Posted on 02/23/2010 4:03:22 PM PST by rumrunner
So, after waiting for more than five years to finally buy a house that I thought was fairly priced in socal, and having paid out about $150,000 in rent over that time period, I'm about to close on a short sale.
The banks/investors (BofA, Citi) are going to "lose" about $400,000 on the house. The guy that's selling the house never lived in it. He never put a dime of his own money it. He will still have his own house in a different part of the county. He will keep that house. He is out nothing.
I did a little digging about short sales and came upon this gem this month:
Guy buys a house in Florida. $290k mortgage. Takes out a Heloc of $140,000. Uses it for his S corp business. He asks that his loan be modified. Citi says "sure". He settles the entire Heloc for $15,000 and the Heloc is now extinguished. Yes, 10% on the dollar. He still has his business and other assets.
This was his reply in that forum:
"WOOOOOHOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!! I just got my letter!!!!! $15,000.00 or 10% whichever is greater!!! I just settled 140K for 15K!!!!
THANK YOU xxxx You guys are the best!!!! I'm sooo happy right now!!!!!!!!!!!!!!!!
I was never behind on my 1st or 2nd. My credit is still good, the only remark will show paid in full but less than agreed on my credit file."
Normally, I wouldn't care. The bank entered into a contract. The homeowner and/or the bank lost. But usually when people gamble, they lose with their own money. But it isn't their money anymore; the homeowner's and bank's losses are now socialized. The homeowners and banks are paying off their markers with our money. And laughing all the way to the bank. At me. At you.
So, in closing, the guy in Florida and his business thanks you, and me, collectively known as the "taxpaying suckers of Freerepublic."
PS: Barney Frank, Paulson, Geithner, Greenspan, Blankfein, Buffett and other assorted "masters of the universe", financial genius all, thank you, too.
Wonder how that mark will look for the next time.
Like they care about their credit scores.
You only need two years from a BANKRUPTCY to get a loan with FHA. Two years.
666 ?
Yea, I think the guy might have been embellishing a little, or it was a fluke.
It is not normally that simple.
But it true that Obama and company put the entire national treasury in escrow, and now they are looking for ways to spend it. Maybe? Idunno?
You nailed it. For over two years I have been telling my friends that are stuck to stop paying. Every one eventually had no choice. The ones that did the best are the ones that stopped earliest. It is not immoral. It is simple contract law. And the result is a temporarily damaged (notice I did not say “permanently destroyed”) credit score.
Heck, I just found out my brother in law that had nine rental homes in Arizona just walked away from ALL of them. He still owns the home he lives in though, and makes the payments. He still has a good job (very good, actually). He just lost all of his renters as things went sour and the payments would have quickly bankrupted him.
What’s a heloc?
Thieves and such often rejoice with like “suckers” bluster when they have scammed or rip’d-off someone......
Home equity line of credit.
Home equity line of credit
And here is his follow up:
“Guys I may have just been duped by Citi Mortgage, I sent in the 15K as the letter states, now I’m getting calls from collections asking where is our 125K? Now that I’m readin this letter it states they are accepting a short payoff of 15K OR the net proceeds from settlement, whichever is greater. WHat the hell does “net proceeds from settlement” mean? Could I have been swindled here? The letter also goes on to say the money I send in is theirs to keep. If they try to say they never agreed on 15K I guess they can right?”
Now who is the sucka?
My wife and I ate nothing but noodles for a year to save 20% down for our first home, the one we live in now.
We no longer have to eat noodles but still saved the necessary 25% required to buy land and recently purchased 46 acres.
I no longer eat noodles.
This isn’t meant to twist the knife. But maybe the lesson here is that some people have invested too heavily in all this “Pay your bills on time or you’re a bad person” stuff.
Back when Bush signed off on the Bankruptcy Reform Bill, in 2001, I switched to the democrats after 30 years of being a republican. I did a post here and I got of bunch of these type replies. That only deadbeats and crooks wouldn’t pay their credit card bill, etc. Of course, I replied that middle class families were being preyed on, and ought to be able to take chapter 7, period. That went over like a ton of bricks.
Now, today, we look at the people who made bad and stupid loans and realize they really are predators. At least more of us do now, than did then.
Maybe what really has you mad, it that what you have been taking as a fair system, isn’t. In that case, the anger should be aimed at the bankers, not the people who were able to beat them at their own game, or at least, lose less.
parsy, who ascribes to the WWF rules of morality at times
Home equity lines are secured by the equity in the home so methinks Citi now owns his house.
Home Equity Line of Credit
If one is late one month on a 2,000 a month payment (this is a 240k house at 5.x percent) then it may take him 4 months to pick that up, with the usual left-over of $500 monthly “just in case”.
I use my own example.
I planned on a “just in case” that was similar to a car payment. I own a paid-off car, so I had no car payment. But after 4 months of unemployment, I found 16 months of catch up . like an imaginary Mercedes payment.
Coming to the end of that, I’m glad I planned this way. But still... 4 months isn’t even that bad. I was returning cans and working at an arcade, third shift stocking shelves and digging ditches at construction sites within my first 2 weeks of unemployment. it’s very difficult.
My story isn’t even one of a predatory loan - but a predatory ex wife who promised to be there with her income... which quickly went the direction of another dude 7 years younger than me within my first 2 weeks of unemployment.
Anything can happen. People lost their homes before 2004 too.
Thank you!
Hi RobRoy,
Thinking of walking away here too. Upside down 100K AND going through divorce. I have kept the house as part of the divorce but is going to be tough to make the payments and it is worh far less than the loans (100k). What do you think?
Thank you!
I’d walk unless you make over $150K a year...
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