Posted on 01/26/2010 8:16:22 AM PST by TheThinker
Yup, the article conviently skipped over the fact that in a number of states, you cannot simply “walk away” from your mortgage loan scot free.
The loan servicer will come after you, just like if you “walk away” from any other legal debt.
I like how people are thinking they can “stick it to the banks”, as though the banks hold mortgages any longer (they are almost all securitized). And, even if that were true, there was absolutely no representation by the bank or anybody that the home would not decline in value.
Rationalization abounds these days. We see it every day, when Zero begins reading nonsense from his ObamaPrompter....
I won't flame you, but I will disagree.
I believe that the actions that the Fed have taken combined with the Obama Administration's spending will create runaway inflation as a previous poster stated. Everybody will be a millionaire (probably on a weekly paycheck basis) and your piddling little $3000 monthly mortgage payment won't even equal what you spend for beer money.
Just be very careful and don’t try to “outsmart” the financial system. KISS.
;-)
Yep...that’s what they have in mind. The creation of hyperinflation is deliberate. Even if you own the house because the mortgage became cheaper, you still won’t be able to buy things to repair it.
Not necessarily. We tried to buy a short-sale house several years ago and the owner got the bank to sign away their need to pay the difference. After waiting a year, we still didn’t get the house because the bank holding the second mortgage wouldn’t accept a similar deal. I would NEVER ever again bid on a short sale.
The lender voluntarilly signed a contract with the only recourse in case of default being foreclosure.
Because you had the option to NOT buy a house with a usurious variable rate.
The lender had the option not to loan the money.
Because maybe you shouldnt have been thinking along the lines of an investment.
BOTH parties viewed it as an investment. Both parties assumed that perpetually rising house prices would make it a profitable investment. Both parties were wrong. House prices DIDN'T keep rising. Since both parties viewed it as an investment, why should only one party actually be at risk if the bet on future property values was wrong?
“So lets see we walk away from our mortgage, because really since it was probably a no money down sub prime mortgage it’s no skin off our back. The poor sap next door who put 20% down and struggles to keep current on his mortgage is now living next to a foreclosure. His home value now goes down more than it would have. He’s still paying though but you just wiped out a good part of his net worth. Good plan. “
Either way the house is worth less, the price of a house doens’t fall because the neighbor sells his house for less. The sale just registers the fact that housing prices have already fallen. BTW the housing isn’t going to recover to the previous highs for many years. Nor should they. It took all kinds of mortgage fraud to pump the market up to those levels. We should let them correct to their natural level which is probably at least 25% lower than they are now.
That's the sad part of all this, that these Marxists are enabling these borrowers into believing that they are victims and providing the means to accommodate it.
Leave your 401k alone. The bank and creditors took a risk and were well aware of the potential consequences. Your retirement accounts cannot be touched by creditors, so whatever you do, leave them there for your future.
If I were trying to outsmart anyone it would involve the IRS building, a guy in a turban and a smoking vest
No penalty if you're over 59.5 years of age.
The problem is that banks are not permitted to go back to the old days because of laws passed by Clinton, Barney Frank, and crew.
The bank shafted you by loaning you money at a low interest rate to buy a home?
Actually, the penalty for early withdrawal is waived if the withdrawal is used to pay back-taxes, so the IRS share is penalty-free.
Additionally, the income tax due is based upon this year’s income tax rate. As Cowman is facing unemployment, it’s not unthinkable that his income will be significantly reduced, meaning he may end up making $20,000 or less for the entire year, and his tax rate may be less than 15% (and may in fact be zero if he can get his AGI down to zero which is possible). With the penalty for early withdrawal, he may only have a 22-25% hit on the non-IRS-payback share of his withdrawals.
For some people (especially those with little or zero AGI), it is actually wiser to pull out from your 401K, pay the 10% fine and pay down other debts. If you have 4 years left on an 7% car loan, but this year you could adjust your AGI down to zero, you would actually be money ahead to take a one-time 10% penalty to pay off your car; the compounded interest of the car payments would be larger than the penalty paid.
No, I’m not a tax attorney or even a CPA, but I have gone against the IRS several times (and won - the reward being my annual audit now), and know for a fact that the penalty is waived if the withdrawal is used to pay off back taxes.
You have seen the effect with mortgage originators tightening underwriting standards. The only place you can get a low down loan now is through the FHA or VA. Whether it is immoral or not, people are doing this. Since BK laws were reformed, people who are responsible in paying their obligation pay for the losses creditors suffer when individuals file for bankruptcy. Society through its legislature decides how losses from people who cannot or will not pay will be distributed. Back in Victorian England you could be thrown into debtors' prison until your debts were cleared. Society thought this was too severe a punishment so BK laws were reformed essentially shifting the costs to society at large.
Amazing, isn’t it? Heck, we have lost equity in our house (we moved to FL during the boom, not quite the top but certainly on the way up). However, unless we hit a point where for some reason we cannot pay (I don’t expect that to happen, but I suppose something unforseen could happen) we will continue to pay our mortgage payments. We seem to be the sort of idiots other people rely on to take up the slack.
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