Posted on 04/20/2007 6:27:01 AM PDT by RexTheRunt
Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.
The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.
"Five months later, I lose $100,000," Taylor, a high school teacher, said. "I don't think I can take $100,000 into the stock market and lose it faster."
Such a scenario, known as a short sale, was unthinkable during the real estate boom of recent years. In the course of five months, a person could buy and sell a property and walk away with tens of thousands of dollars. Now, instead of receiving large checks at the settlement table, many sellers are writing them.
"It was unheard of three years ago," said Kevin Connelly, a mortgage banker for Pinnacle Financial in Vienna. "Everyone was doubling their money, and suddenly the tide has turned."
(Excerpt) Read more at washingtonpost.com ...
I didn't want to judge this aspect of the story in my post, but it certainly makes you wonder.
Presumably, neither of them decided in the short time they were in the house, that a divorce was imminent. Surely, that's a decision that brews for a much longer time. If they had a remote thought as they were signing papers for their current house, that they would be divorced in short order, why would they enter a longer financial commitment such as a mortgage?
Idiots.
When I bought my house in 1988, this happened to me, though not on that scale. And it wasn’t because I overbought, it was just because the market changed.
Too many people live beyond their means. Sheesh...buying a house in that price range with that income...deserves a dummy slap.
Here’s a radical thought. They could consider honoring their wedding vows.
Ding Ding Ding! We have a WINNER!
Right on the mark.
from the article
“And if the lenders do forgive the debt, the Internal Revenue Service will consider it taxable income. On Wednesday, Reps. Robert E. Andrews (D-N.J.) and Ron Lewis (R-Ky.) introduced a bill that would make such a forgiven debt non-taxable.”
I think the politicians andrews and lewis are idiots because of what I said in post 54. It most definitely is income. For the next bob nardelli (disgraces former ceo of Home Depot), the company will simply loan the guy the money to buy a house, then forgive the loan.
I live in Purcellville Va. The often heard joke here is that you can cut thru the walls of these new houses with a buck knife. This was a wonderful small town for years. Now we have grid lock on Main street. There was a time folks would use their whole hand to wave as you passed on the roads.
And, in further breaking news..., dog bites man...
When I read these articles I am thankful I live in an area that has seen ordinary appreciation in housing prices over the past 5-6 years. It has kept the speculators and flippers out of the market.
I'm always willing to call a spade a spade. lol!
I've known several people that have bought houses together without being married. Their relationships *always* end...and they both get clobbered financially.
I think that the "journalist" was trying to make a point about how the Housing Market and EEEEEvvvvil Lenders prey on people....but just wound up talking about someone that did something stupid.
Please let me quickly clarify my statement as well...I'm not a big fan of banks, lenders, etc, that preapprove people for humongous amounts of money, with low ARM interest rates that approach a bait and switch technique. However, you can't protect people from their own stupidity, either. Not the bank's fault for people that don't read the fine print.
You should be thankful! A personal residence (much to the surprise of the majority of owners today it seems) is NOT a piggy bank to consistently tap for "I wanna" reasons! While homes typically increase in value over time (assuming they are in a good location), much of the gain is illusory since it merely reflects inflation. Unless you are prepared to sell and move from high priced location X to low priced location Y, a personal residence represents economic security/stability and not an "investment"...
I have a number of neighbors who are discovering this fact now (and their numbers are increasing)...
Dependent-on-the-nanny-state mentalities passively sat in New Orleans watching hurricane Katrina for days on end as it headed up the Gulf straight for them.
Who, other than useful-idiot 'RAT voters get themselves into such jack-pots on such a large scale. They're "victims", alright - victims of their own stupidity.
That’s really neat. I love stories about how people have used good judgment and gotten good results!
That's what I was thinking, too.
Maybe he thought that buying his wife a palace would keep her happy.
In a buyer’s market, we look at newer, well built homes that are priced at 50% of their seller market value.
SHHH. You are supposed to keep that a secret ^_^
Hey PAR - similar thoughts. Finances are the No.1 issue in many marriages. Over-extended mortgages, monthly expenses, etc put more pressure on the relationship. Bad RE deals can be costly in more than one way.
This is quite true in non-bubble times when prices are equal to 100-120 times the monthly rent, -and- if you know you can keep the house long enough to sell at the next peak (which might be 15 years away).
I have a hard time justifying $4000 a month in interest, taxes, HOA, maintenance etc. when the same house rents for $1800, though.
Money magazine has an interesting comparison of stocks vs. RE from 1978-2004.
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html
Do you have a fixed-rate mortgage? I think they’re only found on adjustable-rate mortgages these days... otherwise you could borrow at the low teaser rate and then skip to a new loan before they get the chance to make a real profit off of you.
You wouldn’t expect someone who doesn’t honor their promises to a spouse and to God to honor a promise to pay a bill, would you?
But even in that sort of community, we are going to see many stories of people who "cashed" out their equity to buy cars, vacations, etc.
They are getting stung for their stupidity when the rates reset just as the speculators are.
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