I am so very tired of being punished in this country for being responsible. I actually purchased a house I can afford and continue to make payments and all I get is the opportunity to contribute more taxes to those people that purchased a house they could not afford in the first place. Or those that want to whine about lost property value. A house is an investment and like any investment you have the opportunity to either make or lose money. So for all of those people that are bitching about losing money and wanting a handout I guess that means when you made a profit on your last house you contributed a portion (above and beyond taxes & fees) of those profits to "society".
I purchased my place while it was on the way down. Properties in the area had already gone down by 1/3 or so, so we purchased. Turns out it wasn't done dropping yet. Good news is we don't have as far to recover, bad news is there's still a long way to go.
The rules the article is talking about is paying the mortgage. Lots of people are voluntarily not paying their mortgage, or took out a bigger mortgage than they could afford, and have no responsibility in the matter. There are no consequences. They did something stupid, and the government is saying, hey, it's okay, you didn't do anything wrong.
Well, they did. Yes, the banks giving the loans share the responsibility, but it's not like they forced people into taking mortgages. Two parties were involved. People got greedy, or wanted more than they could afford for whatever reason, and they should have to pay for it. The problem is, so many Americans (both buyers and lenders) became greedy that it's caused a major meltdown.
So the problem is, the people who took reasonable mortgages, have been paying on time, and have loans they can pay off, have lost TONS of cash thanks to the people who are, quite frankly, greedy selfish assh**es, and yet only the greedy selfish people are getting financial help.
The contract spells out both options -- the keep-paying-and-keep-the-house option, and the stop-paying-and-return-the-house option.
That's the whole idea of a collateral backed loan. It's backed by collateral.
If the bank did an extremely poor job at estimating the value of the collateral, the bank's shareholders and customers might argue that they were grossly negligent and ought to be sued for mismanaging their money -- but it's not the house buyer's fault.
That's horses**t! I bought my house 8 years ago, I was pre-approved to spend double what I bought, but I decided to buy something I knew I could AFFORD, not what the bank said I could.
It's not the fault of the banks or the housing market, it's the morons who didn't think about their purchase then went crying to Nanny Government for a handout when they realized they were in too deep.
To be fair, there probably shouldn't have been a bailout for *anyone*. From the smallest homeowner to the biggest bank, the government just should not have gotten involved. Entities need to fail in order for the system to truly correct itself.
Many of those people had no business being homeowners in the first place and the banks who attempted risky ventures (subprime mortgages, credit default swaps, etc) should have been left to collapse and liquidated. Otherwise, we're capitalizing the gains and socializing the losses.
We played by the rules. Bought a house out of foreclosure before that was trendy. Fixed it up, lived in it for five years and sold it for a small (very small) profit. It really depends on which rules you played by. We played by the rule "buy low, sell high". Although in fairness we bought low and sold only slightly higher. We didn't take a bath because we bought really, really low.
Nothing has really changed other than the prices, the same principle applies.
When we sold the house, we moved into our RV full time. After living the lifestyle a while, it would be hard to get me back into a house at any price.
I tried. I have a 760 credit score. I've never missed a mortgage payment. I make a great salary. The lender asked for 3 years of t ax returns which I provided. I was not approved. The reason? My 2008 didn't look too good. My response was, "whose 2008 looked really good." Obviously they hadn't heard about the economic meltdown.
This seems to be the same thing that is happening to everyone I know who are trying to refi.
Oh yeah, I was also told that if I don't pay my mortgage for three months, I might be able to refi. No way.
I've enjoyed the new tactics many banks are trying on strategic defaults - guilt. They are pushing people not to leave a property to which they are sinking in by spinning it as "dishonorable" or making vague (they have to be very very careful what they actually say) on legal action. Many are intimidated by this and continue feeding these organizations money, not fully understanding their rights or the loan documents.
There is absolutely NOTHING wrong with those who played by the rules and otherwise got f**ked in this entire downfall. We're not talking about the lowlifes that actually helped break the system, rather the regular folks that ended up getting screwed. You think feel pitty for the lenders? Hell no - they reaped the benefits of making money hand over fist for years by tossing out - what they knew were - bad loans. Now when it comes time to pony up and deal with the fact many simply wish to walk away, they're making out themselves out to be the victim. In the end, the lenders made the simple agreement of lending out cash, secured by the property, with the profits of said transaction around 150% of value if the entire term runs. There is nothing else to it, very simple yet so many are confused and bullied every day over what they can and cannot do.
I had to pursue this path on behalf of my parents a few years ago. My folks went from making 300K/yr (engineers, father was Vietnam vet) to both of them being hospitalized for declining health over the course of about a year. Even after insurance, they still paid out nearly 500K in medical bills (unknowing that they didn't have to front all of that... again illustrating the power of intimidation of the average consumer) and of course the fallout from one of them being permanently disabled. Nest egg was gone, many assets were liquidated to try and sell off. After shelling out 2K a month in medications and being denied further insurance coverage (thanks BCBS...) bills simply spiraled. I did the math for them and showed that they may survive now, but due to the massive overhead and hit to infrastructure, in the long run they're going to bleed out. They tried to sell the home, but due to entire housing market going to s**t, there was nothing but lowball offers of 50% of value. They weren't even trying to make money on anything, hell they'd plan to lose another 10K in the process... but the entire hting was shaping up to end up costing them 50K out of pocket just to leave a home that continued to drop in value. I convinced them that they had done their due diligence in the past, and had always been on time - but no one was going to care about that, in the end all any company cares about is money.
They turned the home over. It was hard, but it was the logical step given the scenario. The banks went from first being bullies making very hollow threats, to then sending a very official sounding legal letter (which essentially was no different than a mass-mailed collections letter). Once they were getting nowhere with any of that, they then tried the sob story method, trying to make them feel bad for making the decision. That didn't last long, especially when I intervened on their behalf. In the end, the house was gone. I got them set up in a new place and they actually have been far happier in the last few years than they've been in a very long time. I guess change of scenery and reality checks have a way of doing that to ya,
I "play by the rules" and pay my bills and many times have just enough to get my family to the next paycheck by the skin of our teeth. I live responsibly and my kids are my first priority. They have dinner on the table, clean clothes and a story before bed every night. Their needs come first, and our house reflects this.
My wife and I purchased our home nearly eight years ago when she became pregnant. It's our first home. It's a modest older house that is never going to appreciate in value, but I was able to make the payments with my own salary for several years while she stayed home with our kids until they started preschool. They never had daycare or spent the day being raised by strangers.
Back when I was pre-approved for a home loan and they told me I could have 250,000 I laughed and asked what the mortgage payment would be each month. I forget the exact amount but I recall it was beyond my means. I went with a substantially smaller loan that I could afford and would not require a co-signer as not to put my parents at risk.
If I could have seen in a crystal ball that there was a potential "August Surprise" to bail out upside down homeowners you're damn straight I would have been tempted to buy a bigger house so my family could jump on this train. I wish my kids didn't have to share a bedroom, that the upstairs was larger than a dormer, that we had more than one bathroom, that we lived near a better school.
I didn't get the 8000k housing credit back in my taxes, I was just before that window. I probably wouldn't get whatever this bailout will be. I'm sick and f'ing tired of the squeaky wheel getting greased all the time. I continually feel like I'm screwed by a system that rewards poor judgment.
I'm inclined to "throw the bums out" when I step in the voting booth next time. I see no job creation while fearing for my own, no incentives to return manufacturing to America, no efforts to get the national debt heading down, a deflated dollar and a growing debt burden on my children. We continue to fight expensive wars with no goal. I laughed at Ron Paul and now wish I had voted for him.
My lifestyle is less than my parents enjoyed and I'm sad to think of what my kids can expect. It's all going the wrong way.
It depends on if your loan is "no recourse" or not. Be sure to consult an attorney before you walk away, or else they could come after you for the balance.
You are absolutely correct. It seems like the general populous is all about blaming the banks, but the people taking out the loans they could not afford share some of the blame and they are getting off scott-free.
I'll just sit here and quietly pay my mortgage that I can afford because I did not try and take out the largest mortgage I could.
Hey - I don't even own a home - I am still saving for one - but the prices stay high because the government is propping them up, out of my reach. Where's my bailout? Maybe everyone should get a bailout.
I know... let's all bail each other out! Let's send checks to ourselves - problem solved, right? Oh, wait...
1. Those folks who are defaulting are screwing over their neighbors. The more defaults, the lower THEIR home values go and eventually, they'll be underwater too. Then they may decide to default and round and round we go.
2. It ruins your credit for 7 years.
3. The bank may give you a 1099 and you'll have a tax liability for the difference between what they sold it for and what you owed on the mortgage(s).
4. If it's a second home, the bank may sue you to recoup losses.
5. Many folks have lost on their stock portfolios. How is the real estate any different than stock holdings?
6. When you bought the house, it was a good deal then? If you can afford the payments, then what's the problem?
7. Real estate prices will come back. If you bought a single family residential home as an "investment", you need to learn a few things about investing: for one, what constitutes and investment. MYTH: Homes are investments.
8. It's a douche bag thing to do. Just because there's other people being unethical sleazy douche bags doesn't mean you need to jump into the sleaze pit.
9. As losses mount, banks may start suing single family homeowners too.
10. If you're going to do it, be pretty damn sure you're willing to live with the consequences. There's no free lunch in this World - least for us little people.
elsewhere42Aug 10, 2010Buried
I wish more underwater home owners would perform a "strategic default".
It is perfectly legal and satisfies the terms of the loan. (If you don't pay, the bank gets the house)
This will force the banks to play nice or risk loosing an enormous amount of money.
gerakis100Aug 11, 2010Buried
playing by the book = getting screwed by the gov
nickolasscAug 11, 2010Buried
I agree, but unfortunately people have been conditioned to believe it's a moral decision rather than a business decision.
darkmatter911Aug 11, 2010Buried
I am so very tired of being punished in this country for being responsible. I actually purchased a house I can afford and continue to make payments and all I get is the opportunity to contribute more taxes to those people that purchased a house they could not afford in the first place. Or those that want to whine about lost property value. A house is an investment and like any investment you have the opportunity to either make or lose money. So for all of those people that are bitching about losing money and wanting a handout I guess that means when you made a profit on your last house you contributed a portion (above and beyond taxes & fees) of those profits to "society".
wagedomainAug 11, 2010Buried
I purchased my place while it was on the way down. Properties in the area had already gone down by 1/3 or so, so we purchased. Turns out it wasn't done dropping yet. Good news is we don't have as far to recover, bad news is there's still a long way to go.
The rules the article is talking about is paying the mortgage. Lots of people are voluntarily not paying their mortgage, or took out a bigger mortgage than they could afford, and have no responsibility in the matter. There are no consequences. They did something stupid, and the government is saying, hey, it's okay, you didn't do anything wrong.
Well, they did. Yes, the banks giving the loans share the responsibility, but it's not like they forced people into taking mortgages. Two parties were involved. People got greedy, or wanted more than they could afford for whatever reason, and they should have to pay for it. The problem is, so many Americans (both buyers and lenders) became greedy that it's caused a major meltdown.
So the problem is, the people who took reasonable mortgages, have been paying on time, and have loans they can pay off, have lost TONS of cash thanks to the people who are, quite frankly, greedy selfish assh**es, and yet only the greedy selfish people are getting financial help.
The system is completely backwards.
rmxzAug 11, 2010Buried
The contract spells out both options -- the keep-paying-and-keep-the-house option, and the stop-paying-and-return-the-house option.
That's the whole idea of a collateral backed loan. It's backed by collateral.
If the bank did an extremely poor job at estimating the value of the collateral, the bank's shareholders and customers might argue that they were grossly negligent and ought to be sued for mismanaging their money -- but it's not the house buyer's fault.
v3n0mAug 11, 2010Buried
That's horses**t! I bought my house 8 years ago, I was pre-approved to spend double what I bought, but I decided to buy something I knew I could AFFORD, not what the bank said I could.
It's not the fault of the banks or the housing market, it's the morons who didn't think about their purchase then went crying to Nanny Government for a handout when they realized they were in too deep.
betteroffedAug 11, 2010Buried
To be fair, there probably shouldn't have been a bailout for *anyone*. From the smallest homeowner to the biggest bank, the government just should not have gotten involved. Entities need to fail in order for the system to truly correct itself.
Many of those people had no business being homeowners in the first place and the banks who attempted risky ventures (subprime mortgages, credit default swaps, etc) should have been left to collapse and liquidated. Otherwise, we're capitalizing the gains and socializing the losses.
philliesbluntAug 11, 2010Buried
If home prices wearn't blown completely out of proportion, none of this would have been a problem.
dangercollieAug 10, 2010Buried
We played by the rules. Bought a house out of foreclosure before that was trendy. Fixed it up, lived in it for five years and sold it for a small (very small) profit. It really depends on which rules you played by. We played by the rule "buy low, sell high". Although in fairness we bought low and sold only slightly higher. We didn't take a bath because we bought really, really low.
Nothing has really changed other than the prices, the same principle applies.
When we sold the house, we moved into our RV full time. After living the lifestyle a while, it would be hard to get me back into a house at any price.
joeynineAug 11, 2010Buried
I tried. I have a 760 credit score. I've never missed a mortgage payment. I make a great salary. The lender asked for 3 years of t ax returns which I provided. I was not approved. The reason? My 2008 didn't look too good. My response was, "whose 2008 looked really good." Obviously they hadn't heard about the economic meltdown.
This seems to be the same thing that is happening to everyone I know who are trying to refi.
Oh yeah, I was also told that if I don't pay my mortgage for three months, I might be able to refi. No way.
theworldisflatAug 11, 2010Buried
I've enjoyed the new tactics many banks are trying on strategic defaults - guilt. They are pushing people not to leave a property to which they are sinking in by spinning it as "dishonorable" or making vague (they have to be very very careful what they actually say) on legal action. Many are intimidated by this and continue feeding these organizations money, not fully understanding their rights or the loan documents.
There is absolutely NOTHING wrong with those who played by the rules and otherwise got f**ked in this entire downfall. We're not talking about the lowlifes that actually helped break the system, rather the regular folks that ended up getting screwed. You think feel pitty for the lenders? Hell no - they reaped the benefits of making money hand over fist for years by tossing out - what they knew were - bad loans. Now when it comes time to pony up and deal with the fact many simply wish to walk away, they're making out themselves out to be the victim. In the end, the lenders made the simple agreement of lending out cash, secured by the property, with the profits of said transaction around 150% of value if the entire term runs. There is nothing else to it, very simple yet so many are confused and bullied every day over what they can and cannot do.
I had to pursue this path on behalf of my parents a few years ago. My folks went from making 300K/yr (engineers, father was Vietnam vet) to both of them being hospitalized for declining health over the course of about a year. Even after insurance, they still paid out nearly 500K in medical bills (unknowing that they didn't have to front all of that... again illustrating the power of intimidation of the average consumer) and of course the fallout from one of them being permanently disabled. Nest egg was gone, many assets were liquidated to try and sell off. After shelling out 2K a month in medications and being denied further insurance coverage (thanks BCBS...) bills simply spiraled. I did the math for them and showed that they may survive now, but due to the massive overhead and hit to infrastructure, in the long run they're going to bleed out. They tried to sell the home, but due to entire housing market going to s**t, there was nothing but lowball offers of 50% of value. They weren't even trying to make money on anything, hell they'd plan to lose another 10K in the process... but the entire hting was shaping up to end up costing them 50K out of pocket just to leave a home that continued to drop in value. I convinced them that they had done their due diligence in the past, and had always been on time - but no one was going to care about that, in the end all any company cares about is money.
They turned the home over. It was hard, but it was the logical step given the scenario. The banks went from first being bullies making very hollow threats, to then sending a very official sounding legal letter (which essentially was no different than a mass-mailed collections letter). Once they were getting nowhere with any of that, they then tried the sob story method, trying to make them feel bad for making the decision. That didn't last long, especially when I intervened on their behalf. In the end, the house was gone. I got them set up in a new place and they actually have been far happier in the last few years than they've been in a very long time. I guess change of scenery and reality checks have a way of doing that to ya,
shadowman99Aug 11, 2010Buried
I "play by the rules" and pay my bills and many times have just enough to get my family to the next paycheck by the skin of our teeth. I live responsibly and my kids are my first priority. They have dinner on the table, clean clothes and a story before bed every night. Their needs come first, and our house reflects this.
My wife and I purchased our home nearly eight years ago when she became pregnant. It's our first home. It's a modest older house that is never going to appreciate in value, but I was able to make the payments with my own salary for several years while she stayed home with our kids until they started preschool. They never had daycare or spent the day being raised by strangers.
Back when I was pre-approved for a home loan and they told me I could have 250,000 I laughed and asked what the mortgage payment would be each month. I forget the exact amount but I recall it was beyond my means. I went with a substantially smaller loan that I could afford and would not require a co-signer as not to put my parents at risk.
If I could have seen in a crystal ball that there was a potential "August Surprise" to bail out upside down homeowners you're damn straight I would have been tempted to buy a bigger house so my family could jump on this train. I wish my kids didn't have to share a bedroom, that the upstairs was larger than a dormer, that we had more than one bathroom, that we lived near a better school.
I didn't get the 8000k housing credit back in my taxes, I was just before that window. I probably wouldn't get whatever this bailout will be. I'm sick and f'ing tired of the squeaky wheel getting greased all the time. I continually feel like I'm screwed by a system that rewards poor judgment.
I'm inclined to "throw the bums out" when I step in the voting booth next time. I see no job creation while fearing for my own, no incentives to return manufacturing to America, no efforts to get the national debt heading down, a deflated dollar and a growing debt burden on my children. We continue to fight expensive wars with no goal. I laughed at Ron Paul and now wish I had voted for him.
My lifestyle is less than my parents enjoyed and I'm sad to think of what my kids can expect. It's all going the wrong way.
lfabAug 11, 2010Buried
It depends on if your loan is "no recourse" or not. Be sure to consult an attorney before you walk away, or else they could come after you for the balance.
If you have the ability, I say walk.
craftyguyAug 11, 2010Buried
You are absolutely correct. It seems like the general populous is all about blaming the banks, but the people taking out the loans they could not afford share some of the blame and they are getting off scott-free.
I'll just sit here and quietly pay my mortgage that I can afford because I did not try and take out the largest mortgage I could.
Backwards system indeed.
atarioAug 11, 2010Buried
Just keep quietly paying the rich their money. Stay in line, citizen.
ayeroxorAug 11, 2010Buried
Shut up. You're just being shellfish.
/bazooka bubblegum joke writer
generalalcazarAug 11, 2010Buried
Hey - I don't even own a home - I am still saving for one - but the prices stay high because the government is propping them up, out of my reach. Where's my bailout? Maybe everyone should get a bailout.
I know... let's all bail each other out! Let's send checks to ourselves - problem solved, right? Oh, wait...
bluto36Aug 10, 2010Buried
Damn all this time i have been paying my own mortgage.
so not fair, the rich people should be paying for me.
6502samAug 11, 2010Buried
1. Those folks who are defaulting are screwing over their neighbors. The more defaults, the lower THEIR home values go and eventually, they'll be underwater too. Then they may decide to default and round and round we go.
2. It ruins your credit for 7 years.
3. The bank may give you a 1099 and you'll have a tax liability for the difference between what they sold it for and what you owed on the mortgage(s).
4. If it's a second home, the bank may sue you to recoup losses.
5. Many folks have lost on their stock portfolios. How is the real estate any different than stock holdings?
6. When you bought the house, it was a good deal then? If you can afford the payments, then what's the problem?
7. Real estate prices will come back. If you bought a single family residential home as an "investment", you need to learn a few things about investing: for one, what constitutes and investment. MYTH: Homes are investments.
8. It's a douche bag thing to do. Just because there's other people being unethical sleazy douche bags doesn't mean you need to jump into the sleaze pit.
9. As losses mount, banks may start suing single family homeowners too.
10. If you're going to do it, be pretty damn sure you're willing to live with the consequences. There's no free lunch in this World - least for us little people.