I close on my first home on Monday. I’m excited and nervous, and all of my ducks are in a row. To say that someone would just leave their home for nothing seems ludicrous to me, but I’m a greenhorn in these matters, I suppose.
I got myself into something that I knew I could afford, something that would appreciate over time and something that is fixed and relatively static for the time I’ll be there (I anticipate 10 - 15 years). This article makes me think I’ve done something wrong while my heart tells me to keep on truckin!
On the lighter side, I’ve heard the industry term for these new loans are ‘Neutron Bomb’ loans - in 2-3 years the people are gone, but the homes are still standing ...
Look, the overwhelming majority (and I mean something like 95% or more) of these situations where somebody walks away from a property, they are not the home the person lives in. They are ‘second homes’ which are actually investment properties turn investment disasters and ‘income properties’ turn income vaccuums.
BofA took loans with zero down and when the market goes down 20% the home is now 20% upside down. And if you are a homeowner in other financial trouble and you are now paying a mortgage on a home which will take more than a decade to be worth what you are paying on it, the idea doesn’t exactly lack sense.
The ‘cure’ to this (if the geniuses in Congress choose to ‘solve’ this problem) will basically destroy real estate even further than the whole banking screw-up which has turned a recession into a depression in many markets.
This would have been one of the normal downturns or corrections that we’ve seen in the last fifty years which would have been a little deeper because of the level of prior activity but also recovered faster because of the friendly tax treatment of capital gains. But the banking scandals with the over-collateralizing of mortgages on Wall Street by those scheming bastards are causing a total collapse in a number of markets and preventing otherwise healthy markets from either recovering or gaining ground.
And the Feds had no more idea that the banks were building a house of cards around every mortgage they took out than the Feds knew that Arthur Anderson was creating a house of debt-ridden scams in some of the countries largest corporations. But in both cases, it was Wall Street would profitted from it and failed to look behind the curtain as they promise their investors they do when they promote and recommend various companies stock.
As they revamp, Fannie and Freddie to “help” the irresponsible - guess who gets the bill?
YOU, YOU IDIOT!
So plan on using your welfare check (the “rebate”) to help finance that too. I suppose that's Bush's idea of "compassionate conservatism".
I feel so quaint if not a relic for having bought a house primarily as a place to live in for many years.
bump for later
“Bank of Amigos” again...
A Credit Card You Want to Toss
http://www.freerepublic.com/focus/f-news/1966742/posts
Bank of America’s New Credit Card Targets Illegal Immigrants
http://www.foxnews.com/story/0,2933,251672,00.html
>> “There’s been a change in social attitudes toward default ... We’re seeing people who are current on their
>>credit cards but are defaulting on their mortgages ... I’m astonished that people would walk away from their homes.”
Why should he be surprised? The Bank of America was the vanguard in trying to change American attitudes toward debt. They issued the first true credit card. They encouraged Americans to regard no longer their revolving debt as shameful.
If I wanted to sell, which I don't, (I really hate cold) I'd wait a year or two before even considering it.
What about Private Mortgage Insurance? Not one word about this being mentioned......every one of those loans made with less than 20% down had to carry it, those that provided the insurance can bail these suckers out. Not the tax payer.
The housing market collapsed many decades ago due to values inflating beyond the means of everyday people to purchase them. It has since been propped up with creative financing. Many decades ago, home loans were unheard of. In the 50’s, 10 year mortgages were the rule, but over time stretched out to 15 years. Next came 20 year mortgages and now 30 years. During the most recent boom, we saw more 40 year mortgages and even a few at 50!
Think this is bad? Just wait till they come out with 15 year car loans.
When bankers were wise and acted responsibly and in the interest of their stockholders, foreclosures worked more in their favor than the borrowers. But what we have seen is that banks have become greedy and not acted in their stockholders best interest and it may be that we have too many loans in which there was more irresponsiblity on the part of the lender than the borrower. He cannot blame the borrower for what was a terribly unsound and risky business plan, and that was lending money on home values which had far outpaced the borrower's income and ablity to pay.
Maybe we’ll be going back to the days where mortgage lenders expected 20% down.
bring back debtors prison for these deadbeats.
Why SHOULD they get more? They get the house. The lender probably went along with the inflated value on the appraisal. And, if there's equity in the house they get the money over the original price.
I won’t be paying - whoever lent them the money will be paying.
If Hillary and Obama have thier way, yes! we will be paying the bill. This is the change they have in store for us. income redistribution
What Moms and Dads paid for the total cost of their homes in the late 50s and early 60s, today’s working class pays that, every single month, for 30 years... just for the monthly mortgage alone.