Posted on 05/31/2010 12:22:29 PM PDT by Lorianne
In areas hardest hit by plunging real-estate values - including the San Joaquin Valley - some people who can afford their mortgage are opting to walk away from their loan and let their bank repossess the house.
"It's very stressful to get to that point," said James Graham, a 48-year-old power-plant worker who walked away from his home in Bakersfield last fall. "You're raised up to do the right thing and pay your mortgage, pay your bills."
"But when you get to that point where it's time to walk, it's time."
It's called "strategic default," and experts say it stems from frustration with home values that have plummeted since buyers bought or refinanced at the peak of the real-estate boom, and banks dragging their heels on loan-modification requests.
(Excerpt) Read more at fresnobee.com ...
You said it better than I could.
“Foreclosure is similar in that it is a documented consequence (among others) if you fail to meet the obligations of a mortgage contract - AKA breach it.”
California's no-growth policy is the reason. The list of the 100 US cities with the smallest houses contains 43 California cities.
Sadly, the rent would be overpriced. A realistic rental price would cover, I'd say, about 65, 70 percent of the cost of the property (mortgage, prop taxes, insurance) in many So Cal markets.
What gets me is that it could go back to being prosperous so easily if the power of the free market was liberated. On dozens of fronts, government fetters it, hobbles it, cripples it. For all its many faults (that was a joke, son!), So Cal is a really fantasic place, about as dynamic and exciting for entrepreneurship as a place could be.
But then again, business owners and entrepreneurs are my American heroes, so I'm prejudiced.
Ouch!!!
OK, now we're getting somewhere.
Where is the moral failing, on the part of either party?
Another beer made me smart enough to realize that all the time I was agreeing to your incorrect term "breach," when I should have been using the more precise "default."
“The truth is I’m in that situation to a degree and I’m going to do my damnedest to survive it honorably.”
I wish no ill-will towards you.
It’s not reasonable to think our national financial sclerosis stems from one family walking away in California.
That’s why the conversation appears to have broadened in scope.
We’ve got some Americans screaming - “Throw them in jail”, “I have to pay for these house-flipping deadbeats”, “no credit for them for a million years”, etc.
Please accept my assurance that I sincerely hope this does not happen...but what if something DID happen to YOU...laid off, injury, sickness, death, etc.
Heck, you could have been struck by a bolt of lightning while at work....like I did.
You would then most likely try to work with your “lender”.
After months of:
“You may resubmit a complete workout package, containing all of the requested and required documentation, as outlined in the submittal instructions reflected on the workout package.”
“Each workout package is individually and thoroughly reviewed, providing the attention that mortgagors deserve, while permitting negotiators with the opportunity to peruse all potential options to prevent and/or resolve loan delinquency.”
...you would prudently try to establish the entity that LOST MONEY due to your default. Failure to do so exposing you to other entities serving you with NODs in the future...
If you were to THEN learn that NO ONE lost money you would be angry. Angrier yet to learn that it has been sold MULTIPLE times with INSURANCE on each “sale”.
Usually what happens is - the homeowner in default just walks away, shamed, and allows the foreclosure process go uncontested.
What would you do if you if something happened in your own situation?
I hope your cabinet shop is doing well.
Before anything else, screw you and ESAD.
Nice ignorant statements you make there, especially the recommendation to go be a DUmmie. Unlike you, I don’t think someone who knows he has been screwed over is whining.
FYI, not that you care, we did EVERYTHING by the book, including putting a down payment. When we saw that we had lost value on the house, in addition to losing a sizable part of my income (pay cut plus loss of overtime pay,) we decided to ask ahead of time, rather than wait until the end, hoping the situation would become better with my company. When we asked the bank, proactively, for a way to save the house, they did not tell us that they had options available for us. All they did was say “sure, we’ll lower your payment by x percent while we work with you,” only to take 6 months “reviewing” our situation, then dropping a nice little bomb on us.
Not only did they refuse to work with us, but then they screwed up our credit rating, even though we never missed any payments. In your ignorant view, I should have gone on welfare in order to save the house, right?
Given the crap sandwich Wells Fargo has offered me, I will gladly turn it down and let them shove the house where the sun doesn’t shine...it can’t hurt me any more than I am already hurting.
So, again, ESAD, ok?
Artificial? How does that happen except at times like when the government offers special rebates and tax incentives to buy a home?
Prices in real estate more than anything reflect market demand based on location. If the rents are high, there's a reason for it. It's the market. As a renter or a landlord, you may not like it, but that's the way it is.
The only times artificiality comes into play that I can see has to do with government interference in one way or another, usually on multiple fronts. Zoning and environmental regulations alone create a huge artificial currents in markets.
Another ignorant statement.
When we were denied a mod the first time, we called WF to say "WTF" and their so-called "advisor" said to us "well, now that I look more closely into your case, we should have put you into our own program, rather than the Federal, which would have allowed us (WF) to modify your loan with more lenient terms and conditions. But, since you haven't paid your FULL mortgage payments all this time, we can't do it now...sorry!"
Just there, I can count 2 WTF statements, and the only reason we're still working with them (and PAYING our loan, TYVM) is that we signed the mortgage when we bought, and we WILL continue to provide for the kids.
Let me repeat.
If something happens beyond your control and you can’t make your payments - it is what it is. I’m not condemning anyone for that. Life is hard. Things happen.
What rubs me the wrong way is this specific case. A man who doesn’t say his financial condition has changed and says he can make the payments is walking away because HE made a poor choice and it doesn’t benefit him any longer to honor the agreement HE made.
Again, nowhere have I condemn someone because their life has been turned upside down due to the loss of a job or similar disaster. By the grace of God I go...
JRios1968,
Save your energy! Some people will not learn. If you sincerely attempt to “work” with “them” - “they” are sizing up your assets. They want that too. IF you are given a loan modification...it will be temporary...and will last until you have no money.
When you take away a man’s money then take away his home because he has no money...he will be an angry man.
http://www.foreclosurehamlet.org
Las Vegas, it appeared to me, has square milage by the dozens of vast, bleak housing tracts of very large homes with association fees and regulations, and little appeal except for being expansively adequate living quarters in Las Vegas. If Las Vegas was thriving and bubbling and churning along as it has in more free-market days, those homes would be beautified and used and valued. Now, they sit there empty in their uniform beige ugliness, desert mountains stark behind them. I would be surprised of their current market value even meets the costs of construction, development, and HOA fees.
I’m an advocate of pulling everyone out of some of those developments, insuring that they’re completely empty and putting a match to them, square mile by square mile.
Here’s a little recognized factoid: Lots of people who were buying up all those properties in Reno and Vegas were doing so by ‘cashing out’ their California homes’ equity.
Negative equity means no buyers for a whole lot of Nevada residential properties.
As a native New Yorker, I don’t see WTF people need bigger houses when they are having smaller families than ever. These Toll Brothers eyesores can’t be justified in any rational way.
That's nice to read. It makes sense to me. It tells me I'm not off the track, or at least not alone, in how I read it. I do think that for the walkaways to work correctly, government has to get out of the way on many fronts and free the economy, employment, productivity and commerce to blossom.
Oh, maaa-aaa-aaan!! That's GORGEOUS! My husband is wondering why I was laughing and cheering in here!
Yep. Such a stellar illustration of how the banks get blamed for problems the government caused. Also a stellar illustration of how government programs and regulations create artificial sways on the markets, as loan modifications conducted by government fiat will certainly have huge influence on real estate prices.
REAGAN WAS RIGHT! "Government doesn't have the solutions to our problems, government is the problem."
“The common denominator here is that the federal government is tinkering with the free market and screwing it up.”
Bingo! Worth repeating.
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