tex2670

Sorry-this is just plain wrong. Don't confuse legal ownership with equity. You own the car--not the bank. The bank has a lien on the car. They are required by law to hold onto your title in order for their lien to be valid, and to prevent you from selling it out from under them. When you obtained a loan, you gave them the right, in your loan papers, to repo the car if you don't pay. That's how it works, plain and simple.

Then MD is f---ing over its residents. When you lease a car, you are buying the right to use the car for the term of the lease. Here in PA, each monthly lease payment includes tax (which is taxed at a different rate than sales tax). So, on a 36 month lease in PA, you pay, in 36 installments, tax on the montly payment. If MD is charging sales tax on the full price of the car (putting aside the trade-in issue), then MD is totally ripping off the customer who elects to turn in his car at the end of the lease. The whole reason that lease payments are less than finance paymets is because the financing (plus the down payment) is the whole purchase price. The lease payments are only the difference between the "purchase price" and the contract residual value--why would MD charge sales tax on the residual value unless the person was buying out the lease?

Why would anyone lease the Civic for the same they owe if they financed it? Like I said, leasing is cheaper because you are only paying for the "value" of the car you consume during the term of the lease. Compare payment on a 36 month loan vs. a 36 month lease. The loan fully pays for the car over the 36 month term.

And--you own your house. You do not rent it. Just because the bank has a right to forclose on your house if you fail to make payments, doesn't make them the owner. Your house is collateral for repayment of the loan--and if you don't repay it, the bank can THEN take it (ie, foreclose). Look at the deed to your house--it is not in favor of the bank--it is in your name. Look at the registration of your leased car--it is in the bank's name.

tex2670

Look in the county records--the house is in your name, not the bank's. The loan papers give the bank the right to foreclose on your house, and limit your "rights"--not because they own it.

Same with your car registration--I leased a car, and my registration was in GMAC's name, not mine. I now own both my cars, and the registration has always been in my name. And, once my loan was paid off, the bank delivered the title certificate to me, which they were holding to secure the collateral held for their loan.

The bank can't hold the title to your house--it's in your name in the county records. So the lender records evidence of their loan in the county records to prevent you from re-selling without getting them paid off.

You are correct--if you get foreclosed on, you will likely walk away with nothing. But again, this has to do with "equity" not "ownership". First off--if you have equity in the house, you are unlikely to let it go to foreclosure--if the value of the loan is less than the value of the house, you can probably sell, and then get the bank paid off. Then--no foreclosure.

It's not that different with a car--if you are upside down on your car--if you try to sell it and get a loan payoff--you have to PAY to sell your car. You're in a huge bind. But if you have "equity" in the car, you get the payoff, sell the car, give the proceeds to the bank, and you are out.

cssnms

Wrong??? I don't think so... With all due respect, you're are wrong on almost every front. The difference between you and I is, I speak from experience whereas you speak from your personal perceptions of reality.

Contrary to what you believe, legally, if the bank holds the title to your car because you borrowed money from the bank to buy it, you do not own your car, the bank does and that can be said whether you are leasing or borrowing. Technically there is joint interest. Furthermore, the registration is not proof of "ownership," an unincumbered title is. It works the same in the world of RE. How many times have you been to court during a foreclosure process and heard someone claim they own the house or car? My guess is never... Well I have,,, been there and done that and I have no misconceptions about who owns my house or my car up until the day I pay off the note. I pay the bank to live there just as I pay the bank to drive my IS. To your point, I "own" my GX because I paid it off. I own my suits, my shoes etc because I bought them with cash. Theoretically speaking there is very little difference when it comes to borrowing money against a piece of property and leasing it. The property secures the line of credit in both cases with the exception that someone paying down debt has the goal of owning that property one day and or reeping the benefits of any accumulated equity either through appreciation or paying off the princple. There's no other way to look at ownership then in the legal sense.... sorry...

As for MD and its tax policy I am not going to get into it any further, it is what it is.... If you think people lease cars to simply avoid sales tax you are out of touch, otherwise I would not have leased my car. My point regarding the Honda example is, there is NO difference between the two senarios. You are getting hung up on hypothetical numbers, but the concept is the same and I asked you to explain the difference, you can't. It sounds like you honestly think you have entitlement to everything you think you own that is levered up with debt. Guess what? Your entitlement is the priviledge to use the property as long as you satisfy your obligations to the bank or until you legally "own" it!

Anyway I got the answer I was looking for no thanks to you two. I am not going to debate your personal opinion on the matter, it's a deadend game. You think you own your car or your house, despite owing the bank, good for you. I say I "own" my GX because it's paid off.

cssnms

Yes I am... First off, if you can't make your payments due to a life event I don't care how much equity you have in the deal you will get foreclosed on and you will not have a choice in the matter. It happens all of the time. In my business I see investors put all kinds of equity into a deal only only to get foreclosed on because they are unable to refinance, so they stop making payments and so starts the foreclosure process. It's no different with a vehicle.

Equity in a vehicle all depends on how much you bought it for, how much you put down and what the FMV is. If you cannot continue to make the payments with any luck you have enough equity in the car to sell it quickly and below FMV before the bank takes it from you. Maybe you get some cash out of the deal, maybe not, in either case given the time value of money and the depreciating nature of automobiles you loose either way, but at least your credit is not dinged.

This all gets back to my point of ownership. When push comes to shove, by definition the bank is the owner of the property since the loan to you is securitized by the property with the understanding that you will continue in good faith to pay the note with the goal that in the end there will be full transferance of ownership to you when the debt is satisfied.

tex2670

Look--what you are saying is, in the abstract, correct. Until you loan is paid off, you are not free and clear, and the bank can take your property. But they have to take it--they don't own it. Not jointly, not at all. As you said--it is their security. If they want to own it, they then need to take legal action--foreclose on real estate, or repo with a car. Once the foreclosure or repo is done, then they own it. At the foreclosure sale, the property is sold to the highest bidder--which is usually the bank. This is my "personal perception of reality"--based on 15 years in the morgage lending industry, and other secured lending work.

In New York, car companies stopped leasing a few years ago because of a wrong court ruling that made the ultimate owner of the car potentially liable in a car accident. As the leasing company was the owner, they were potentially liable. But not if the car was purchased--this had no impact on the lender, because they didn't own the car. And lenders ended up creating a new scheme that looked like a lease, but was really a loan--why? So the bank would not actually own the car. I believe a new law corrected that decision, and car leasing has returned to NY.

cssnms

"Abstract," no, the bank paid off the previous lender at your closing, so that you could live in your house, or "own" it as you call it. The bank is willing do this (for a fee) because you don't have enough money to do it on your own as most Americans don't. The bank can take the property because they own it. And of course the loan is securitized by the property, I mean how else would the bank reduce their exposure??? The property is all they have to reduce their risk. To reduce their risk further against let's say, depreciation, in most cases they ask the borrower to share in the risk and put some of their own skin in the game.

Look, I don't need to explain all of this to you though. Now that I now you are a mortgage broker I understand where you are coming from.... It sounds like after 15 yrs in the biz you actually believe what you have been telling your clients for all of these years. To bad you weren't there when some of them got foreclosed on because you convinced them that even though they are borrowing more then they can afford they still "own" the house. Just because you administer loan applications does not qualify you as an expert, albeit you're more qualified then the other guy. On the other hand without going into further detail I work for a bank on the investment advisor side of the business and believe me when I tell you there is no doubt in our industry who owns the RE when we put leverage on property or provide financing. The end game though is to generate a good cash-on-cash return and when it comes time to sell hopefully it provides for a decent unlevered or levered return.

Good luck to you it's a tough time in our industry.

tex2670

not even close. thanks for your insight.

Kurtz

iTrader: (1)

cssnms is flatly wrong here.

The bank isn't the owner when they hold a mortgage, they are a secured creditor. It's kinda scary he claims to work at a bank and does not know this.

If the bank owned your home by holding the mortgage they would not foreclose on it when you didn't pay. They would simply evict you from the home they own.

Significant legal difference there.

Your statements about foreclosure suggest you don't even understand what the term means.

As noted, if you check county records the guy who took out the mortgage is the owner. The bank isn't. The bank is a leinholder, which is not an ownership relationship at all.

Likewise in, say, New York State, you hold the title to a car even if there's a lein on it. The leinholder has a secured interest in the car but is not the owner. You are the owner, says so right on the title.

If you lease however you are NOT the owner, the leasing company is, and it would say so on that title.

cssnms

Oh Kurtz you're never shy about interjecting your "expert" opinion even when you are unqualified to do so. Did Tex sell you your mortgage? Stick with car talk you are way out of your element here.

Kurtz

iTrader: (1)

And you're never shy about claiming other people don't know what they're talking about.

Problem is while they're offering detailed, specific, explanations of why you're wrong you never offer anything beyond "No way, you're wrong"


You'd be more convincing if you tried, I dunno, addressing the specific points others make, instead of just insisting you know better when you clearly have no clue what you're even talking about.



The owner of a mortgaged home is listed as the owner in county records, not the bank. Because the bank is not the owner.

The owner of a financed car is listed as the owner on the vehicle title too, because they're the owner, not the bank.

The bank is a leinholder in both cases. This is not even remotely the same thing as ownership in any legal sense.

The leasing company is listed as the owner on a leased car, because they are the owner, not the guy paying the lease.
There is no lein involved, because the guy driving the car is not the owner, the leasing company is.

If you don't pay the owner of a house money to live there he evicts you.

If you don't pay a bank on the mortgage for a house YOU own the bank initiates a foreclosure proceeding, which is completely different, because they're not an owner, they're a leinholder.

Many types of FHA mortgages for example have a place to specify if the home will be owner occupied. Since obviously "the bank" does not live there this would be a nonsensical question if "the bank" was the owner.

Got any specific sources that disagree with the above, or just more of how you're "in the industry" and know better?

I'll even help you with a source showing I'm correct and you aren't.... in fact, how bout repeated, government, sources showing you're wrong?

http://www.nydmv.state.ny.us/broch/c19.htm


Notice how the owner is the owner of the car, the people you borrowed the money from are "lienholders" not owners.

There's a legal difference you see.

You'd think someone who worked at a bank would know that.


Here's another-

http://www.flhsmv.gov/DMV/faqtitle.html

(florida)

Notice how the owner, not the people who financed the purchase, gets the title...in his name. The people who financed it are the lien holders, not the owner.


But wait! You're in Maryland right?

Here's Maryland telling you you're completely wrong too!

http://www.mva.maryland.gov/vehicles...curityinterest


Notice how the lending institution (the lienholder) gets the "notice" and the OWNER gets the title.

That's because the bank isn't the owner.

tex2670

Finally--I thought Kurtz would never show...