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Random Quote: Good judgement comes from experience. Experience comes from bad judgement Colin Powell
"Once negative equity exceeds 25% or the mortgage balance is $70,000 higher than the current property value, an owner starts to default with the same propensity as investors."
All it takes is $70K upside down and they bail out, interesting. How many boat owners are 70K upside down but would never consider walking away? The home they walk away from but the boat they'll keep paying, interesting isn't it.
All it takes is $70K upside down and they bail out, interesting. How many boat owners are 70K upside down but would never consider walking away? The home they walk away from but the boat they'll keep paying, interesting isn't it.
Maybe because you can live on a boat & hide it as well......
Let's say that 6 years ago I bought a house for $100K. 3 months later I sold it for $150K, netting $50K cash. Due to the timing of the payments, I never paid one penny in payments and had the original seller pay my closing costs. I theoretically used the bank's money for free, and tied up $100K of their money for 3 months for nothing. Is that immoral?
I'm surprised to see some of the responses in the thread condoning walking away from a home as though its not a big deal and is simply business. It's not what this country was built on and is part of the reason why we're heading for disaster. . People worked hard for their homes, made sacrifices to purchase their homes and did what they could to stay in their homes. If you're currently walking away from your home, I'm guessing you shouldnt have bought it in the first place. Yes, the banks were negligent in their loan practices with zero money down loans, ninja loans, and whatever other loans they issued. BUT, as the homeowner, if you're making 50k a year and you're buying a 500k home, you must have had a pretty good idea that your paycheck wasnt going to cover expenses. credit was extended to everyone. The community re-investment act encouraged banks to re-invest within the community....... The shadow inventory could be the death of this country. First we had the subprime debt issues, credit card defaults followed, prime mortgages are seeing pressure as others have stated, and yes, the commercial real estate market is beginning to unfold. its funny, noone even mentioned the municipalities that are in default.....or greece, spain, ireland .......yea, let the people who purchased their homes and others who accumulated big credit card balances continue to walk away and we'll accelerate the process to the point of no return for all of us. I'm not saying corporations who do the same are excused as they are a huge part of the problem. both need to be held accountable. I can only hope we all get through this.
I didnt get caught up in it but!!!! Many were told buy above their means?$?
Quote:
Originally Posted by rubicon007
I'm surprised to see some of the responses in the thread condoning walking away from a home as though its not a big deal and is simply business. It's not what this country was built on and is part of the reason why we're heading for disaster. . People worked hard for their homes, made sacrifices to purchase their homes and did what they could to stay in their homes. If you're currently walking away from your home, I'm guessing you shouldnt have bought it in the first place. Yes, the banks were negligent in their loan practices with zero money down loans, ninja loans, and whatever other loans they issued. BUT, as the homeowner, if you're making 50k a year and you're buying a 500k home, you must have had a pretty good idea that your paycheck wasnt going to cover expenses. credit was extended to everyone. The community re-investment act encouraged banks to re-invest within the community....... The shadow inventory could be the death of this country. First we had the subprime debt issues, credit card defaults followed, prime mortgages are seeing pressure as others have stated, and yes, the commercial real estate market is beginning to unfold. its funny, noone even mentioned the municipalities that are in default.....or greece, spain, ireland .......yea, let the people who purchased their homes and others who accumulated big credit card balances continue to walk away and we'll accelerate the process to the point of no return for all of us. I'm not saying corporations who do the same are excused as they are a huge part of the problem. both need to be held accountable. I can only hope we all get through this.
I am in know way making these people walking away blameless. BUT when I got my first mortgage I had to jump through hoops and hang off the rim to qualify. That was in the 70s . Anyone could have qualified in the past decade and they were watching the prices of homes double and triple. They were told if they didnt get in then they would be left behind. The mortgage brokers and real state brokers broke every old rule that was ever used in getting unqualified people into the market. This is the way it was only two years ago. That is why the housing market kept expanding and rising!!?$$$$$$ people who normally would not have qualified were scooping up what ever they wanted because it was that easy! thats why property values were rising so fast! It was a bubble and some on this thread got caught up in it by buying into extra properties or into subdivisions that are almost dangerous to live in with more big empty homes then occupied taxpaying owners.It was a bubble and it was all preventable. Not from the bottom up but the top down. which is what is happening now.
Most lenders treat a short sale as a BK. However, max 3 years before you can buy again. Amazing! Only a small handful of lenders are going after the defiency which is the most surprising thing to me. The smart ones are settling for a negotiated amt or putting them on a payment plan. Most of the time, you just receive a 1099 for the deficiency balance and pay UNCLE SAM.
I know someone who just short sold their Investment Property for 325k and had previously purchased it at 700k. The lender did not go after her for the defiency or even a settlement. It was on an Investor loan, and she had 100k in an IRA!!! She received 1099 and will be paying Uncle Sam over 30k for the hit. Also, she put down about 75k on the original purchase. **** Whats your call, deplete the entire IRA and Bankrupt them?? Interested to hear?
There are a million different scenarios out there. A lot of them i have issue with. However, some people lose their jobs and have no choice but to default.
Mom always said don't through good money after bad. Cut your losses could be the right decision for some and yes like most everything involving people there will be abusers. I agree it goes against the nobler values that some of us live by but this is uncharted financial waters the world economies are currently in.
In 2007 I sold three homes to people who didn't have a job. The mortgage broker said they had plenty of stated income. For all the newbies on here, yep I saw it coming. Notice the dates on the thread............................................ .......
Most lenders treat a short sale as a BK. However, max 3 years before you can buy again. Amazing! Only a small handful of lenders are going after the defiency which is the most surprising thing to me. The smart ones are settling for a negotiated amt or putting them on a payment plan. Most of the time, you just receive a 1099 for the deficiency balance and pay UNCLE SAM.
I know someone who just short sold their Investment Property for 325k and had previously purchased it at 700k. The lender did not go after her for the defiency or even a settlement. It was on an Investor loan, and she had 100k in an IRA!!! She received 1099 and will be paying Uncle Sam over 30k for the hit. Also, she put down about 75k on the original purchase. **** Whats your call, deplete the entire IRA and Bankrupt them?? Interested to hear?
There are a million different scenarios out there. A lot of them i have issue with. However, some people lose their jobs and have no choice but to default.
It turned into a bad investment and she is feeling the pain. Even in bankruptcy she would probably be able to keep the IRA. No good would come from total financial ruin. my.02
Walking out on your mortgage is not fraud. The terms of the deal are clearly laid out in contract. Pay X at Y rate and keep the property, fail to pay and we take and sell the property to recoup our loss. They chose the second path.
I think you are completely wrong on this. Lets say you borrow $300k from a bank. You owe the bank $300k plus interest as the terms of your contract state. You put the home you are purchasing up as colateral against the $300k you owe the bank.
Your contract with the bank is for the $300k you borrowed, not for the home. If you default on the loan you owe the bank the principal whatever that amount is, if the house is worth less than the principal owed you still owe the difference. This holds true in every state except CA which has their own laws releasing the borrower from the debt.
Now if the bank chooses to go after you for the difference thats another story. They used to not because the legal fees were greater than the difference, but thats not true any more.
You have an obligation to pay back what you owe. Its one thing to lose a job and just not be able to pay the loane. However, if you still have the means and walk away because you don't like the new terms, your a POS in my book.
Take another example. Say I lend you $20 bucks because your short on cash one night and we go out for dinner. You eat the steak but then tell me your not paying me back because the steak was tough. Thats not my effin problem, and you better give me my damn money if you don't want your nose broke. I didn't promise you a good steak, I gave you $20 bucks, and you promised to pay me back.
Same things with the bank, they didn't promise you you'd make money on a house, they just provided you with the money, and you promised to pay it back.
A little of topic but relative 
