Originally posted by: dardin211
Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
I am wondering the exact same thing, as it's something that has crossed my mind with my own home. I have a 780 credit score, 30yr fixed at a 5.62% rate, always paid on time, have no problems making the payment each month. The house next door as well as one across the street foreclosed and one sold recently for about 50% less then what I currently owe on my own home, the other is on the market for about 40% less then what I currently owe. So this puts me quite a ways upside down on my home, as I am only a few years into owning it. Being so far upside down, probably wouldn't bother me, if this was the house I wanted to die in, however it is not. The wife and I planned on owning this for about 7-10yrs and then getting something slightly bigger, as our family will have grown in size by then.
I doubt I would do this, even though I know walking away is the correct choice financially, but morally I am not the person to do this.
Originally posted by: Fern
If you're a bank and make fixed rate mortgages, you potentially lose if the interest rate later skyrockets. I've never clearly understood how banks can afford NOT to make only ARM loans.
Fern
Originally posted by: mugs
I don't like seeing people get out of repaying their debts, but you can't get blood from a stone. With a recourse mortgage it'd be up to the bank to decide whether to try to recover the money they lost.
Originally posted by: PricklyPete
7-10 years is a long time...I highly doubt you will still be upside down by that point.
Originally posted by: PricklyPete
Originally posted by: dardin211
Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
I am wondering the exact same thing, as it's something that has crossed my mind with my own home. I have a 780 credit score, 30yr fixed at a 5.62% rate, always paid on time, have no problems making the payment each month. The house next door as well as one across the street foreclosed and one sold recently for about 50% less then what I currently owe on my own home, the other is on the market for about 40% less then what I currently owe. So this puts me quite a ways upside down on my home, as I am only a few years into owning it. Being so far upside down, probably wouldn't bother me, if this was the house I wanted to die in, however it is not. The wife and I planned on owning this for about 7-10yrs and then getting something slightly bigger, as our family will have grown in size by then.
I doubt I would do this, even though I know walking away is the correct choice financially, but morally I am not the person to do this.
7-10 years is a long time...I highly doubt you will still be upside down by that point.
Originally posted by: BoberFett
Originally posted by: Firebot
Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
That's the biggest problem out of all this. Housing prices are not getting higher, and more and more people are choosing to get foreclosed. The banks take the hit on the foreclosure, credit crunches down a bit more, house prices drop again due to the high supply, more house owners decide that it's easier to get foreclosed then pay, etc.... It's a vicious cycle caused by the lack of any regulation in lending practices.
Cities could start condemning foreclosed properties. Demolish a bunch of empty houses and dwindling supplies will start stabilizing prices.
Fuck the bank who owns the property, they should have been more careful about who they loan to. It won't help credit liquidity because the bank is still screwed, but at least it would slow down these walkaways.
Originally posted by: frostedflakes
Crap like this pisses me off to no extent. I don't care how much a person is upside down on their home, they signed on the dotted line and are obligated to pay off their mortgage.Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
People invested in homes hoping they could sell in 5-10 years and net a nice little profit, but the bubble burst. Sucks that they chose a bad time to buy a house, but that's not a good enough excuse to walk away from a mortgage.
Originally posted by: Genx87
Originally posted by: frostedflakes
Crap like this pisses me off to no extent. I don't care how much a person is upside down on their home, they signed on the dotted line and are obligated to pay off their mortgage.Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
People invested in homes hoping they could sell in 5-10 years and net a nice little profit, but the bubble burst. Sucks that they chose a bad time to buy a house, but that's not a good enough excuse to walk away from a mortgage.
I understand what you are saying but these are also investment vehicles. Would any business hold onto a product line that is putting them into the hole so far they wouldnt get out?
Originally posted by: jpeyton
A year later, he's looking to relocate to Boston, but his house is worth $300k and nobody is buying.
He will probably walk away from his mortgage as soon as his transfer to Boston comes in. It makes no financial sense holding onto a property that he's upside down on by $200k.
Originally posted by: rudder
Originally posted by: jpeyton
A year later, he's looking to relocate to Boston, but his house is worth $300k and nobody is buying.
He will probably walk away from his mortgage as soon as his transfer to Boston comes in. It makes no financial sense holding onto a property that he's upside down on by $200k.
Until the bank comes after him to get the 200K. It is nit uncommon for a bank to sue a deliquent homeowner for the difference.
Originally posted by: Skoorb
12% seems kind of OMG wth number to me. 1/5th of homeowners upside down doesn't concern me because that's easy to happen with 100% loans and all that, but 12% in foreclosure is bad, especially since unemployment is still very low. This foreclosure number, unless the gov does something very strange, is going to greatly increase. 20% would not surprise me before this is all said and done.
I agree, they rank right up there with profitable companies that are laying people off.Originally posted by: mugs
People who walk away from mortgages they can afford are some of the lowest scum who are contributing to the problems we're having now. :thumbsdown: We need recourse mortgages in this country so the banks can take these people's assets.
Originally posted by: heyheybooboo
There is no way in Hell I would stay in a house that dropped 20% in value.
It would take 15 years for that house to regain its value with consideration to inflation. During that time you will have paid 50% more than the value of the property in principle and interest not including HOA fees, insurance, p-taxes and maintenance.
I'd laugh at any bank that took a civil action against me for a deficiency. Seat my jury and let my lawyer explain to them how hard I played by the rules to be only screwed by the financial institutions whose greed created the mess in the first place.
Originally posted by: Vic
Originally posted by: heyheybooboo
There is no way in Hell I would stay in a house that dropped 20% in value.
It would take 15 years for that house to regain its value with consideration to inflation. During that time you will have paid 50% more than the value of the property in principle and interest not including HOA fees, insurance, p-taxes and maintenance.
I'd laugh at any bank that took a civil action against me for a deficiency. Seat my jury and let my lawyer explain to them how hard I played by the rules to be only screwed by the financial institutions whose greed created the mess in the first place.
Cases like these never go before a jury. And if you can afford a lawyer, you can afford to pay your mortgage. Plus, "the rules" are clear as can be. Maybe you ought to read documents before you sign them? You didn't borrow the house, you borrowed the money and used the house as collateral. That's why the promissory note and the security instrument are separate documents. Just because you're ignorant of the law is no excuse for you to be allowed to break it and screw over the investors who lent you the money with which to buy a house.
Meh... you're just another thieving deadbeat. Oh, it's the cruel world's fault you're stupid and can't make a honest living! :roll:
In that long and growing list of people to be mad at for the financial/credit/banking/foreclosure crisis, don't stop with Golden West's Pick-A-Payment mortgage hustlers Marion and Herb Sandler, Ponzi-scheming Bernard Madoff, all those rich CEOs or even irresponsible buyers. Remember this crowd: The mortgage brokers, real estate agents, lawyers and others who committed mortgage fraud and pocketed the profits.
In a selfish quest for more money, they committed crimes that drove up housing prices, fueled foreclosures and left lenders holding mortgages on properties not worth as much as the mortgage.
They are people such as Michael Pahutski, Gregory Mascaro and Gregory ?Dee? Rankin and Jules A. Springs. All have pleaded guilty in federal court in Charlotte.
Mascaro, a former Charlotte real estate agent, was sentenced last month to two years in prison and ordered to pay $62,361 in restitution. Former real estate agent Rankin was ordered to spend a year on house arrest and put on five years' probation. Pahutski, a former mortgage broker who pleaded Tuesday to 21 charges, faces as much as 20 years in prison. Springs, a mortgage broker, also faces sentencing.
To their credit, federal prosecutors here and around the country have been pursuing such fraud cases for months. It's clear fraud is one of the factors in the national foreclosure crisis. Of the 19 properties listed in the Pahutski indictment, more than half have fallen into foreclosure, the indictment says, and one lender, Bank of Georgia, was ruined.
Nationally, banks reported nearly 53,000 cases of suspected mortgage fraud in 2007, about 10 times the level in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network. As of last summer, authorities were looking into at least 1,400 mortgage fraud cases nationwide. Hundreds of real estate industry players have been indicted. Losses to homeowners and other borrowers are estimated at more than $1 billion.
Locally, there's been a steady trickle of mortgage fraud indictments from real estate transactions in and around Charlotte. Consider Troy Anthony Smith, a Waxhaw attorney who pleaded guilty in January. His indictment says he was part of at least two mortgage fraud cells targeting Union and Mecklenburg County neighborhoods such as Providence Downs South, Woodhall, Firethorne and Piper Glen.
Homes would be sold at inflated prices, usually from $200,000 to $500,000 above the true price, the indictment says. Participants in that kind of fraud lied about buyers' income, gave fake bank statements and tax returns, bribed local businesses for bogus verifications of employment and paid kickbacks to real estate agents and investors, court documents say.
Charlotte lawyer Demetrius Rainer took part in similar mortgage fraud schemes in similar neighborhoods. She, too, pleaded guilty and awaits sentencing.
Those crooks were nothing less than parasites sucking out illegal profits and leaving damage that has helped ruin family livelihoods, destroyed savings and put people on the streets. If we had rotten tomatoes, we'd throw them. Lacking tomatoes, we just hope the federal courts mete out suitable justice.
Originally posted by: Genx87
There is an article on CNN Money about people letting themselves go into forclosure even when they can make payments. They will take a hit on their credit because the losses they have seen will never be made up. Think about some schmuch who makes 80K a year buying a 500K home that is now at 350K and dropping fast. When the hell is he going to make up that 150K? Walk away, rent for 6-8 years, and get back in. I'd be interested in seeing how many of these people can afford the loan but are walking? See if as a % it grows over the next 12 months as people make financial decisions.
Originally posted by: Vic
Lenders are inundated with forbearance and modification requests right now, so it's not unusual to have to wait several weeks to find out if your request for assistance was approved or not. Remember, you signed a legal contract. For the lender to modify the terms is a courtesy they provide because they would rather have your monthly payments than your home.
If you short sell the property in Florida, you can still be pursued for the deficiency, the whining of 12 year-olds on the internet notwithstanding. Just to put this in perspective, guys, 2 recent requests (or should I say, 'demands') for full settlement on short sales that crossed my desk where: (1) a flipper who left the property vacant and unsecured for the past few years so it could be used as a crack house and the cost to cure the property is roughly equal to the projected amount of the deficiency, and (2) an investor where the defaulted loan originated as a cash-out refi, while claiming the property was owner-occupied when it was actually a rental, and is now claiming the hardship leading to the short sale is the inability to rent the property, and the projected amount of the deficiency is roughly equal to the large amount of cash out they got from their refi (but which, of course, they don't have any more).
So yeah, the banks are the only crooks. :roll:
Well, that's the chance you took. You weren't going to give the lender any of the equity if the home appreciated in value, were you? Of course not.Originally posted by: Robor
Thanks for the info Vic... When I talked to the bank they were not only open to a short sell they almost encouraged it - which I thought strange. Honestly, we put a lot in upgrades in the place (tile, roof, A/C, hurricane proof garage, repairs) about 3 years ago and we don't want to dump it for nothing or walk away. What bothers me is we're pretty much paying 'rent' into a place that has a lease that doesn't expire until we get even in value. When that is no one knows but it's pretty certain it's a while off... :-/
Originally posted by: Vic
Well, that's the chance you took. You weren't going to give the lender any of the equity if the home appreciated in value, were you? Of course not.Originally posted by: Robor
Thanks for the info Vic... When I talked to the bank they were not only open to a short sell they almost encouraged it - which I thought strange. Honestly, we put a lot in upgrades in the place (tile, roof, A/C, hurricane proof garage, repairs) about 3 years ago and we don't want to dump it for nothing or walk away. What bothers me is we're pretty much paying 'rent' into a place that has a lease that doesn't expire until we get even in value. When that is no one knows but it's pretty certain it's a while off... :-/
In the meantime, at least your 'rent' is tax-deductible and does work towards an equity stake in the property, 2 things which actual rent doesn't do. The reason to buy a house is to eventually own your own home, not to play the housing stock market.
If your hardship is legitimate though, and you agree to work with your lender, it is likely that they will agree to a full settlement at short sale. Or if you've been timely with your payments thus far, will agree to a modification to make things a little easier on you. I recommend trying the latter first, as short-selling is just buying high, selling low, and expecting someone else to pick up the margin for you.
If you can make some one else take the losses you would be stupid to keep paying.Originally posted by: Vic
Well, that's the chance you took. You weren't going to give the lender any of the equity if the home appreciated in value, were you? Of course not.Originally posted by: Robor
Thanks for the info Vic... When I talked to the bank they were not only open to a short sell they almost encouraged it - which I thought strange. Honestly, we put a lot in upgrades in the place (tile, roof, A/C, hurricane proof garage, repairs) about 3 years ago and we don't want to dump it for nothing or walk away. What bothers me is we're pretty much paying 'rent' into a place that has a lease that doesn't expire until we get even in value. When that is no one knows but it's pretty certain it's a while off... :-/
In the meantime, at least your 'rent' is tax-deductible and does work towards an equity stake in the property, 2 things which actual rent doesn't do. The reason to buy a house is to eventually own your own home, not to play the housing stock market.
If your hardship is legitimate though, and you agree to work with your lender, it is likely that they will agree to a full settlement at short sale. Or if you've been timely with your payments thus far, will agree to a modification to make things a little easier on you. I recommend trying the latter first, as short-selling is just buying high, selling low, and expecting someone else to pick up the margin for you.