Posted on 03/10/2010 4:41:55 PM PST by Kartographer
Jose and Anna Tolentino moved into their Novato condo in August 2005, two days before Jose, a Navy reservist, shipped out to Kuwait.
"I was happy to have my wife in such a nice place while I was away," he said.
But now, with the condo worth about half the $425,000 they paid, his attitude has changed.
"I don't want to keep on paying when the house will never go back up to its value," he said. "It's better to cut our losses, get out of there and go rent."
(Excerpt) Read more at sfgate.com ...
No, wait, better yet, pick up that bong and stay in your cave. You'll do less damage there.
Not defending this couple at all, but can’t you see their point? You all mention you purchased a home you could afford and I bet today it is worth more than you paid. This condo was what was available in 2005 (hindsight being 20/20 we know NOW that it was overpriced) and they probably hoped by 2010 it would be worth a bit more than they paid instead of half.
And to add, who knew the economy in California would tank so miserably?? I sure didn’t and I feel terrible for my neighbors who paid the top of market and then are downsized or furloughed (whether government worker or private).
These are times that are only akin to the Great Depression when other families walked away from their homes.
It’s not just the rich in Napa County that are surrendering to “the moral hazzard!”
Very good point. It’s happened in our neighborhood. The foreclosures have lowered the price of other homes, thus putting more of the homeowners underwater.
We bought our home 20 years ago, and some foreclosoures in the area are selling for the same cost as the homes were 20 years ago (granted some fixing up is needed on those types of sales) but those being hurt the most bought within the past 5 years. With each foreclosure, and lowering of the house values, they’re more and more underwater (and these are not people who bought houses they couldn’t afford...they can afford them, but as the article stated, it’s like throwing good money after bad, especially if it should take another 20 years for prices to return to the value when they bought.) Add to that taxes and insurance (we’re in Florida and homeowner’s is ridiculous) and I think you’re going to see more people walking away.
CRA created this originally. Now Government regulation of mortgage lenders (difficulty of obtaining a mortgage) is guaranteeing that values will remain suppressed.
Under these circumstances, I don't blame people who want to walk away.
Reminds me of the Federal government's commitment and swore duty to secure and protect our sovereignty and borders.
It's one of the few things they are actually supposed to do.
There’s no need to be insulting to me just because I see the world the way it is instead of the way it ought to be. In hard times especially, people worry about their own house before they worry about their neighbor’s house. You can get all angry and philosophical and insulting if you want to but you aren’t going to change that. Incidentally, I’m not hitting on any bong and I have watched my home lose plenty of value over the past two years so I am far from happy about any of this as I would dearly love to sell the damned thing for at least what I paid for it but I can’t so I continue to make my payments like a good little mortgage owner even though I know this investment is a bust.
It varies. You could have $100K structure on a $400K lot, a $400K structure on a $100K lot, or some mix in between.
No. More than half of us are better than that. Most of us have been Boy Scouts and recited "On my Honor ..." as we learned what that meant, or at least learned the same concept from our parents and other positive role models. This sailor is a disgusting excuse for a man and has no business in our Navy, nor is he worthy of raising children. He's not just defaulting on a loan he never should have taken out, he's choosing to default and milking that theft for every dollar it's worth by refusing to make payments or partial payments he could make. He has no honor, and I would never trust him with anything of value. Ever.
* Bought a house I could afford
* Paid as promised (actually better, since I overpay to reduce principal faster)
* Saw it as a place to live, not an investment. I never took a dime of equity out.
I am not saying these all apply for the instant case, but heck, why don’t I qualify for principal reduction?
Answer: Liberalism rewards bad decisions and punishes (or ignores) good ones. It this cultivates those bad decisions, thus turning them into good ones (from an outcome perspective).
I hear your frustration. Hubby and I are just ignoring what everyone else and doing our own thing. At least *we* know that we walk with honor.
Four years ago we qualified for bankruptcy. We'd been stupid and put ourselves in debt up to our ears. One night we sat down with the numbers and had "the talk". We decided, together, that we'd find a way to honor our debt.
It isn't easy, but neither of us has regretted our choice for a minute. In another four years, we'll own our land free and clear, have a healthy savings account and have no other debt.
What hacks me off is that people like us get the opposite of reward. It's like the credit companies find out who's actually paying, then try to milk those people for every dime they can get.
I can't wait until we're no longer playing this stupid game! :-)
God bless you for your morality.
Most Americans see their debt as some sort of affliction, foisted on them from afar. They don’t view their signatures on a contract to repay as a moral obligation, nor do they think the other party has given up something of great value.
Hang in there.
These are the times that try men’s (and women’s) souls.
“I’ve never even been in a home worth a half million dollars. I wonder what they look like inside.”
In California they look like the tract homes that they are. At the height of the bubble they looked like the condos that they were.
I’m not disagreeing. This guy sounds like an all around idiot frankly. Whoever loaned him the money for this condo was the bigger idiot though.
In the Great Depression people lost their homes, they weren’t making strategic decisions to abandon them.
Like I posted earlier—there is no other time in our economic history except the GD. Yes people “lost” their homes due to job loss and investments becoming worthless, sorta like now, with 12.5% unemployment (reality over 20%) in California so many of these people making a strategic decision to walk away are just making the decision for themselves that the bank would make for them anyway. If you can’t make your payment you lose your property.
Granted this couple just doesn’t think they can have a family with the high mortgage payment verses what their income is today. Perhaps their income has dropped due to furlough or pay cut, but their is a huge mental hurdle to overcome when what you are purchasing has lost half its value instead of traditionally increasing in value a few percentage points a year.
Most of us posting here, including me, have purchased a home and enjoyed a nice increase in value over the years albeit with a drop in value in the last two but not under water. I will stay and continue to pay my mortgage because I feel that I haven’t overpaid, that in the long run my value will again begin to rise and I like my home. If I owed double what I paid, felt there would be no hope of recovering any of the purchase price and then had a drop in income, it might occur to me to make a strategic move. I lost equity not purchase price...a big difference.
This is one of the best anecdotal definitions of a "slippery slope" I've ever read.
There have been a number of times since the Great Depression when large numbers of Americans lost their houses. California from 1989-1994 with the end of the Cold War and the decline of the aerospace and defense industry. Texas in the ‘80s with the bust in the oil patch. Detroit and the rust belt with the demise of American steel and manufacturing.
During the ‘89-94 bust homes in California were down as much as 40%. I knew people who had to sell then, but it was due to job relocation and divorce. I never heard of anyone
considering a “strategic foreclosure” until this current episode. One considerable difference is that in the ‘89-94 era everyone had skin in the game, they couldn’t have bought without a downpayment. It is much easier to walk from a home that you financed 100% when you live in a non-recourse state like CA.
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