Start the flame war now!
http://www.latimes.com/classified/realestate/news/la-fi-harney29-2009nov29,0,3801270.story
Walk away from your underwater mortgage
- Thread starter sanjuro
- Start date
Best financial interest. Yup. No question about it.
Moral? That all depends on each person's viewpoint. Some people think it's immoral to eat bacon.
In the past the banks/lending institutions/loan sharks have NEVER relied on "morals" to get a loan repaid. They have always relied on incentives (losing the 20+% equity you put in) or penalties (breaking kneecaps) in order to get paid. Banks have required 20% down in order to protect *themselves*. Somewhere along the way, they figure that they could make more money by offering riskier, and riskier loans. They assumed that any losses from deadbeat borrowers would be offset by the additional capital they gained from everyone else. Oooops.
Moral? That all depends on each person's viewpoint. Some people think it's immoral to eat bacon.
In the past the banks/lending institutions/loan sharks have NEVER relied on "morals" to get a loan repaid. They have always relied on incentives (losing the 20+% equity you put in) or penalties (breaking kneecaps) in order to get paid. Banks have required 20% down in order to protect *themselves*. Somewhere along the way, they figure that they could make more money by offering riskier, and riskier loans. They assumed that any losses from deadbeat borrowers would be offset by the additional capital they gained from everyone else. Oooops.
He's exactly right. Not paying your mortgage and staying in the house is squatting. Walking away in a non-recourse state is part of the contract.
He's not talking about people who can't pay their mortgage, he's referring to people who are upside down on their loans. That doesn't imply they can't pay them.
This ideology is exactly why this country sucks. We've become nothing more than self-centered bitches who fold at the slightest resistance and refuse to be held accountable for our own actions.
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Ah, you must be talking about the banks!
edit: Besides which, you do realize we're talking about America and Americans, right? Your description is is a general condition, and isn't a symptom, but rather the disease.
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Must Spread Rep.
Does it make sense for people to walk away on a home they are upside down on? Financially, sure. Morally, its reprehensible, especially when were talking about people who can make the payments and opt to walk out anyway simply because they made a bad bet. Silver is right about the general lack of accountability being the disease and not the symptom. The government shouldn't be bailing out these people and/or business, they should be putting them away.
*edit: After reading the article I reaffirm my point. Professor White's moral compass is seriously askew. Do the banks share the burden for making the loans that Dante points out? You bet, and their balance sheets are suffering and if they can't handle the losses they should fail. If your a homeowner walking away from a payment you can actually afford, your a f-ing dirt bag.
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Not in a non-recourse state it isn't.
Sorta makes you wonder why the powers that be made those loans in the first place, no? Maybe some underwriting and a down payment wasn't such a bad idea, eh?
How are banks responsible for market values dropping?
Housing values have nothing to do with how the house was financed.
You couldn't be more wrong. Housing values on the way up had a lot to do with how the sales were being financed.
Cheap money and lax underwriting leads to higher home values. It didn't help that most of their models didn't account for drops in real estate prices...
Two side by side houses. Purchased at the same time for equal money.
One is financed on 30yr fixed rate with 25% down.
The other is an interest only heartbeat mortgage.
Please explain why one would depreciate at a different rate than the other in a devaluing market. (hint: IT WON'T)
Rapidly rising home values existed long before the 'victim' loans your argument is based on started, btw. This isn't the first real estate bust either. The northeast market got crushed in the early 90s, rebounded to ridiculous highs yet doesn't have the foreclosure rates or massive value corrections found elsewhere.
One is financed on 30yr fixed rate with 25% down.
The other is an interest only heartbeat mortgage.
Please explain why one would depreciate at a different rate than the other in a devaluing market. (hint: IT WON'T)
Rapidly rising home values existed long before the 'victim' loans your argument is based on started, btw. This isn't the first real estate bust either. The northeast market got crushed in the early 90s, rebounded to ridiculous highs yet doesn't have the foreclosure rates or massive value corrections found elsewhere.
You said housing values, not depreciation rates...those aren't the same thing.
edit: And with your two examples, which borrower walks away?
I really need to explain how a ton of iffy loans made without collateral is the fault of the banks?
What do you mean by "victim" loans, by the way?
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No one should obligate themselves to a home that exceeds 2 times their annual income. My wife and I live in a house that cost less than our combined annual income, the mortgage payment is far less than rent would be on a 15 year conventional loan.
I know guys with larger families on single incomes living in houses that cost upwards of 4 times their annual income on 30 year loans driving huge trucks on ZERO down over 7 years, I can't imagine how they're going to make ends meet let alone send their kids to college.
That said - walking away from the results of your stupidity doesn't make you any less likely to repeat your failure. Pay your bills cowards.
I know guys with larger families on single incomes living in houses that cost upwards of 4 times their annual income on 30 year loans driving huge trucks on ZERO down over 7 years, I can't imagine how they're going to make ends meet let alone send their kids to college.
That said - walking away from the results of your stupidity doesn't make you any less likely to repeat your failure. Pay your bills cowards.
The types of loans you seem to think justify walking away from a legal commitment whether they apply to your situation or not.
Explain to me what you think the legal commitment of a mortgage is in a non-recourse state, please.
Depends specifically on the loan, but if it is a non-recourse loan, being able to walk away from the loan and giving up the house is the way the loan agreement is written. It's not a loophole, it's not hidden in the fine print, it's a basic feature of the agreement.
Why?
The bank holds the title to your house until you finish paying it off. It's their house anyway.
If you can't keep paying the mortgage, walk away and let them auction it off to someone who can afford it. It's not even breaking the contract, it's in the contract.
If a forum had a custom title, that would be the PAWN's.
Ok, I'm gonna come right out and say this.
The bank owners, their shareholders, and all the execs that are responsible for this are like 4chan trolls, but they're in it for the money, not the lulz. They will take your money and screw you six ways from sunday as long as you let them.
The bank owners, their shareholders, and all the execs that are responsible for this are like 4chan trolls, but they're in it for the money, not the lulz. They will take your money and screw you six ways from sunday as long as you let them.
That's so hot.
Oh yea! that's it! Extrapolate my dividends!
Clearly.
Go capitalism!
Greedy American yuppie phucs....Fvck Yeah!
Seriously. If you can live without credit for the next 10 years, go for it. You have nothing to lose. That being said, companies run credit checks on potential employees. If you have high level security clearance, kiss it goodbye. Want a job in Finance? Not a chance. Don't mind traditional Blue Collar work? Have at it.
BAH! Being irresponsible with bad decision making skills and horrible credit are obviously a pre-requisite to a job in finance. Sh!t walking away from a mortgage might be the first step towards a CEOship in your own bank and a multi-million dollar parachute.
No way, bankruptcy is the American way! You get to ditch any and all bad contracts, shed debt, reorganize and you're back in business the very next day. All that happens is you flush the shareholders equity down the toilet... Oh, you're talking about *personal* bankruptcies. Yeah, screw them greedy yuppie phucs.
I'd be shocked if 1% of jobs today actually checked your credit score before deciding to hire you. And I'd be shocked if 1% of the companies that bothered to check your credit history would care if you had one Deed In Lieu of Foreclosure on your record. Do you *really* think that the financial companies (who came up with all of these shady mortgage deals) would hold it against you if you said "I did the math and it was financially advantageous for me to divest myself of the collateral in exchange for early cancellation of the loan"?
Just think of it as chapter 11...
Buying at the top of the market doesn't necessarily constitute "bad judgment". Taking advantage of 3% down requirements on an FHA backed 30y fixed doesn't isn't necessarily bad judgment either.
Sitting down and being realistic that your $600k (and current $550k loan) is only worth $250k, and that it's advantageous for you to a) buy something smaller and then b) hand in the keys on your former residence and wipe out $300k worth of upside-down debt seems pretty damn financially astute to me.
Besides, with the millions getting foreclosed upon, there's less and less of a stigma about it.
The company I work for pulled my credit report and discussed it at my final interview, 4 years later it was pulled again to determine if I was suitable for promotion. If you are in charge of any sort of balance sheet - your credit is going to be checked. Thems facts.
This ties into several threads here in PAWN.
http://minnesotaindependent.com/50472/bachmann-minnesotas-highest-foreclosure-rate
http://minnesotaindependent.com/50472/bachmann-minnesotas-highest-foreclosure-rate
Why is it every time Ston^H^H^H^HJoker says something like this I immediately get this image in my brain:
Funny this is what I think of.....Why is it every time Ston^H^H^H^HJoker says something like this I immediately get this image in my brain:
or
