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60 Minutes - On Walking Away From Your Mortgage, And Now EVERYONE Wants To Know How They Can Do It
The Business Insider ^ | 5-10-2010 | Joe Weisenthal

Posted on 05/10/2010 6:26:23 AM PDT by blam

60 Minutes Runs Feature On Walking Away From Your Mortgage, And Now EVERYONE Wants To Know How They Can Do It

Joe Weisenthal
May. 10, 2010, 9:09 AM

Did 60 Minutes prompt a big cultural and economic moment last night?

The weekly TV news show ran a big feature on strategic defaults, and from what we gather it made strategic defaults look pretty sympathetic.

It also acknowledged that it could undermine the recovery.

Either way, we know LOTS of folks decided they want in on the action. How do we know?

Because all of the sudden we got flooded with search hits from people searching for information on how to walk away from your mortgage.

They were all landing on this handy how-to guide we drew up in January.

Do you want to get in on it? Click here to find out how.

[snip]

(Excerpt) Read more at businessinsider.com ...


TOPICS: Culture/Society; Extended News; News/Current Events
KEYWORDS: abandon; defaults; economy; housing; mortgages; realestate; shortsale; walkaway
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To: delapaz
Yeah, why honor a valid contract? After all, the lender made them borrow the money, right?
101 posted on 05/10/2010 8:30:36 AM PDT by clintonh8r (Times Square: A law enforcement success made possible by an intellingence failure.)
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To: TexasCajun
A system that would work if enough landlords put it into practice, but good luck with that. There are always going to be landlords with property in areas where you can't afford to be picky.
102 posted on 05/10/2010 8:31:12 AM PDT by Melas
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To: delapaz

I disaggree housing is a great LONGTERM investment. Real estate typically appreciates 6-7 % a year.
The problem was people FLIPPING houses and low/zero down payment mortgages.
Plus there are tax advantages such as mortgage interest, real estate taxes that are all deductable from your income tax.


103 posted on 05/10/2010 8:31:34 AM PDT by woodbutcher1963
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To: savedbygrace

I’m not looking to walk, as my post above says, we sold at a good price. I am just curious about those that do walk and get nailed with a large 1099. Imagine the serious hit for a tax bill of $50k, $100k or even $250k, not to mention the massive hit to the economy and possible bailout of those people. wow.


104 posted on 05/10/2010 8:32:15 AM PDT by CodeToad
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To: CA Conservative

See #96 and please comment. Maybe I’m misinterpreting.


105 posted on 05/10/2010 8:32:47 AM PDT by savedbygrace (Rev 22:20 He which testifieth these things saith, Surely I come quickly. Amen. Even so, come, Lord)
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To: Cyclone59

Federal law exempts the sale of a residence. If it was your rental house that was forclosed, then you’d be taxed on the forgiven monies as income. Primary residence, nope.


106 posted on 05/10/2010 8:34:08 AM PDT by Melas
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To: Notary Sojac

lol. At least your hair grows back if you make a mistake.


107 posted on 05/10/2010 8:34:11 AM PDT by CodeToad
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To: TexasCajun
Probably. I'd say most if not all of us on FR are being watched in some form.

But as far as renting goes, the scums will cry discrimination from now till the cows come home, especially if you live in a city/town with a good school system that they can use to essentially get a private tutor/teacher/education for their ‘special needs’ child, all while collecting the child's ‘crazy check’.

The more I see, the more I know the whole system is corrupt.

(And I mean no disrespect to any LEGITIMATE special needs children or their families out there. If you need it, by God use it to improve your children's’ lives!)

108 posted on 05/10/2010 8:34:13 AM PDT by GOPsterinMA (Paul Ryan/Greg Abbott in 2012.)
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To: clintonh8r
It's a business decision.

How long would it take to rebuild your credit after a default?

versus

If I continue to pay the mortgage, how long will it be before my equity in the house rises to meet the amount I will have paid?

I would recommend that everyone in this situation carefully run the numbers for themselves, there is no one right answer.

109 posted on 05/10/2010 8:34:42 AM PDT by Notary Sojac (I've been ionized, but I'm okay now.)
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To: CodeToad

See #100. CA Conservative says you would not be in IRS danger. Maybe I’m misinterpreting the IRS publication, as I suggested in #105 to CAC.


110 posted on 05/10/2010 8:35:06 AM PDT by savedbygrace (Rev 22:20 He which testifieth these things saith, Surely I come quickly. Amen. Even so, come, Lord)
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To: CodeToad
If you check out many of these larger mortgages, $3200 is about average for PITI. That is just for a $400K property. $2,400 for principle and interest, $400 for property taxes and $200 for insurance. In many places near cities, especially in the northeast, that $4,800 property tax is closer to $12,000 in property taxes. Imagine paying $1,000 a month just in property taxes.

Notice how it always seems to be the most democrat-infested areas that suffer from enormously-inflated prices on property. That $400K property in central Kentucky would probably be around $150K. Maybe $200K near a city.

111 posted on 05/10/2010 8:36:45 AM PDT by meyer
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To: Notary Sojac
I would recommend that everyone in this situation carefully run the numbers for themselves, there is no one right answer.

You could just as easily choose to rob banks, become a pimp or murder for hire with that approach.

Forget about any moral implications, just run the numbers.

112 posted on 05/10/2010 8:37:33 AM PDT by TChris ("Hello", the politician lied.)
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To: bgill
Renting is nothing but throwing money out the window. They'll have nothing in the end.

True, but consider the person paying on a $400,000 mortgage on a house that is now only worth $150,000. That person will be paying about $3500/mo. for the next 15 years before they have any equity. That comes out to about $630,000 they are paying during that time, and at the end of that period, they still wouldn't have any real equity. Furthermore, they cannot move, because they owe more than the house is worth.

In contrast, they could rent a comparable home for about $2000/month. After 5-7 years, they can buy another home at a much lower price. Any hit to their credit will be gone, and they will have saved $90,000-$125,000 during that time period - maybe more if the landlord pays for water/garbage/sewer, etc.

Now, if they like their home, want to stay, and can afford it, the fact that the house went down in resale value wouldn't really matter. But if they can no longer afford it or if they need/want to move, from a strictly financial perspective, what is the best move? I am not talking morals or ethics right now - just financial.

113 posted on 05/10/2010 8:39:43 AM PDT by CA Conservative
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To: clintonh8r
Credit reports are also used by employers, insurance companies, etc., so it’s not smart to allow your credit to deteriorate, even if you plan to never borrow again. Plus...you need a credit card to buy an airline ticket, rent a car, make on-line transactions, etc. Credit reports matter

Nope. You don't need a credit card for anything. We were on the Dave Ramsey plan long before there was a Dave Ramsey plan. We buy absolutely nothing on credit and have no credit cards. I don't care what my credit score is, because I make very little use of credit. Ramsey says the only thing you should ever buy on credit is your house, and we're close. The house and one of our cars are the only two things that we owe a dime on. Everything else is a cash transaction. I buy plane tickets, rent cars, hotel rooms, etc etc, with my Visa debit card. No credit app required. All you need is money in the bank.

114 posted on 05/10/2010 8:39:59 AM PDT by Melas
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To: blam

Probably the point has been made before but I get the very strong sense is a common scenario is people used their house as an ATM or a piggy bank - they took out 2nd and 3rd mortgages to get a big cash windfall - which they promptly spent - and now they’re whining that they can’t make their payments.

Either that or someone bought a huge house with no money down and a liars loan.

Very hard to feel sorry for any of these people.


115 posted on 05/10/2010 8:42:44 AM PDT by 2 Kool 2 Be 4-Gotten
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To: blam

Whatever happened to honoring your commitments?


116 posted on 05/10/2010 8:42:58 AM PDT by sauropod (Ill behaved women rarely make dinner.)
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To: savedbygrace

No, the Federal government passed a law that exempts any forgiven debt as a result of foreclosure or short sale from being taxed as income. There are a few rules - has to be your primary residence, etc., and the law is only in effect until 2012. You still get the 1099, but no tax is due. Your state laws may be different, however.


117 posted on 05/10/2010 8:43:27 AM PDT by CA Conservative
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To: clintonh8r

They should honor the contract. By mailing in the keys in the event of a default, as the contract demands.

There. Contract honored. Any other arguments?


118 posted on 05/10/2010 8:45:06 AM PDT by delapaz
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To: Ann Archy

Don’t kid yourself. They all find places to live. Wake me when we start reading stories about employed people living on the street even though they can afford to rent a house or an apartment, because they can’t find a rental because of bad credit. Don’t hold your breath though.


119 posted on 05/10/2010 8:45:22 AM PDT by Melas
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To: driftdiver

“Giving the home back is within the terms of the contract that was signed.”

Yep, so is getting a 1099, so no one is out anything. Everything is according to the contract.


120 posted on 05/10/2010 8:45:36 AM PDT by CodeToad
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