years old. I always made money doing something...cutting grass in the summer and shoveling snow in the Winter. After 57 years of life I've never collected unemployment, welfare, food stamps or public housing. Never wanted it. Always worked and worked hard. Now it looks like I'm working to bail out rich people that fly around in private jet planes while I worry about making payroll and paying quarterly taxes. I'm beginning to worry if it is all worth it.