Posted on 09/26/2010 7:41:50 AM PDT by Oldeconomybuyer
Millions of middle-income home- owners are struggling to pay down bloated, underwater mortgages while wealthier Americans are simply mailing in the keys to the mansion and calling it a day.
It's time for average Americans to start seeing their mortgage papers for what they are: records of financial transactions, not moral documents.
In a free-market society, an individual homeowner is not responsible for the strength of the nation's housing market. If anything, walkers may stimulate the economy, by spending a portion of the money they were sending to the banks each month.
Take a look at your finances and decide for yourself whether homeownership makes sense. A better decision for the future of your family may be to rent, pay off your credit cards, and put the savings in a college fund for your children or grandchildren.
Walk away from your house if it will be better for you to rent. And remember, walking away now doesn't mean that homeownership may not work for you later.
(Excerpt) Read more at mercurynews.com ...
Oh wait, it's OK to re-neg on private contracts, as long as we don't give the government THEIR portion of our hard-earned money.
One of the things to do BEFORE making the purchase, not AFTER!!!
This IRS page describes the "Mortgage Forgiveness Debt Relief Act of 2007".
Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?So for example, home equity lines loans made on available home equity would not qualify. Even purchase money loans on anything other than a principle residence would not qualify for tax forgiveness.No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.
I've sen a number of such houses here in the Sacramento area in the $1700/mo range - and these are houses less than 5 years old, about 3000 sq ft, and the rent often includes some of the utilities and yard care.
Nope, that does NOT exempt all mortgage debt.
Others got exotic loans with little to no money down, and/or interest only so that they could buy more home than they could afford.
Even if they bought at the 'peak', responsible homebuyers who got fixed rate mortgages with a fair down payment would usually be able to keep their balance below the depressed value.
Besides, why does it matter if you are underwater, anyway? I am underwater on my car right now. So what, should I mail the keys to the bank? Buy a home you like at a loan you can afford, these things won't change if you go underwater, but your property taxes might go down. It's still cheaper than renting.
And before anyone cries to much for those poor banks, most have received their money back as these homeowners have paid them years of principal payments at interest while the banks have received that money virtually free from the fed.
Typical scenarios like someone let's say that bought a house in 2005 for $250,000 and being the good conservative, put $50,000 down and financed $200,000 for 30 yrs at 5.75%.
Now after paying for 5 years, the bank has received $70,000 of which $55,000 is profit to them. Now with the value dropping to $150,000, the homeowner is underwater by $35,000 and decide to walk to take a better job elsewhere. Their credit is ruined and they'll be renting for years to come, but the bank sells the house for $150,000 and they still have received $20,000 more than they have in it when all is said and done. Meanwhile the homeowner has lost the original $50,000 and the $70,000 in payments for something that could have rented for five years at a cost of $55,000.
So when all is done the bank is up $20,000 and they lost $65,000 with bad credit for years to come.
No, but it does exempt the vast majority of the debt that most people would be worried about. There are some specific situations that would not be covered, but that would be the exception rather than the rule.
Yep. And they'll find themselves facing federal tax liabilities.
Does God show up to the closing himself to sign? Does an angel come with power of attorney?
There is No Free Lunch in this life!
The down side to the Stratigic Default incudes:
Never being hired by a bank (or insurance company). Not even for a non banking job like IT support or Marketing.
Know your state laws! In Delaware, the lender can seek a default judgement for the unpaid balance which will acrue interest at the statutory rate (double digit) So if you are semi young with a higher than average earning potential, the obligation will follow you.
No you aren't. There is a reprieve through 2012..
I really want to know why baseless idiotic statements like that, rife with stereotypes are any different than racial or gender stereotypes that enlightened society so abhors.
We were discussing mortgage foreclosures, and the imputed income from foreclosures or short sales is indeed excluded. Refinanced mortgages are in general also excluded. Home equity loans (i.e., second mortgages) may or may not be excluded depending on whether the money was used for home improvements. (And as a practical matter you'll probably be safe in any case, but there's no guarantee.) Loans on investment properties are technically subject to imputed income taxation, but I know of specific instances where that never happened; in general the banks no longer bother to send 1099 forms on any mortgage losses.
If you look at the closed sales numbers you might find many did indeed buy at the peak. The turnover is not a “myth”.
You want me to pay for them, kabar? You don't see moral hazard here? Your plan would make chumps of people who play by the rules - and would undermine an economic system that's been the engine of our prosperity.
In a short period of time, everyone would have a financial excuse not to pay for their home. Why should the rest of us pay when you get a free ride?
If someone makes a bad investment, should they be allowed to get their local newspaper for free? Would the reporter who wrote this piece be willing to have money taken out of his paycheck for those of us who bought the wrong stocks? How would the person who wrote this class-envy piece feel about giving up 20% of his pay... for me? For my greed and carelessness? I'll doubt he wants to give up HIS money - just ours.
Typical charming liberal thief.
He wants me to cover the loses of people who bought waaaaay too much house for what they could afford. Some bought to flip and make a profit. I should cover that? And the house as ATM machine? I can cover the vacations he took on that? Gimme a break.
The tax system was changed to encourage flipping houses and taking nutty risks... that was wrong. Here in Florida everyone was doing it...
The bankers who encouraged this - and liberal legislators who changed the regulations so this mess could happen should be hung by their thumbs for a thousand years.
Luckily, most citizens didn't fall for the con, - they bought homes they could afford and didn't use their homes as ATM machines. Most were responsible - and they should not be punished by those who showed a lack of thought, greed, a need for instant gratification.
So the article's blanket claim that worries about legal consequences are unfounded is, by your own admission, false.
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