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Walking Away From Your Mortgage  
User currently offlineKen777 From United States of America, joined Mar 2004, 8188 posts, RR: 8
Posted (4 years 6 months 3 weeks 1 day 21 hours ago) and read 3015 times:

A rather concerning article in the NYT today. About people who are underwater on their mortgage walking away even if they are able to pay the monthly payments. The article also notes that companies (including banks) do the same thing.

The extent of the problem is demonstrated in the stat that 65% of all residential properties with a mortgage in Nevada are underwater.

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?hp

75 replies: All unread, showing first 25:
 
User currently offlineCytz_pilot From United States of America, joined Dec 1999, 568 posts, RR: 1
Reply 1, posted (4 years 6 months 3 weeks 1 day 21 hours ago) and read 2985 times:



Quoting Ken777 (Thread starter):
About people who are underwater on their mortgage walking away even if they are able to pay the monthly payments.

I heard about this quite a lot in Central California when I was working for a real estate magazine there. Homes in the cities of Merced & Stockton dropped to less than half their value from a few years ago, by averages. They're becoming ghost towns from people just leaving. Imagine being in debt $500,000 for a home that was now worth about $250,000. For anyone who thinks that the housing market isn't going back to where it was, they make a choice...what is 10 years of bad credit worth to them...if it's less than they still owe, why would they stay. A house is an investment, all investments carry risks, and sometimes when the risk doesn't pay off, it's better to cut the losses and jump than ride it to the bottom.

Very sad, indeed...but a sign of the times.


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7405 posts, RR: 50
Reply 2, posted (4 years 6 months 3 weeks 1 day 17 hours ago) and read 2905 times:
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Bad thing to do. I do not know why people would do that, there's always a way out with a shred of you credit in tact


Made from jets!
User currently offlineLowrider From United States of America, joined Jun 2004, 3220 posts, RR: 10
Reply 3, posted (4 years 6 months 3 weeks 1 day 15 hours ago) and read 2876 times:

Never mind keeping your credit intact, what about the contract you signed pledging to pay the money back? Boo hoo, the housing market tanked, I will take my ball and go home? A disturbing comentary on our society. If this becomes common, mortgage rates are going to start to look like credit card rates.


Proud OOTSK member
User currently offlineBMI727 From United States of America, joined Feb 2009, 15719 posts, RR: 26
Reply 4, posted (4 years 6 months 3 weeks 1 day 15 hours ago) and read 2868 times:



Quoting Jetjack74 (Reply 2):
Bad thing to do.

I don't think so, at least not in the strict moral sense. If that is the best thing for someone to do financially, then do it. The article talks about being responsible and setting an example. Screw that, the only responsibility they have is to build the best financial future they can within the law, and if someone feels that trashing their credit is a fair price to pay in order to get out of an investment gone bad, I don't have a problem with that.

If an investment goes underwater, sometimes it is best to just walk away and do something else.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineKen777 From United States of America, joined Mar 2004, 8188 posts, RR: 8
Reply 5, posted (4 years 6 months 3 weeks 1 day 15 hours ago) and read 2848 times:



Quoting Lowrider (Reply 3):
Never mind keeping your credit intact, what about the contract you signed pledging to pay the money back?



Quoting BMI727 (Reply 4):
If that is the best thing for someone to do financially, then do it.

Note that the article pointed out:

Quote:
Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials. Former Treasury Secretary Henry M. Paulson Jr. declared that “any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation.”

The concerning part for me is that the housing industry these days is dependent on mortgage payers maintaining payments. If the majority of people underwater walk away then it could take the 60 years noted in the article for a recovery to happen.

Housing values are based on what someone will pay and I don't know how strong this country is IF the growth of walk-aways continue to grows.


User currently offlineGatorfan From United States of America, joined Oct 2009, 331 posts, RR: 1
Reply 6, posted (4 years 6 months 3 weeks 1 day 14 hours ago) and read 2829 times:

it's the only rational decision. Any discussion of morality has to be made in light or what the financial institutions have done. The banks have been bailed out on the back of current and future taxpayers and are now profiting from their irresponsibility. Anyone who imposes on themselves a sense of moral responsibility here is just screwing themselves.

I say this from the position of someone who paid off their home mortgage in 9 years and who could still sell his house at a profit.


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7405 posts, RR: 50
Reply 7, posted (4 years 6 months 3 weeks 1 day 14 hours ago) and read 2798 times:
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Quoting BMI727 (Reply 4):
I don't think so, at least not in the strict moral sense.

It's never morally responsible to just walk away from something just becuase you can't afford the mortgage

Quoting BMI727 (Reply 4):
If an investment goes underwater, sometimes it is best to just walk away and do something else.

There's always a short sale option, and plus many lenders becuase of the financial crisis are most likely more than willing to renegotiate a lower mortgage rate in order to help the borrower. The banks and lenders don't want a foreclosed or abandoned home, especially with the bottomed-out market. But many people just panic and never attempt to do anything, thinking they'll be cleaned out by the banks. Hardly the case

Quoting Lowrider (Reply 3):
Never mind keeping your credit intact, what about the contract you signed pledging to pay the money back?

I agree, but doing nothing is 10 times worse than just running away from it.

Quoting Lowrider (Reply 3):
Boo hoo, the housing market tanked, I will take my ball and go home? A disturbing comentary on our society. If this becomes common, mortgage rates are going to start to look like credit card rates.

This is a lesson many Americans will learn



Made from jets!
User currently offlineLTBEWR From United States of America, joined Jan 2004, 13039 posts, RR: 12
Reply 8, posted (4 years 6 months 3 weeks 1 day 13 hours ago) and read 2786 times:

The situation many find themselves in today with 'upside down' mortgages isn't the same for everyone. Some were blind to the risks, lied about income, got false compatable values, played the banks with false info to get a mortgage. For some, banks, their employees or mortgage brokers were greedy for the fees for placing a mortgage, usually to sold into a pool so had no risk, so let they lies go by, made irresponsible decisions. Then for others, they lost their jobs, had health problems or other pesonal setbacks that meant they couldn't afford to pay.
What needs to happen is several things. One is to allow 'cram-downs' in Bankruptcy proceedings to reduce the amount due on a mortgage to the lender to more moderate market levels. Two, is to mandate that all banks redo mortgages that are upsidedown, taking the hit for thier bad decisions. Three is to tax higher as well criminaly and civily sue those banks and bankers who abused the system to get back some of the losses and to get some justice. Fourth, is to return sound regulation and business policies as to banking and financial services. Fifth is to put in a much higher capital gains tax rate for short term 'flipping' of real property (as well as stock, bonds, commodities and other investments) to recover some of the losses and discouage the next 'bubble'.


User currently offlineMir From United States of America, joined Jan 2004, 21522 posts, RR: 55
Reply 9, posted (4 years 6 months 3 weeks 1 day 13 hours ago) and read 2780 times:



Quoting Lowrider (Reply 3):
Never mind keeping your credit intact, what about the contract you signed pledging to pay the money back? Boo hoo, the housing market tanked, I will take my ball and go home? A disturbing comentary on our society.

Disturbing indeed, but it becomes very hard to blame people for not playing by the rules when the lenders don't follow them themselves.

-Mir



7 billion, one nation, imagination...it's a beautiful day
User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 10, posted (4 years 6 months 3 weeks 1 day 13 hours ago) and read 2768 times:



Quoting Jetjack74 (Reply 7):
There's always a short sale option, and plus many lenders becuase of the financial crisis are most likely more than willing to renegotiate a lower mortgage rate in order to help the borrower.

No there is not always a short sale option.

If the home is too far under, or the holder of the mortage is a bit upside down themselves - the lender will do anything they can to avoid a short sale.

That is what happened to my daughter's home. Job loss put them without an income to support the home or payments - a 1,300 sq ft 3 br / 1 bath for 100K in Dallas.

We floated them for a few months - but it became very obvious that the mortage servicer - Chase - was not going to allow a short sale, or renegotiate a lower rate.

So the home is gone. The family of six is living in with my son's family and they are starting over. Even now, the bank is opposing the bankruptcy.


User currently offlinePyrex From Portugal, joined Aug 2005, 3941 posts, RR: 28
Reply 11, posted (4 years 6 months 3 weeks 1 day 12 hours ago) and read 2745 times:



Quoting Cytz_pilot (Reply 1):
A house is an investment,

Well, there is your problem right there. House = place to live = bare necessity = something you do with your essential income. Investment = not necessary = something you do with your disposable income. If you could afford a $200,000 but wnated that extra room for your air guitar collection than it is your problem - rent it out.

Quoting LTBEWR (Reply 8):
Two, is to mandate that all banks redo mortgages that are upsidedown, taking the hit for thier bad decisions.

Thanks for increasing the interest rate for all responsible borrowers. A bank, when giving out a loan, makes an investment in the person and their creditworthiness - it is the borrower that makes the "investment" on the real estate. Why the hell should a bank take the hit just because YOUR investment turned sour?

The solution for this problem is very simple. Make all mortgage loans recourse, as they are everywhere else around the world (a practice stupidly banned in some U.S. states). Or of course, we can go the way of the Democratic Party - use Fannie and Freddie to crowd out and essentially kill off the private mortgage market and then once the U.S. government holds every single mortgage in the U.S. pass laws giving people incentives to default, thus putting the burden of these deadbeats onto all taxpayers. Zimbabwe here we come.



Read this very carefully, I shall write this only once!
User currently onlineFlighty From United States of America, joined Apr 2007, 8405 posts, RR: 2
Reply 12, posted (4 years 6 months 3 weeks 1 day 12 hours ago) and read 2738 times:

The funny thing is, people consider it an investment when it goes up. When it goes down, they just walk away like they got amnesia about the signature they signed, like it never happened.

If that's how it goes, then houses can no longer can be an investment. Banks will not give loans that enjoy an investment upside if they have no recourse on the downside. Why would a bank do that? It's too risky.

Otherwise, there needs to be some recourse. Or, we could just have a giant Federal giveaway program where everybody gets a house, on money borrowed from China and basically our kids will be slaves to their masters in China. The immaturity involved would be nothing new for Americans, including the Baby Boom generation.


User currently offlineCasinterest From United States of America, joined Feb 2005, 4474 posts, RR: 2
Reply 13, posted (4 years 6 months 3 weeks 1 day 12 hours ago) and read 2723 times:

The folks that walk away do not get off scott free.
Thier credit rating is junked and they lose the house.

These are serious ramifications.

People should walk away. The banks should get left holding the bag for their lack of reiling in the wilde markets. They wrote mortgages for houses that were above and beyond the standard 28% rules means and averages in many markets. Did they assume everyone was suddenly getting paid more?


People walking away would help balance the system and make the banks more watchful for what they did. Houses would never be speculative if the Mortgage industry had strict standards and followed them for mortgages.

The bubble went up hard and if I found myself with a mortgage payment of 2500 a month on a 500,000 dollar loan for a house that was now worht 250,0000 and my neighbor was renting the same size house for 1250 a month. You better believe I would walk away from the house. That would be 15000 cash in hand that I could use to pay for rent and go cashless.


Not everyone will walk, but there are many that will, becase why go broke on an investment that will not regain it's value in the next 10 years?



Older than I just was ,and younger than I will soo be.
User currently offlineBMI727 From United States of America, joined Feb 2009, 15719 posts, RR: 26
Reply 14, posted (4 years 6 months 3 weeks 1 day 12 hours ago) and read 2718 times:



Quoting Jetjack74 (Reply 7):
There's always a short sale option, and plus many lenders becuase of the financial crisis are most likely more than willing to renegotiate a lower mortgage rate in order to help the borrower.

Those are definitely better options that people should look into, but if those options are exhausted and the best financial decision is to walk away, I can't argue with that.

Quoting LTBEWR (Reply 8):

Both buyers and banks made a lot of bad decisions during the bubble period, and both sides are paying the price now.

Quoting Pyrex (Reply 11):
Why the hell should a bank take the hit just because YOUR investment turned sour?

Because that is the way the system works, whether you are investing in a house, a business, or something else. If the bank thinks the investment will turn sour they won't give you the loan. When a bank loans money for an investment, they are essentially investing in whatever the borrower is, which is why they don't just give out money for whatever with no questions.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineManuCH From Switzerland, joined Jun 2005, 3011 posts, RR: 47
Reply 15, posted (4 years 6 months 3 weeks 1 day 11 hours ago) and read 2708 times:
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How can you just walk away from a contract you sign? Can't the bank come after you and get their money somehow? In this country, besides losing the house, you would be forced by a judge to do monthly payments to the bank ("forced" as in "we take the money from your account, period") until you settle your debt. Does something like this exist in the US?


Never trust a statistic you didn't fake yourself
User currently offlineFX772LRF From United States of America, joined Apr 2009, 675 posts, RR: 12
Reply 16, posted (4 years 6 months 3 weeks 1 day 11 hours ago) and read 2698 times:



Quoting ManuCH (Reply 15):
How can you just walk away from a contract you sign? Can't the bank come after you and get their money somehow? In this country, besides losing the house, you would be forced by a judge to do monthly payments to the bank ("forced" as in "we take the money from your account, period") until you settle your debt. Does something like this exist in the US?

That's called foreclosure. They essentially kick you out of your home, and damage your credit score for a good amount of time.

I also think that they can take you to court over it, and make you set up payments to them.

I'll have more information after I talk to my father about it tomorrow. We nearly had to go through all of this.

-Noah  wave 



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User currently offlineNws2002 From United States of America, joined Feb 2008, 883 posts, RR: 0
Reply 17, posted (4 years 6 months 3 weeks 1 day 11 hours ago) and read 2687 times:

Some states allow banks to come after your other assets, most do not. Usually the property is the collateral on the loan, and that's what the bank gets when you default. You have the right under the contract you signed to stop making payments, the consequences of that are simple, the bank gets the property.

Several states also allow the bank to file a civil suit to attempt to collect whatever money they may be owed after they sell the property. Usually this is not worth it. If the person cannot afford a mortgage payment, how can they afford a lump sum payment of tens of thousands of dollars? So the banks write it off.

This is not morally wrong. It's the nature of business. The banks took a risk on loaning money to someone. That person ended up unwilling or unable to repay the loan, due to economic reasons. The banks face the consequences of loaning large sums of money in a rapidly rising market without adequate collateral to cover themselves if they whole thing comes tumbling down.


User currently offlineMD11Engineer From Germany, joined Oct 2003, 13968 posts, RR: 63
Reply 18, posted (4 years 6 months 3 weeks 1 day 8 hours ago) and read 2639 times:



Quoting FX772LRF (Reply 16):
Quoting ManuCH (Reply 15):
How can you just walk away from a contract you sign? Can't the bank come after you and get their money somehow? In this country, besides losing the house, you would be forced by a judge to do monthly payments to the bank ("forced" as in "we take the money from your account, period") until you settle your debt. Does something like this exist in the US?

That's called foreclosure. They essentially kick you out of your home, and damage your credit score for a good amount of time.

I also think that they can take you to court over it, and make you set up payments to them.

I'll have more information after I talk to my father about it tomorrow. We nearly had to go through all of this.

-Noah wave

No, I know what MauCH means. We have essentially the same system over here. The creditor goes to the local court of justice wirh all the paperwork he has about the debtor and gets a legal writ about the unpaied debts, which is valid for thirty years. Then, with this paper, he goes to the bailiff and first the bailiff will take stock of the debtor´s property. Everything not on a very limited list of essential items (basic furniture, tools and shop equipment required for a job to earn money) will be marked with a seal. Then the debtor has two weeks to raise the money, if not his property (including house) will be auctioned off. If the debts are bigger than his property, he´ll have to swear an oath that he has no other assets, if he lies he wil be tried for perjury, a serious offense with jailtime on it.
The bailiff can also go to the debtor´s boss and order him to transfer all of the debtor´s salary above social welfare level to the creditor in monthly installlments.
We have one rule though that if the debtor is bankrupt, but makes a serious effort for seven years to pay back his debts, he can be, in agreement with the creditors, cleared of the remaining debts, but the hurdles are quite high. This at least gives a person a chance to make a new start and won´t ruin him for the rest of his life.

Jan


User currently offlineVC10 From United Kingdom, joined Nov 2001, 1407 posts, RR: 16
Reply 19, posted (4 years 6 months 3 weeks 1 day 7 hours ago) and read 2627 times:

Here in the UK you cannot walk away from your mortgage, even if you hand in the keys and move out the debt is still yours . The mortgage company will sell the house and if it does not raise sufficient to clear the mortgage then they will chase you for the unpaid debt.

littlevc10


User currently offlineFCA767 From United Kingdom, joined Nov 2006, 1740 posts, RR: 1
Reply 20, posted (4 years 6 months 3 weeks 1 day 7 hours ago) and read 2619 times:

I always thought! why not just Live in them...why the need to worry about resale value...unless it's to do with other things like not having a job because of the recession and interest rates going up.

User currently offlineLTBEWR From United States of America, joined Jan 2004, 13039 posts, RR: 12
Reply 21, posted (4 years 6 months 3 weeks 1 day 6 hours ago) and read 2596 times:

What I think should happen, further to the points I made earlier, is to criminally charge those that commited fraud in their application for a mortgage and as possible, go after other assets of value if a mortgage is upside down. Problem of course is that there isn't enough jail space for such debtors and only a few have sufficient assets to go after beyond the primary home they are in a bad mortgage with.

User currently offlinePyrex From Portugal, joined Aug 2005, 3941 posts, RR: 28
Reply 22, posted (4 years 6 months 3 weeks 1 day 4 hours ago) and read 2568 times:



Quoting BMI727 (Reply 14):
If the bank thinks the investment will turn sour they won't give you the loan.

A bank invests in YOU when they give you the mortgage loan, what part of that don´t you get? Otherwise why would they even care how much your monthly income is? Then again, you might be right, maybe they thought they were investing in someone with character and it turns out you were nothing but a common crook, so they should lose their "investment".

Quoting BMI727 (Reply 14):
which is why they don't just give out money for whatever with no questions.

Hmmm, yes they do. It's called unsecured debt. Just like credit cards. That is why the way things are going mortgage rates will go the way of credit card rates (either that, or Fannie/Freddie will keep being the bottomless pit of money they are now).



Read this very carefully, I shall write this only once!
User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 23, posted (4 years 6 months 3 weeks 1 day 4 hours ago) and read 2547 times:



Quoting LTBEWR (Reply 8):
Two, is to mandate that all banks redo mortgages that are upsidedown, taking the hit for thier bad decisions.

Who says what is a bad decision? A home, car or other asset has no real 'value' until the owner tries to sell it. Yes the tax authorities and appraisers can estimate a current sale value, but that is only an educated guess.

We do not think homes will climb back to the price levels at which many of these people purchased, but we don't know.

Quoting VC10 (Reply 19):
The mortgage company will sell the house and if it does not raise sufficient to clear the mortgage then they will chase you for the unpaid debt.

That occurs in the US also. But seldom is there much to recover. There is about seven years to collect the unpaid portion. And the mortage holder has to write off the unpaid portion from their books immediately.

That is one reason many people are extended month to month - so the mortage holder can avoid listing the home as a loss.

Recently many people who lost homes with second mortages from GMAC have been surprised to find the requirements set on GMAC for their bailout funding by the government require GMAC to go after those 'bad debts'.

I know people who lost jobs and homes two or three or four or five years ago who are facing court dates and potential asset seizures from GMAC. A great many people who lost homes did not declare bankruptcy, so the outstanding debt is still on the books.

Quoting ManuCH (Reply 15):
you would be forced by a judge to do monthly payments to the bank ("forced" as in "we take the money from your account, period") until you settle your debt.

It is difficult to get that kind of court order in the US. Child support or IRS debt/penalties are among the few things which can be 'taken' from your wages.

Lenders can get court orders requiring you to pay a set amount, but they cannot force you by taking the money from your accounts. They can seize accounts, cars, furnishings, watches and jewelry, etc. physical property.

However, our 'states rights' friendly constitution allows each state to set different thresholds and catagories for such seizures. There is no one standard across the US.

In some states a bankruptcy can take your home. In some it cannot.


User currently offlineD L X From United States of America, joined May 1999, 11211 posts, RR: 52
Reply 24, posted (4 years 6 months 3 weeks 1 day 4 hours ago) and read 2547 times:



Quoting Jetjack74 (Reply 7):
It's never morally responsible to just walk away from something just becuase you can't afford the mortgage

Taking on or releasing a mortgage is not a *moral* event.

Do you think it is moral to foreclose on family when the breadwinner loses his job?

If you become a bad investment for a bank, don't think they won't drop you in a New York Minute. This has to be reflexive.



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25 Post contains images Falstaff : Well, people do it for a variety of reasons. I will have to do it if my job goes away. I owe $82,000 on my house. It is worth around $20,000-$25,000.
26 D L X : Falstaff, thank you for your post. I hope your unfortunate experiences serves to actually educate some people around here beyond the talking points th
27 GatorFan : After the bank obtains legal title from you under the foreclosure process, they then evict you. The house is then usually sold at auction to the high
28 Falstaff : Thanks. You are right about biased pundits. They come from all sides too. There mortgage "crisis" was caused by a lot of factors. A lot of people jus
29 Falstaff : My credit card company (1st national of Omaha) raised my rate from 9% to 16.9% and I had a zero balance and have never made a late payment. What a bu
30 Ken777 : Unfortunately your daughter's situation is happening all too often. It's pretty obvious from the house stats that your daughter didn't go out and spl
31 Falstaff : A lot of the houses on my block were bought by GIs that had fought in Korea. The last original guy on the street is a Korean vet, he moved in when he
32 Ken777 : I believe that was one of the "Golden Ages" for this country in terms of the average family. Serve in uniform and you would generally be able to buy
33 StarAC17 : They won't barring a huge amount of inflation like what was seen in the early 1980's because people simply won't have an incentive to buy and everyon
34 Mt99 : So shouldn't the banks protect its own investment making sure only qualified people get the loan?
35 D L X : And all investments carry risk - the risk that it will be in your financial advantage to stop paying the loan. I am really bothered by this idea of i
36 Falstaff : GMAC was financing for up to 8 years at one time for higher end cars. That is why there were people around here that were broke driving $50,000 cars.
37 RFields5421 : Yes the bank should. But bank officers are under pressure from their owners, investors, to make more loans and to 'grow'. Being a conservative bank w
38 Mt99 : The banks shot themselves in the foot!
39 Cytz_pilot : I don't know that people necessarily want a larger house, but people fall into a trap when they've been told that they can get a larger house by bad
40 StarAC17 : We're doing fine with that business model. Signed, Canadian Banks (the soundest in the world)
41 GatorFan : I think it's actually going to get much worse. Consumer spending is going to be depressed for a very long time. Home prices are going to continue to
42 Falstaff : This kind of thing has happened before and has been going on in Detroit for years. There are thousands of vacant homes and businesses in cities like
43 Ken777 : Detroit may be the classic example of a need for a new "Marshall Plan" - this time focusing inward to work on rebuilding this country. That may seem
44 Baroque : A question. I can see that the walk away stunt could have produced the results it did in the US. And I can see why Aus with no ability to walkaway has
45 Flighty : Well your post is very good, I guess, for the unusual situation of Detroit, MI. It's interesting. I hope I am not overly sanctimonious about mortage
46 Alias1024 : It would certainly reduce speculation on real estate, which was a contributing factor in the bubble that the housing market experienced. I think that
47 Flighty : Everybody will do what they can, within the law, to earn a million dollars. If it wasn't illegal, then it wasn't the companies' fault. They were doin
48 Baroque : Would not a "no walkaway" setting automatically have improved lending practices? Perhaps not to the extent of making them honest - that story from Fl
49 Comorin : Banks enter the business of lending by charging a premium for risk. On mortgages, this includes default and prepayment risk. This risk is also based
50 RFields5421 : Walkaways are only a very a small part of the US problem. The vast, vast majority of homes foreclosed are when the bank has the family evicted from t
51 Ken777 : There is an assumption that everything was within the law. There was simply too much money to be made churning loans for anyone to have slowed down a
52 Alias1024 : I doubt it. Part of the problem was that the people originating the mortgage had no interest in whether it actually performed in the future. What the
53 Ken777 : Somehow I feel most of them will be sunning themselves in the sun on some beautiful beach, maybe with some beautiful babe near. ANd we need to rememb
54 StarAC17 : One of the biggest reasons that the UK is in such as mess is that the UK invested heavily in things such as these Credit Default Swaps and derivative
55 Baroque : 10 ,000 of them. Then again the drug pusher analogy might work. But to me, from here that looks like a deliberate effort to acquire agents with scant
56 RFields5421 : A couple years ago a friend in Australia told me that there was a similar mortgage problem in the land down under about two-three decades ago. Austra
57 Okie : The major difference is that Fannie Mae and Freddie Mac were making loans and guaranteeing loans that were not viable. They just got another 400 Bill
58 Baroque : I guess that difference would account for quite a bit. Not sure about a change in our system in either the 70s or most of the 80s. Mortgage brokers r
59 Flighty : Yeah but you are not talking about the opposite scenario. What if housing prices rise 30%? Then that person who works at Taco Bell just made a 30% pr
60 RFields5421 : Always get in on the Pyramid scheme at the start, not the end. The thing is there were less than a 1,000 of these mega stupid cases. The vast majority
61 Okie : Well, that is fine until John Q Taxpayer gets to pick up the loss. I would hate to differ here, I think most were planning on reselling 2 to 3 years
62 Melpax : As Baroque said, mortgage brokers have only become promiment here in the mid-to-late 90's. Prior to that, you basically had to go begging cap-in-hand
63 Baroque : That all fits with my memory too but as I read your post I suddenly wondered how effective a couple of TV series based around bank foreclosures might
64 Melpax : I do remember that series, It was on not that long ago. I remeber the banks copping flak back in the 90-91 recession for being 'too eager' to forclos
65 Falstaff : I would agree. The brokers were driving up the prices by making the loans "too good to be true". Here in Detroit there was a show on WJR 760 (a very
66 Falstaff : When I got home from work today and checked the mail I found settlement infomation from the state of Michigan regarding the class action suit against
67 Ken777 : Congratulations on that victory! Personally I hope the crooks are required to pay off your mortgage in full. That is the best way to send the sector
68 StarAC17 : Anyone who walks away pays big time as the bank can choose to go after you if they want and even if they do you can declare bankruptcy. However doing
69 Okie : One of the issues around here is letting borrower short sale the house and the mortgage company turns around and issues a 1099 for the difference in
70 StarAC17 : I'm not one either but I don't understand how you are responsible for taxes for money you still owe, that doesn't make sense to me. I can see you sti
71 Post contains links RFields5421 : You do not still owe any money. However, the tax laws of the US have long required you to count debts you owe which are formally abolished without yo
72 Baroque : The falls in property values given in some of the posts are fascinating if a bit terrifying - as in the "what if that happened here" sense. I heard a
73 Okie : The market is really having a tough time sorting itself out. Before the crash as you had the sub-prime market, ARMs, Freddie, Fannie and speculators
74 RFields5421 : A large percentage of the loans failing and many of the walkaways are not sub-prime mortages. There is deep trouble in the market with homes purchase
75 Falstaff : That would be me.
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