Renter = Sucker, Reason #23: 5 years free livin'

Alas, NY is a recourse state, so when the lender eventually wins, it can go after you personally.

This article is interesting. I assume the Segal's took out a 2/28 or 3/27 with a huge reset. These loans were designed to be refinanced so that the lender could continue to keep earning fees. Anyone who could not refinance probably could not pay the new rate which might have been 6% higher. But the Segal's should have read the mortgage docs too and some people are fighting foreclosure for no other reason than to continue to live in the home rent free. There's no way to know for sure which party is less wrong here. Perhaps the Segals were initially duped but now insisting on dragging out the process with no real hope for success. They can't refinance since the home is in all likelihood too underwater

If they've been saving up their rent checks for 5 years,
they might be able to buy a house with a massive downpayment,
and live for 1/2 the cost of renting for the rest of their lives.

Dealboy, you are right - this story proves that owners are 100% smarter than renters.

Yep, those stories sure make it sound like they're living the life. Too bad you're being forced to bleed out your losses slowly up here.

Who told these people to buy a home with an exploding ARM. Who takes out a Purchase mortgage on property without going through a lawyer, who presumably is hired to handle other facets of the purchase. These may not have been dealing with the most reputable lenders(brokers), but they clearly bear some responsibility here. And five years rent free? Give me a break! They're clearly receiving some benefit here.

"As the waterfront property's value skyrocketed, eventually reaching $750,000, she refinanced twice (once to expand a business), and took out a second mortgage. She now owes more than $600,000 on the home, which is worth only $235,000."

W....t.....f..... Really?

Missed that part , I should've read to the end. These people made a Faustian bargain and lost. Nobody should feel sorry for them.

Paid $135k
Now owes $600k

In other words, in addition to 5 years of free living,
she got PAID over $400,000 to live there.

Holy jackpot lottery, Batman!

Same story with lots of multi-family RE investors. Re-fi for some multiple of what you paid or what it's worth, take the cash after plowing a little bit into improvements, and hand keys to the lender.

There, of course, you're talking tens or hundreds of millions in gravy. See, e.g., Savoy Park, Riverton Houses, and on and on.

holy bankrupt moron, boy blunder!

owner=retiree eating alpo, living in some park

doucheboy!!
dumbboy!!

Wbuttocks, what are you 14 years old?

Sorry, but cashing out $400k and never paying it back, and living for free for 5 years simply beats the living daylights out of renting. If they rented, they'd have the same problems, except none of the benefits. You're not very bright, are you?

And how much are their ongoing legal fees? Or are their lawyers working for free too?

Dealboy, I've known a few people who have played those sorts of games over the years, long enough to see them in their senior years. It doesn't end up pretty. The problem with the approach is that it usually goes hand-in-hand with little accumulated wealth over the years. So they live large for 5-10 years, and then they crash and never recover. They end up living significantly less well than their peers: having your wealth reset to zero, with no access to credit, at age 35 or 45 or 55 is very hard to come back from.

How come they don't just sock away the difference and end up more wealthy? A few impediments. First, there are recourse states. Sure you can try to sneak bits and pieces here & there, but never big money. Second, they are usually bad speculators. Half the cash-out is spent, the other half is put in bad investments (another bubble house). Then, they lose all their money, and their bad credit keeps them from being able to purchase anything at bargain-prices after the crash. So they miss out on a very big opportunity.

So if your goal in life is to blow through $50K a year of OPM between ages of 35 & 45, and then have $0 to your name with no ability to buy when prices have crashed (and not until you're 50), setting you back 15 years from your peers during your high-earning years, then yeah, you've got a great strategy.

And pity the job-seeker whose background check and credit report show those sorts of atrocities. Unemployable for life.

the patience you all have with dumbboy is impressive

in all fairness, tho, i think i covered the results of dumbboy's "living free" deal with the vision of bankrupt retiree eating alpo, sleeping on a park bench (a vision that i think will too often come true for many baby-boomer retirees, based on problems o0ther than real-estate induced bankruptcy)

.

inonada,

I know they aren't saving anything.
The irony is that only a responsible person would be able to realize lasting advantage of those tactics. The exact type of person who DOESNT blow thru 400k in HELOC.

I am not advocating their plan, as my mortgage is paid off.
But, the point remains, they got one hell of a free ride that could never be pulled off as a renter.

"eating alpo, sleeping on a park bench"

Well - better than life in Long Island City.

HAHAHAHA!