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 ...
Exactly. It's a business deal, nothing more. For the bank, the house is the collateral. They know the risks. It's business, not tiddlywinks.
This fish is rotting from the head back.
People have spent a decades watching failed CEOs walk away from bankrupt companies after drawing years of lavish pay for bad decisions or bailing out of failed businesses with golden parachutes, and now they are watching as failed CEOs continue to draw multi-million dollar compensation at failed businesses bailed out with average citizens tax dollars.
The result: average citizens have come to understanding that once you reach a certain level of “success”, you are “entitled” to lavish reward at stockholder and/or taxpayer expense no matter how badly you screw up.
It used to be that average Americans dreamed of becoming wealthy, after a decade or two of observing how it actually works, now they feel increasingly entitled to act like them.
I can’t imagine taking on a 3000 mortgage unless I was making serious coin—and expected to do the same for many years. My mortgage is around 1200. That’s manageable.
That’s a good point. People are right to draw those conclusions. Why be a sucker?
“How will walking away from your morgage affect your credit score and ability to buy a home in the future?”
I don’t know how it would affect your credit in the long run, but I had a conversation recently with a (seemingly) well to do person/beautiful home - that didn’t set well with me.
This man was having a garage sale, we started talking, and he told me he had just bought another home in the same neighborhood. I noticed the realty sign in his yard and congratulated him on being able to sell - and he told me the house didn’t sell - that he was “letting the bank have it back.” During our conversation, he made it clear that he had bought the second one at a bargain price with this in mind. He was one of those braggy types and seemed so proud of himself.
I wonder how often this happens. But I suppose if you qualify on paper and have the ability, you can do this and probably get away with it. It may come back on him but he didn’t seem to care.
You should check the rental listings sometime. Most of them now say something along the lines that they will rent to people with foreclosures as long as the rest of their credit is clean. So it is not difficult to get a rental with a foreclosure, especially in this market. And the rent is usually about half the cost of the mortgage payment.
“Sure it might make sense...if you don’t mind reneging on your legal and moral obligations. “
LOL... right... sure.... if the banks had no risk in drawing up loans for these contracts then there is no moral or obligation. You should look up the meaning of “legal” in the dictionary because you do not seem to understand.
Actually, I have found some very nice places in good parts of town willing to rent to people with foreclosures. With the high number of foreclosures occurring, the stigma has largely dissipated.
Right. And anyone who looks at how a 30 year mortgage is paid will notice that most of the interest is paid up front with very little of the money going towards principle. Nobody should feel obligated to stay in a business deal that is destroying them financially, short and long term. As mentioned, there are penalities if you can’t pay whether it is a mortgage or a rental agreement.
“How will walking away from your morgage affect your credit score and ability to buy a home in the future?”
200-300 point credit drop- that’s it
Thank you for being a voice of sanity in an overly sanctimonious thread.
Very good, hard-working people got caught in a trap that was set by the powers-that-be. I refuse to judge those people en masse by calling them greedy good-for-nothings. When they have to tap into their savings, retirement, loans from family and so on just to pay a mortgage on a house that was over-valued when they bought it, they’re sacrificing their future and any financial security they might have. THE DAMN HOUSE ISN’T WORTH IT.
The large banks and lending companies were bailed out to the tune of billions of dollars. No one is coming to the rescue of these poor souls, so if they have nothing to lose, they are far better off if they just move on and try to start a new chapter in their lives.
I have been told from several sources several times that many people who have a successful business have been bankrupt at least once before. Nobody seems to condemn these people for not paying back on these loans even after they have a successful business and have the money.
My first house went negative for awhile but I still paid my mortgage. It was still cheaper than rent and I had the money. Last year when I bought my new house I paid about 1/3 of what the last person owed on it.
To make the numbers simple lets say I paid $100,000 and a person a few houses over has a mortgage a comparable house for $300,000. There are several more houses available in the area for $100,000. He can not refinance to the lower rates available because he owes to much. If this was business and not homes most would just consider it a learning experience and they would leave.
What should an individual be different?
There are so many folks defaulting that many property managers (probably most) don’t even consider it an issue. I know this because I talk to property managers and I rent out a couple of properties of my own.
Amen.
You should know that the federal government passed a law exempting debt forgiven as a result of foreclosure at least through 2012, and most states have followed suit.
“Sure it makes sense, now that honor and personal responsibility have been declared null and void by the leftist, ruling class. Any time you buy a new car, you’ve paid dramatically more than the thing is actually worth. So should all of those obligations also be “walked out on???””
Honor? Personal responsibility? It is a business transaction- Are you insane?
The bubble was just the “bigger fool” theory in action. We marveled here at how people could be spending $700,000 for a hovel in Southern California...but those who bought those homes assumed that even bigger fools would pay $900,000 for those shacks in six months. All bubbles work this way, going back to the Dutch tulip mania.
“Exactly. It’s a business deal, nothing more. For the bank, the house is the collateral. They know the risks. It’s business, not tiddlywinks. “
On top of that, the banks have insurance on the paper and recover 80% of the initial loan... for a house worth half of what the bank will receive from insurance and the TARP and the interest payments already received.
F*ing con game.
I’ve considered that if a large number of people have credit hits from walking away from a house in this era, this type of credit hit will lose its sting. Apartments need to have renters, and homes need to have buyers. In the 80’s, I worked with car dealerships in finance, and marveled at how people with repo’s and BK’s could get financed. They did indeed - not at very good interest rates, but they got financed.
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