Saturn - I didn't see in the article where they also discuss the
mortgages owned by Fannie or freddit that are so upside down on a
loan to value basis that homeowners are going to just walk away.
RIGHT NOW I could walk away from my 300K mortgage, go two doors
down the street and buy my identical house for 160K less than what
I owe on my house. Or I go 3 doors the other direction and pick up
a slight fixer uppper - same model for even 15K less than
that....Where is the incentive to keep paying for my house? It's
the RIGHT thing to do, but is it the sound business thing to do?
How many of these fannie's and freddie's are in the same boat that
I am in - PLENTY! There will be another round of "jungle mail" as
the next wave of foreclosures begins again.
I used to think that to honor our word, the right thing to do is
to keep paying our mortgage... but having listened to this
argument, I realize that our word was not to keep paying, but to
keep paying or to turn over the collateral (in this case the house)
to the lender.
Morality and good business sense go hand in hand in this case,
because the banks, in order to protect themselves, have asked us to
hand them the collateral in the event that we are unable or
unwilling to pay, unless the mortgage contract includes something
else.
If you walked away from your mortage obligatons you would not be
able to buy the cheaper house 3 doors down with another mortgage,
surely?
Like the guy says in the first video, these bad loans are piling
up debt on the public like one big fat mortgage, except they have
no house as collateral against the debt.
It seems to me there will be a debt owed by every individual in
the nation to the tune of six figures, coupled with compound
interest, the idea of paying it off would be comical if the outcome
was anything other than enslavement.
How we got into this situation was because of the availability
of cheap credit, and the foolishness of those who spent more than
they had, safe in the knowledge they could walk away from thei
obligations. Leaving us all impoverished.
I see Venezuela's Chavez has debased the currency by 50% on
imported goods, a strategy that could be employed by other
debtor nations like ours.
It is feasible if you time it correctly OR pay cash for the new
house. I could likely qualify for a new mortgage even before
"selling" the existing house/mortgage. So you get a one shot deal.
Another big thing going on around the country - or in the areas
hardest hit by the declining values, are short sales. you find a
buyer that buys your home for less than you owe and the banks are
accepting this stuff. Same result - but the departing homeowner is
not killed on their credit rating. Besides, credit ratings are only
needed if you need it. AND if you take a hit, you can rebuild a
credit rating in a lot less time than it would take for housing
values to regain 100 - 150%. it's a nightmare that America is going
to have to face one way or another. If the folks that CAN pay their
mortgages keep paying, are they really doing anything that REALLY
helps the whole of the economy? In times like this is Capital
preservation not Priority ONE? I did not buy a home that I could
not afford, nor did I buy it with no money down. I have a huge cash
investment in my house so that is already lost. To continue BUYING
my house equates in my mind to buying Bear Sterns all the way to
$2.00 - how did that work out for everyone?
I take your point on about capital preservation and what you say
about continuing to buy your house being a bad investment idea, but
if you were unable or unwilling to pay your mortgage and had
your property repossesed, are you saying you could still go and
obtain another mortgage for another property?
Posted by rgoodwin on 11th of Jan 2010 at 07:09 pm
No. Obviously if you wait until you lose a home to foreclosure,
you are going to kill all chance of getting another mortgage for
many years. BUT if you were to purchase a second home, THEN let
your existing go to foreclosure, you have "beat" the system. I know
a few folks that have indeed done just that. Fo course paying cash
for a home may be an option as well.
Who says paying your mortgage is the right thing to do?
Is it a law, part of a religion? NO the banks say it - why?
to prevent their own losses at your expense. You only have
one life to live, and only make so much money, what you do with it
only you can decide; but I would have walked away if I was
you.
Seeing the buddy buddy system that runs our government, the
illicit returns banks are making at the expense of taxpayers, and
the bailouts for EVERYONE but the consumer has me completely
despondent in our economic situation.
I am sorry you are in that situation and I commend you for being
a moral pillar in the wake of recent events, but that decision will
have an 20 year impact on your financial life assuming you have a
30 year mortgage to pay down. Just run one of the mortgage
calculators online and look at the amortization schedule. It
takes 20 years on a 30 year mortgage at 6% to bring the principal
balance down to 160 from 300K.
-chad
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mortgages
Posted by parki48 on 11th of Jan 2010 at 12:29 pm
this is an old video but shows Steve's chart on mortgages
http://www.cbsnews.com/video/watch/?id=4668112n
also, google David Walker, he is the government accountant, he is about to give up
American taxpayer nightmare
Posted by saturn6 on 11th of Jan 2010 at 02:31 pm
Fannie and Freddie are now full wards of the state, departments of the U.S. government. And their obligations are now the obligations of the American taxpayer.
American Taxpayer Nightmare
Posted by rgoodwin on 11th of Jan 2010 at 03:13 pm
Saturn - I didn't see in the article where they also discuss the mortgages owned by Fannie or freddit that are so upside down on a loan to value basis that homeowners are going to just walk away. RIGHT NOW I could walk away from my 300K mortgage, go two doors down the street and buy my identical house for 160K less than what I owe on my house. Or I go 3 doors the other direction and pick up a slight fixer uppper - same model for even 15K less than that....Where is the incentive to keep paying for my house? It's the RIGHT thing to do, but is it the sound business thing to do? How many of these fannie's and freddie's are in the same boat that I am in - PLENTY! There will be another round of "jungle mail" as the next wave of foreclosures begins again.
rgoodwin - mortgages revisited
Posted by mamaduck on 14th of Jan 2010 at 12:19 pm
Check out this on Yahoo
I used to think that to honor our word, the right thing to do is to keep paying our mortgage... but having listened to this argument, I realize that our word was not to keep paying, but to keep paying or to turn over the collateral (in this case the house) to the lender.
Morality and good business sense go hand in hand in this case, because the banks, in order to protect themselves, have asked us to hand them the collateral in the event that we are unable or unwilling to pay, unless the mortgage contract includes something else.
Anyone remember Mortgage burning parties? for
Posted by ditch on 14th of Jan 2010 at 12:29 pm
Anyone remember Mortgage burning parties?
for all you kids, it was something that used to happen all the time before the banks invented home equity loans.
rgoodwin...
Posted by saturn6 on 11th of Jan 2010 at 05:01 pm
If you walked away from your mortage obligatons you would not be able to buy the cheaper house 3 doors down with another mortgage, surely?
Like the guy says in the first video, these bad loans are piling up debt on the public like one big fat mortgage, except they have no house as collateral against the debt.
It seems to me there will be a debt owed by every individual in the nation to the tune of six figures, coupled with compound interest, the idea of paying it off would be comical if the outcome was anything other than enslavement.
How we got into this situation was because of the availability of cheap credit, and the foolishness of those who spent more than they had, safe in the knowledge they could walk away from thei obligations. Leaving us all impoverished.
I see Venezuela's Chavez has debased the currency by 50% on imported goods, a strategy that could be employed by other debtor nations like ours.
saturn6
Posted by rgoodwin on 11th of Jan 2010 at 05:16 pm
It is feasible if you time it correctly OR pay cash for the new house. I could likely qualify for a new mortgage even before "selling" the existing house/mortgage. So you get a one shot deal. Another big thing going on around the country - or in the areas hardest hit by the declining values, are short sales. you find a buyer that buys your home for less than you owe and the banks are accepting this stuff. Same result - but the departing homeowner is not killed on their credit rating. Besides, credit ratings are only needed if you need it. AND if you take a hit, you can rebuild a credit rating in a lot less time than it would take for housing values to regain 100 - 150%. it's a nightmare that America is going to have to face one way or another. If the folks that CAN pay their mortgages keep paying, are they really doing anything that REALLY helps the whole of the economy? In times like this is Capital preservation not Priority ONE? I did not buy a home that I could not afford, nor did I buy it with no money down. I have a huge cash investment in my house so that is already lost. To continue BUYING my house equates in my mind to buying Bear Sterns all the way to $2.00 - how did that work out for everyone?
rgoodwin...
Posted by saturn6 on 11th of Jan 2010 at 05:56 pm
I take your point on about capital preservation and what you say about continuing to buy your house being a bad investment idea, but if you were unable or unwilling to pay your mortgage and had your property repossesed, are you saying you could still go and obtain another mortgage for another property?
saturn6
Posted by rgoodwin on 11th of Jan 2010 at 07:09 pm
No. Obviously if you wait until you lose a home to foreclosure, you are going to kill all chance of getting another mortgage for many years. BUT if you were to purchase a second home, THEN let your existing go to foreclosure, you have "beat" the system. I know a few folks that have indeed done just that. Fo course paying cash for a home may be an option as well.
rgoodwin...
Posted by saturn6 on 12th of Jan 2010 at 03:25 am
This is interesting...
http://www.businessinsider.com/how-to-walk-away-from-your-mortgage-2010-1#the-basic-calculation-1
Plus,you now get a 6500.00
Posted by shamutooth on 11th of Jan 2010 at 07:45 pm
Plus,you now get a 6500.00 credit when you buy another home to move into. I wonder how many people take the credit and default on the first home.
Title: MORE Off Topic regarding
Posted by cwa82675 on 11th of Jan 2010 at 03:53 pm
Robin,
Who says paying your mortgage is the right thing to do? Is it a law, part of a religion? NO the banks say it - why? to prevent their own losses at your expense. You only have one life to live, and only make so much money, what you do with it only you can decide; but I would have walked away if I was you.
Seeing the buddy buddy system that runs our government, the illicit returns banks are making at the expense of taxpayers, and the bailouts for EVERYONE but the consumer has me completely despondent in our economic situation.
I am sorry you are in that situation and I commend you for being a moral pillar in the wake of recent events, but that decision will have an 20 year impact on your financial life assuming you have a 30 year mortgage to pay down. Just run one of the mortgage calculators online and look at the amortization schedule. It takes 20 years on a 30 year mortgage at 6% to bring the principal balance down to 160 from 300K.
-chad