[stoney]

I'm sorry, but IN MY CASE, you're 200% wrong. For many reasons I don't really want to go into on a public message board. Suffice it to say, I did have 2 serious medical problems that completely wiped me out financially. Because I did the responsible thing and paid my debts.
Hey, I'm not upset, I got the home loan mod, I have a paid off vehicle and I'm current on my bills. I'm broke as hell, but I'm "responsible".

High five!

PS - I think we actually do agree, but you seem to want to be on a soapbox right now, so you I'll let you rant.

Concur entirely. I have had to deal with so many people that did not have the problems that you have had, which is why my stance is where it is.
I very much respect your taking the responsible course of action, and following through on your commitments.

 

[stoney]

Tell me about it

I had moved into an apartment right when I turned 18, with a roommate. Roommate moved back home, rent was due to increase, couldn't afford it.

Parent's convinced me buying a house would be smart. I now disagree with that. Was going to sell at the peak, but again, was convinced to stay. Then the bubble burst and here I am.

That's life.

Are you renting out rooms? That might be a really good solution. Plus as an onsite landlord, you can prevent problems from becoming huge issues AND keep the rowdy, property damaging tennants out of the house.

 

[KavuRider]

Damn you parents!!

No way dude, my parents are AWESOME!

 

[KavuRider]

Concur entirely. I have had to deal with so many people that did not have the problems that you have had, which is why my stance is where it is.
I very much respect your taking the responsible course of action, and following through on your commitments.

I hear you. And it does get frustrating.

Are you renting out rooms? That might be a really good solution. Plus as an onsite landlord, you can prevent problems from becoming huge issues AND keep the rowdy, property damaging tennants out of the house.

In the future, I might just end up renting out the house and moving in somewhere else. Haven't decided yet.

Sorry for the massive threadjack!

 

[SkaredShtles]

No way dude, my parents are AWESOME!

Talking you into buying a house? Talking you into staying in the house?

Maybe you should talk them into paying your mortgage.

 

[KavuRider]

Talking you into buying a house? Talking you into staying in the house?

Maybe you should talk them into paying your mortgage.

They meant well.
Nah, I pay all my own bills.

 

[Andyman_1970]

Concur entirely. I have had to deal with so many people that did not have the problems that you have had, which is why my stance is where it is.

The folks that got themselves into (for example Bend), $400-500k houses making $45k a year and now are screwed because their rates shot up, I have little sympathy for. Now the folks that as we've read had major life problems, layoff, medical bills, etc.......I can feel for them. If someone is coming to the bank, wanting to uphold their commitment and pay their mortgage, but because they got laid off, hours cut or some other major life crisis need their mortgage modified I don't see why a bank would not want to play ball.....other than just wanting to be an a$$.

 

[stoney]

Andy, I can't answer that question. But I'm sure you can guess how I'd answer given my position on things.

 

[ohio]

I don't see why a bank would not want to play ball.....other than just wanting to be an a$$.

It's numbers. Unlike home buyers that have all sorts of emotions going on (from "ZOMG I need a giant mcmansion" to "I'm going to stick this out even though I'm upside down because it's the right thing to do"), for the bank it's maximizing investment or minimizing loss. And rightly so (unless it's a credit union).

If it will cost them less to refinance with the existing "owner," they'll do it. But if it costs less to foreclose, they have no incentive to play nice for the sake of morality. I would encourage all homeowners to think the same way. It is the economically responsible thing to do to walk away from an upside down mortgage.

 

[ridiculous]

It's numbers. Unlike home buyers that have all sorts of emotions going on (from "ZOMG I need a giant mcmansion" to "I'm going to stick this out even though I'm upside down because it's the right thing to do"), for the bank it's maximizing investment or minimizing loss. And rightly so (unless it's a credit union).

If it will cost them less to refinance with the existing "owner," they'll do it. But if it costs less to foreclose, they have no incentive to play nice for the sake of morality. I would encourage all homeowners to think the same way. It is the economically responsible thing to do to walk away from an upside down mortgage.

if you live in a non recourse state right?

 

[ohio]

if you live in a non recourse state right?

Yes.

Also, despite my acknowledgement that banking is a business not a charity, I do find it morally offensive that banks were the primary recipients of massive taxpayer bailouts, keeping their entire industry afloat, and they still choose to take the most cutthroat approach to loan modification. In over their heads or not, these borrowers are still the taxpayers that allowed the bankers to keep their livelihoods.

Even our resident kill-or-be-killed Joker would be out of a job if it weren't for the massive government subsidizing of his industry's failure.

 

[jimmydean]

The folks that got themselves into (for example Bend), $400-500k houses making $45k a year and now are screwed because their rates shot up, I have little sympathy for.

When my buddy kept using his house as an ATM I tried to tell him it was a bad idea. $30k equity loan spent on new quads and a trailer, then $50k equity loan bought a boat and new truck, then when they offered him an interest only loan, he jumped on it saying "Dude, my payments went from $1400 down to $900 a month!"

Then when Intel announced it was closing the fab he and his wife both work, he was freaked. Lucky for him Intel decided to invest in a retrofit so he and his wife still have jobs.

But I know his payments are set to balloon (if they haven't already) and he was trying to refinance but his house went from a peak of $380k (I think they make a combined $120k salary) to barley $200k

 

[Serial Midget]

We've never mortgaged a house for more than our combined annual income and I tend to go small. I cant stand the thought of heating/cooling or insuring/maintaining unused space.

 

[ohio]

We've never mortgaged a house for more than our combined annual income and I tend to go small. I cant stand the thought of heating/cooling or insuring/maintaining unused space.

pussy

 

[SkaredShtles]

We've never mortgaged a house for more than our combined annual income and I tend to go small. I cant stand the thought of heating/cooling or insuring/maintaining unused space.

Unused space? You can shag in ANY room.

 

[stoney]

The rule that I was told and have gone by for years, is never buy a house that total costs is greater than 2.5x your annual income. Even that I feel is stretching it. If you take and income of (let's shoot high for the avg American) 85k, set aside 15.5k for your 401k, 5.5k for you ira, you now have 64k of income. Back out 30% for taxes (all your taxes), and you now have $44.8k. 2.5x your annual income is 134k. If you get a 30y, 4% fixed rate, with 20% down loan, you are looking at a $641 monthly payment. This is 17% of your $3733 monthly take home. This is safely under the max of 30% take home spent on housing. However if you save 30% after tax too (as most people should be) your take home is actually $31.4k/y and that $641 is now 25% of your $2613 monthly take home. Do you see where I am going here? Most people are unable to swallow the humility pill and understand that this is the income and housing costs that they can afford. And that number is usually far different than what they can pay.
If you look at the numbers, you will assume that I am only calculating for one person. If you factor another, non-working individual who also has their IRA maxed out, you can seehow this gets even tighter. The concept that people can spend freely on a moderate income no longer exists; which is also why Toshi is correct in that we need to reduce our footprints with smaller cars and homes. There is just no other way to fiscally survive in this country.

 

[Serial Midget]

Unused space? You can shag in ANY room.

Yeah but, you can only crap in one pot at a time.

 

[SkaredShtles]

The rule that I was told and have gone by for years, is never buy a house that total costs is greater than 2.5x your annual income. Even that I feel is stretching it. If you take and income of (let's shoot high for the avg American) 85k, set aside 15.5k for your 401k, 5.5k for you ira, you now have 64k of income. Back out 30% for taxes (all your taxes), and you now have $44.8k. 2.5x your annual income is 134k. If you get a 30y, 4% fixed rate, with 20% down loan, you are looking at a $641 monthly payment. This is 17% of your $3733 monthly take home. This is safely under the max of 30% take home spent on housing. However if you save 30% after tax too (as most people should be) your take home is actually $31.4k/y and that $641 is now 25% of your $2613 monthly take home. Do you see where I am going here? Most people are unable to swallow the humility pill and understand that this is the income and housing costs that they can afford. And that number is usually far different than what they can pay.
If you look at the numbers, you will assume that I am only calculating for one person. If you factor another, non-working individual who also has their IRA maxed out, you can seehow this gets even tighter. The concept that people can spend freely on a moderate income no longer exists; which is also why Toshi is correct in that we need to reduce our footprints with smaller cars and homes. There is just no other way to fiscally survive in this country.

And where, pray tell, are *you* gonna find a cheap house in the Bay Area?

You had better start making $hitloads of money...

 

[KavuRider]

When my buddy kept using his house as an ATM I tried to tell him it was a bad idea. $30k equity loan spent on new quads and a trailer, then $50k equity loan bought a boat and new truck, then when they offered him an interest only loan, he jumped on it saying "Dude, my payments went from $1400 down to $900 a month!"

Then when Intel announced it was closing the fab he and his wife both work, he was freaked. Lucky for him Intel decided to invest in a retrofit so he and his wife still have jobs.

But I know his payments are set to balloon (if they haven't already) and he was trying to refinance but his house went from a peak of $380k (I think they make a combined $120k salary) to barley $200k

Holy crap...
That's just insane...

 

[stoney]

And where, pray tell, are *you* gonna find a cheap house in the Bay Area?

You had better start making $hitloads of money...

I'm not. I'm renting at 15% and saving the rest (on top of my 30%). When I am able to, I will move to a place, likely CO or PNW and pay cash for a house and mve into retail financial advising. I would much rather put in the hours I am now helping people get out of debt and then making them independent from fiscal concerns, than what i am doing now.

 

[kidwoo]

I would much rather put in the hours I am now helping people get out of debt and then making them independent from fiscal concerns, than what i am doing now.

Is that what you call it?


Sounds like a pinko fvckin pity party.

 

[SkaredShtles]

I'm not. I'm renting at 15% and saving the rest (on top of my 30%). When I am able to, I will move to a place, likely CO or PNW and pay cash for a house and mve into retail financial advising. I would much rather put in the hours I am now helping people get out of debt and then making them independent from fiscal concerns, than what i am doing now.

So while you're young you're spending ungodly amounts of hours doing something you'd rather not?


Have you thought about getting out of the rat race before you're too old to really enjoy it?

 

[DamienC]

I watched Wall Street (1987) last night and LOL'd during the scene where Bud Fox is shopping for his condo in Manhattan and his real estate agent said she could probably get him a mortgage at 10%. What a different world we live in now.

Blue Horseshoe loves Anacott Steel.

 

[Secret Squirrel]

I watched Wall Street (1987) last night and LOL'd during the scene where Bud Fox is shopping for his condo in Manhattan and his real estate agent said she could probably get him a mortgage at 10%. What a different world we live in now.

Blue Horseshoe loves Anacott Steel.

lol

45

 

[dante]

I'm not. I'm renting at 15% and saving the rest (on top of my 30%). When I am able to, I will move to a place, likely CO or PNW and pay cash for a house and mve into retail financial advising. I would much rather put in the hours I am now helping people get out of debt and then making them independent from fiscal concerns, than what i am doing now.

That's similar to what we did. We lived in an (illegal) basement apt for 3.5 years saving every penny in order to buy a house. Although we didn't have enough to pay for it fully in cash, we did have enough to put down a solid 20%, avoid PMI, get a great interest rate and still have a cushion for improvements / oh sh!t fund. Doesn't hurt that our monthly mortgage (plus taxes and insurance) is ~$200-300 cheaper per month than renting a similar house would be, and that doesn't count the write-off for our mortgage deduction either...

I'm all for suffering for a little while to set yourself up for later in life, but you have to remember to actually enjoy yourself "later in life". We suffered for several years in order to set ourselves up for where we are now, but we also remembered to enjoy ourselves now, including owning a home, planting a garden, making improvements, etc. We could have continued to rent small apts (and save money), but I wouldn't give up the past 3 years of home ownership in exchange for that. My current quality of life has a price tag, and I'm willing to pay it.

 

[stoney]

So while you're young you're spending ungodly amounts of hours doing something you'd rather not?


Have you thought about getting out of the rat race before you're too old to really enjoy it?

Despite my new found income, we are still living at nearly the same level and saving the rest. At the rate we are going, we should be able to move and buy a house debt free within 2-3 years.

 

[Andyman_1970]

..........., I do find it morally offensive that banks were the primary recipients of massive taxpayer bailouts, keeping their entire industry afloat, and they still choose to take the most cutthroat approach to loan modification. In over their heads or not, these borrowers are still the taxpayers that allowed the bankers to keep their livelihoods.

Yeah that's the part that really sticks in my craw with this whole situation.

 

[Secret Squirrel]

Meh...figured this was a decent place to put this....


Who own my sh*t?? Ahh...much clearer now.

(It's a chart...it's ridiculous.)

 

[dante]

Can it be embedded?

 

[Pesqueeb]

Update:

Foreclosures on prime fixed-rate mortgages in the U.S. jumped to a record in the third quarter as unemployment strained household budgets of the most creditworthy borrowers.

The inventory of homes in foreclosure financed by prime fixed-rate loans rose to 2.45 percent from 2.36 percent in the previous three months, the Mortgage Bankers Association said in a report today. New foreclosures rose to 0.93 percent from 0.71 percent. Both numbers were the highest in the 12 years since the Washington-based trade group started tracking the categories.

Homeowners are falling behind on their mortgage payments as job cuts make it difficult for them to cover their bills, said Michael Fratantoni, the Mortgage Bankers Association’s vice president of research and economics. The unemployment rate has stayed above 9 percent for 18 consecutive months, the longest stretch since 1983, according to the Bureau of Labor Statistics.

“The increase in these plain-vanilla type of loans to the highest numbers ever show us it really is being driven by the economic environment,” Fratantoni said in a telephone interview. “It’s not going to turn around until we get more significant job growth.”

New foreclosures against all types of mortgages, which also include subprime, rose to 1.34 percent, the highest level in a year, according to the report. The overall inventory of loans in foreclosure dropped to 4.39 percent from 4.57 percent as some mortgages were modified by servicers, companies that administer payments. Those modified loans may reappear as foreclosures in future quarters because of redefaults, said Fratantoni.

Defaulting Again

The share of mortgages with overdue payments dropped to 9.13 percent in the third quarter from 9.85 percent in the prior period, the trade group’s report showed. The rate was 9.64 percent a year earlier.

The decline was led by mortgages 90 days or more overdue, those most likely to go into foreclosure. That category fell almost half a percentage point from the second quarter to 4.34 percent, which may also be a reflection of the increase in modified loans, Fratantoni said.

“The modification programs have helped a number of borrowers, but at the same time we do see redefault rates of around 50 percent at 12 months,” Fratantoni said.

HAMP Modifications

Servicers modified 108,946 mortgages in the second quarter using the Obama administration’s primary anti-foreclosure plan, the Home Affordable Modification Program, or HAMP. That was an 8.7 percent increase from the prior period, according to U.S. Treasury Department data. Using private programs, the companies altered an additional 164,473 home loans, a gain of 25 percent, the data show.

Almost half of the mortgages modified in 2009’s first quarter, before HAMP began in March of that year, were overdue by 90 days or more in this year’s second quarter, according to Treasury Department data. Mortgages overdue by more than three months typically are considered in default, while home loans overdue by fewer days are called delinquent.

Modifications using the HAMP guidelines have a better track rate than non-government programs, the data show. Six months after changing mortgage terms, 11 percent of HAMP modifications were delinquent, compared with 22 percent of loans renegotiated using other means, according to Treasury.

HAMP lowers mortgage payments to about a third of borrowers’ income by temporarily reducing interest, lengthening the term of the loan and deferring principal payments.

Foreclosure Freeze

Today’s Mortgage Bankers Association report doesn’t include much data related to foreclosure freezes that began in late September after questions arose about the integrity of court filings, Fratantoni said. Attorneys general in all 50 states are conducting probes into foreclosure practices after allegations surfaced that mortgage industry employees signed legal documents without ensuring their accuracy.

“We really don’t know what impact the halt will have, though it certainly will put upward pressure on some of the foreclosure numbers,” Fratantoni said. “We’re looking to the fourth quarter or 2011’s first quarter to see the results.”
http://www.bloomberg.com/news/2010-11-18/prime-u-s-mortgage-foreclosures-rise-to-record-on-unemployment-pressure.html

 

[ridiculous]

From The Martet Ticker. Complete with doom background music.

 

[ohio]

Update:
"Both numbers were the highest in the 12 years since the Washington-based trade group started tracking the categories."

OMG, 12 years. It's a record!!! It's historical. Things haven't been this bad EVER (if "EVER" = the last 12 years, which consisted of a tech boom and a real-estate boom).

Not saying people aren't hurting, but no skies are falling just yet.

 

[Pesqueeb]

Bumping for the

Millions of homeowners saw their most valuable asset decay between July and September, according to recently released data from the Federal Reserve, as they lost a portion of the stake they can claim in their homes. A series of new reports reflects home prices are continuing to decline, increasing the pressure on America's tepid housing market. Until the market finds a bottom, the foreclosure epidemic will feed upon itself, analysts say, as foreclosed properties drive home values down. With the unemployment rate hovering near 10 percent, and with companies showing historic reluctance to hire, the housing drag poses a significant impediment to an economic recovery.
By the end of this year home prices will have dropped $1.7 trillion, or about 7 percent, according to Zillow.com, a real estate data provider. This decline has accelerated: Since August, home prices have fallen 7.9 percent, data from Clear Capital, a Truckee, Calif.-based real estate research firm, show. It is the steepest decline in home values since the height of the financial crisis in 2008, said Clear Capital senior statistician Alex Villacorta.
Worse, home prices are forecast to drop an additional 10 percent next year, according to a recent report from Fitch Ratings, a major credit ratings agency.

Moe here.

 

[stoney]

something something Great Depression something something

And by the way, if you don't own it outright, you don't own it.

 

[Toshi]

I hope things bottom out by 2014, when I'll finally be in the market.

 

[dante]

I hope things bottom out by 2014, when I'll finally be in the market.

Don't worry, ZOMG-Zimbabwean-Weimar-style-hyper-inflation will soon take hold... I'm looking forward to paying off my mortage in another 5 years by walking into the bank, handing the teller a $200,000 bill and asking for my change.

 

[Toshi]

Mmm, inflating away my (and my wife's, now! grumble grumble expensive Masters program) student loans would be peachy

 

[Pesqueeb]

Don't worry, ZOMG-Zimbabwean-Weimar-style-hyper-inflation will soon take hold... I'm looking forward to paying off my mortage in another 5 years by walking into the bank, handing the teller a $200,000 bill and asking for my change.

This sh*t needs to hurry up before I pay off all my debts with actual money.

 

[manimal]

Bumping for the

Moe here.

that blows. i was trying to refi my house last month to one of these stupid low rates but, because my home value has remained rather stagnant or, perhaps lost a small percentage, i'm a few grand out of the range of LTV limits and i thought i got a killer rate at 6.25 back in '06.

oh well...it sure would have been nice to save over a hundred bucks a month with a refi to a much lower rate.

oh yeah...one of the banks i called told me that, even though my LTV didn't qualify for a 30yr fixed refi, he was more than willing to offer me a 5/1 ARM i see that not much has changed.

 

[eaterofdog]

I am buying another house as an investment right now. Just too cheap to pass up, nice neighborhood and easy to rent. I won't even need a mortgage.