"People like me are beginning to feel like suckers Why not let it go in default and rent a better place for less?”
Started by Riversider
almost 16 years ago
Posts: 13572
Member since: Apr 2009
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http://www.nytimes.com/2010/02/03/business/03walk.html?ref=business After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing. Since the... [more]
http://www.nytimes.com/2010/02/03/business/03walk.html?ref=business
After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing.
Since the beginning of December, I’ve advised 60 people to walk away,” said Steve Walsh, a mortgage broker in Scottsdale, Ariz.
“The overwhelming bulk of people who have negative equity stay in their homes and keep paying,” said Michael S. Barr, assistant Treasury secretary for financial institutions.
“It doesn’t seem right that I can rent a place somewhere for half of what I’m paying,” he said. “I told my bank, ‘Just take a little bite out of what I owe. That would ease me up. Isn’t that why the president gave you all this money?’ ”
Bank of America did not agree, so Mr. Figliola, who is 48, sees no recourse other than walking away. “I don’t believe this is the right thing to do,” he said, “but I’ve got to survive.”
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Response by marco_m
almost 16 years ago
Posts: 2481
Member since: Dec 2008
when in rome do as the romans. the govt set the precedence and now people are gonna start walkin...its chaos!! lol
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Response by sledgehammer
almost 16 years ago
Posts: 899
Member since: Mar 2009
I totally agree with Steve Walsh. People shall just walk away and give the keys back to the bank. At some point, banks will have to break and unload their inventory at a steep discount. They won't have any options anyway as i doubt the congress is willing to bail banks out again after they screwed Washington and us over and used the Tarp money to speculate to their own interest only!
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Response by sledgehammer
almost 16 years ago
Posts: 899
Member since: Mar 2009
Pay back time bankers! One way or another!
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Response by Riversider
almost 16 years ago
Posts: 13572
Member since: Apr 2009
Let's not call it defaulting, let's just say it's an efficient breach. And wall street doesn't want there stinking mortgages back. We're starting to see an interesting phenomenon. Wall Street is reducing mortgage balances(73% on average in one securitization Home Equiyt Asset Trust 2007-2) and deferring that principal for 30 years and turning the rest of the balance to an interest only payment(YES THIS IS EXTEND AND PRETEND).
Now let's see what that means, the home owner is now a renter who has no incentive to maintain their home and if circumstances warrant will eventually abandon it.
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Response by notadmin
almost 16 years ago
Posts: 3835
Member since: Jul 2008
“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”
i agree with him. buying at the top of the mother of all bubbles is for suckers.
"They are stretched, aggrieved and restless. "
that's the way renters felt when buyers used to brag about their financial acumen.
anyway, i think it's best for these people to walk away, the optimal would be to live rent free while the foreclosure process goes on... with bad credit cash will be king.
and this is a twist... but for people living together, would it be possible to transfer the title to the name of only 1 person... so that the credit of 1 adult member of the family gets spared? saving all the cash from not having housing expenses for all those months and relying on 1 good credit score should be enough (maybe this can only work out for those that are not married, don't know).
the problem is not that they are underwater like during past cycles. the big issue here is that they are underwater after paying double times income that the people underwater 30 years ago paid (during the 80s, this is the example that people bring up when giving moralistic stance).
so imagine a double income family being able to rent for half what housing is costing them. not crazy to imagine that they pay say 40% of their income in housing. renting might allow them to have a stay at home mom if they have young kids (a luxury for many middle class families!), not being so stretched, saving for retirement for real (not by buying a depreciating asset with debt)... the benefits are many.
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Response by somewhereelse
almost 16 years ago
Posts: 7435
Member since: Oct 2009
Morgan Stanley did it. F them.
If the banks can do it, do it back to them.
> that's the way renters felt when buyers used to brag about their financial acumen.
Well, the world has come full circle...
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Response by aped
almost 16 years ago
Posts: 11
Member since: Jan 2010
Look out below!
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Response by somewhereelse
almost 16 years ago
Posts: 7435
Member since: Oct 2009
On in the papers, they referenced an article on walking away in one of the papers.
Apparently 75% (house worth relative to mortgage debt) is the magic number at which folks start to walk away. Given the declines in certain areas, you have to figure a lot of houses fit that bill...
when in rome do as the romans. the govt set the precedence and now people are gonna start walkin...its chaos!! lol
I totally agree with Steve Walsh. People shall just walk away and give the keys back to the bank. At some point, banks will have to break and unload their inventory at a steep discount. They won't have any options anyway as i doubt the congress is willing to bail banks out again after they screwed Washington and us over and used the Tarp money to speculate to their own interest only!
Pay back time bankers! One way or another!
Let's not call it defaulting, let's just say it's an efficient breach. And wall street doesn't want there stinking mortgages back. We're starting to see an interesting phenomenon. Wall Street is reducing mortgage balances(73% on average in one securitization Home Equiyt Asset Trust 2007-2) and deferring that principal for 30 years and turning the rest of the balance to an interest only payment(YES THIS IS EXTEND AND PRETEND).
Now let's see what that means, the home owner is now a renter who has no incentive to maintain their home and if circumstances warrant will eventually abandon it.
“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”
i agree with him. buying at the top of the mother of all bubbles is for suckers.
"They are stretched, aggrieved and restless. "
that's the way renters felt when buyers used to brag about their financial acumen.
anyway, i think it's best for these people to walk away, the optimal would be to live rent free while the foreclosure process goes on... with bad credit cash will be king.
and this is a twist... but for people living together, would it be possible to transfer the title to the name of only 1 person... so that the credit of 1 adult member of the family gets spared? saving all the cash from not having housing expenses for all those months and relying on 1 good credit score should be enough (maybe this can only work out for those that are not married, don't know).
the problem is not that they are underwater like during past cycles. the big issue here is that they are underwater after paying double times income that the people underwater 30 years ago paid (during the 80s, this is the example that people bring up when giving moralistic stance).
so imagine a double income family being able to rent for half what housing is costing them. not crazy to imagine that they pay say 40% of their income in housing. renting might allow them to have a stay at home mom if they have young kids (a luxury for many middle class families!), not being so stretched, saving for retirement for real (not by buying a depreciating asset with debt)... the benefits are many.
Morgan Stanley did it. F them.
If the banks can do it, do it back to them.
> that's the way renters felt when buyers used to brag about their financial acumen.
Well, the world has come full circle...
Look out below!
On in the papers, they referenced an article on walking away in one of the papers.
Apparently 75% (house worth relative to mortgage debt) is the magic number at which folks start to walk away. Given the declines in certain areas, you have to figure a lot of houses fit that bill...