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 ...
Insolvency has been on the books for a long time, and that is one possible way to avoid the tax consequences. However, in 2007, the US government passed a law that exempts debt that is canceled as the result of foreclosure or short sale on your primary residence from being taxed as income. As I stated in another post, there are a few restrictions, but from what I have seen, there is no means test. In other words, you don’t have to prove you could not afford the mortgage, just show that it was foreclosed or that you did a short sale, and that it was your primary residence.
It doesn’t directly affect me, so you’re right, delapaz, I shouldn’t let it get me. The fact that they’re getting a free pass and most of know good and damn well that they’re going to be bailed out somehow is what really fries me!
I grew up knowing that being responsible meant being an adult. Apparently the inverse is not true!
Because it's immoral to do otherwise.
Thank you for the added info. I understand why so many are looking to walk away.
“It will destroy their credit, and take away the freedom they have of owning their own home.”
The whole credit shell game is coming apart. Its been abused by both sides. You can live without a high credit score.
Madoff had a high score.
Me I figure I have to live someplace and I hate to move. So I’ll keep paying my mortgage as long as I can scrape the money together. Some day soon when the total collapse comes we won’t have to worry about it.
Good deal! We wouldn’t be able to keep our kids in Catholic school if we were still living like broke people. My husband brings home about $3600/month, and we do okay on it. Not living high on the hog, but we aren’t living like complete misers either.
It helps to not have to freak out in an emergency—my washer went out a week and a half ago. For just a couple hundred dollars over what the repair bill would have been (it was a fancy bells and whistles one), we went out and bought a new one this past Friday. The emergency fund made it possible :)
Do you really think that is true as an average, for housing in general across the USA? This would mean that housing prices double every 10-11 years.
Even if raw prices went up that much, you have to factor in property taxes, insurance, maintenance, and the high transaction costs connected with the leeches realtor community.
You really can't make money in small scale residential real estate unless you (1) catch a boom on the upside and get out in time or (2) specialize in rentals which can consistently cash flow.
I’m curious, why would you advise your clients not to have a debit card? It’s the safest thing in a world. When someone got my number years ago, it took me all of 6 hours to have the card canceled, a new temporary card issued and every penny the thief stole put back into my account. Contractually, the bank has accepted the burden for fraud and I have none.
I advise everyone I know not to have credit cards.
again nonsense, walking away or even bankruptcy does not hinder debt aquisition. Some home loans may need to wait two years HOWEVER credit cards, new cars, and the like are almost immediate in a 7 and with minimal effort in a 13 (or even a personal 11)
see previous conversations.
this is not, REPEAT not a free pass. There are consequences. But they do not have to be debt slaves forever. They can stick banks with the consequences of the banks own actions. (which also don’t affect you unless you own bank stock somehow).
This is a bubble, there was foolishness. Now that the bubble’s over the debt has to be paid down or defaulted.
I am thinking of a young minister I know with six small children who bought at the top of the bubble in the ghetto. Nothing big, nothing fancy, just a $100k house in a bad part of town, that’s now worth $60k. Maybe. If they’re lucky. And they’re surviving on two part time incomes.
You saying they should pay the bank off forever and lose that $40k to the bank instead of saving it for their kids and putting it forward to the future.
They didn’t do anything wrong except get caught in a mess and buy at a time when the banks were lending to anyone with a pulse that pushed the market up 100% over what it should have been. And yes fraud, on the banks part, was a big part of that.
You saying the ministers family should bear the burden?
Why do you advise your clients never to have a debit card?
Renting is nothing but throwing money out the window. They’ll have nothing in the end.
________________
I tend to agree with you. But there are times when renting is a strategic move. Especially if you plan on being in that locale for less than five years. And of course if there is a history of homes being hard to sell because of the economy.
I do believe one of the biggest problems with today’s market economy is that everything now is structured to mitigate risks, in essence it has become a “no-fault” market.
As a result, now people are shielded from the consequences of bad decisions, and thus, the market no longer serves society. Make a bad loan? Pawn it off on somebody else, go up to your eyeballs in debt? Write it off.
We choose a market economy because we believe it serves the best interests of society, it is a means to an end, not the end itself. But today’s market economy has become so bastardized, in its present form, it no longer has that benefit.
Chris Deaner and his wife Dana of Sun City, Ariz.
When Deaner, an auditor for a local university, bought his three bedroom house in 2006 for $262,000, he thought he got a bargain.
“You know, first time homebuyers, we don’t know houses are overvalued. We just know we need to get in before it keeps going up, and up, and up,” he explained.
But then the balloon burst. So how much does he think he could get for that $262,000 house today?
“Right now, about $142,000,” Deaner said. “Big drop, over 43 percent.”
Deaner and his house were, as they say, “underwater.” With a mortgage of about a quarter of a million dollars on a home worth less than $150,000, he has one very expensive lemon. He says he tried to talk his bank into renegotiating his mortgage, but because he earns enough to keep paying, the bank said no deal.
“They refused to. They said it was gonna affect my credit, and they were gonna take my house. And I pretty much said, ‘Go for it,’” Deaner told Safer.
Deaner said he could afford to stay in the home. But he chose not to. He is walking away. That lemon of a house is now the bank’s problem.
“It’s almost like the ‘in thing’ to do right now, it seems like,” he said.
And because Deaner, like many Americans, only made a 10 percent down payment on his home, “taking a hike” is a lot easier. By law in Arizona and nine other states, the bank cannot go after any of his other assets. But his credit rating will suffer.
“Aren’t you fearful that you’re gonna get a reputation as being a deadbeat?” Safer asked.
“Yeah. But with the money savings that I will have in four to six years, I’m confident I’ll have money to buy my way into a house if I want to,” he replied.
Asked if he doesn’t even feel a twinge of guilt, Deaner told Safer, “No, especially after dealing with my lender, trying to contact them. None at all.
******
Neither do Jean Ellen Schulik and Danny Kuehn. They bought their Phoenix bungalow three years ago for nearly $400,000. The bank now values it at $85,000.
Even though they can afford the mortgage payments, they felt they were trying to bail out an ocean with a bucket.
“No logical business person would do anything other than walk away. And so, there was a lot of soul searching. And I did a lot of crying, ‘cause I’m in love with this house. And every day I would redo the math and think, ‘Maybe we missed something,’” Schulik said. “This just can’t be right.”
But it was: the value of their house was dropping anywhere from five to eight thousand dollars a month, so Schulik and Kuehn just felt it was time to walk away.
“I don’t think we’re villains. We fulfilled the parts of our contract that we have with the bank. We’ve let them know what we’re doing. It’s all legal. It’s not anything I ever expected I would be doing. And it sure doesn’t feel good. But it seems like it’s the right thing to do,” Schulik said.
“What do your neighbors make of it?” Safer asked. “Another empty house breaks down the value of everyone’s house.”
“And we’ve seen that here. I think they will be upset, and I understand that,” Kuehn replied.
“But you’re hardly alone in Phoenix right now, correct?” Safer asked.
“Yes, it’s interesting the number of my coworkers who have approached me to say, ‘How are you doing this? Because I need to do it,’” Kuehn explained.
http://www.cbsnews.com/stories/2010/05/06/60minutes/main6466484.shtml
NO. I do not put value on people according to what they have, never have, never will. Most people just do the best they can with what they have, but careful attention to spending habits is a MUST. The I WANTs has never been in my vocabulary. It is the "I WANTs" that have gotten people into a financial mess that is costing us taxpayers to clean it up. I really do take offense to that.
"Probably never will again"""" that statement tells me you once owned a home.
For future information: Home ownership for people is the only real security you can have in this life.
Unless everyone on FR is super RICH and born into money, 99% of Freepers are Poor or have once been.
Most just have learned to do without the frills in life, in order to pay the necessary bills they have and SAVE some money for their old age. Old age is coming to everyone if they live long enough. An most of us DO NOT WANT to be a burden on our families or the Government, that is if they have any real self respect.
I can afford more than I have now, but choose not to purchase the STUFF.
If poor: first thing disconnect the internet, cook all meals at home, get rid of the cell phone & cable TV, drive one car and make each trip do multiple stops, watch only the movies free on TV. If you can afford a MTG payment of $400, purchase a little less at $200 per month.
This is just a little lesson for those that have never been taught how it's done, but I suppose they are learning the hard way these days.
Umm... yeah, that’s exactly what I’m saying. Contracts and torts are the very first thing any law student learns, and to say that a piece of paper you signed stating you will pay, in full, the amount of money borrowed is no longer valid because that person bought at the wrong time will cause mayhem in the court systems. These legal precepts are the cornerstones to our justice and legal system, and to say that reneging on a contract due to hardship or inability to pay is okay will facilitate the abuse of contracts in the future.
I also bought when the market was higher, and I’ve lost $30K on my property. I’m still making the payments, and when the market goes back up, I’ll have more money.
Real estate is not a right. Property is a right. You can own property (cars, jewelry, guns) and not own real estate. We are a nation of laws, not of men. To reverse that is to reverse the very foundation upon which this country was founded!
“I’m curious, why would you advise your clients not to have a debit card? It’s the safest thing in a world. “
Credit cards are safer than debit cards. Debit cards are connected directly to your checking account. If the bank disagrees with your view of the circumstances they have the contractual right not to reimburse you the money.
Or they can keep it during the investigation. The most that can happen with a credit card is the account gets frozen.
The real blame from the git go is Congress, who allowed the sub prime loans.
Yet, it does boil down to individual responsibility, those buyers knew they could not afford those homes, yet they did not stop themselves.
Some of the buyers could afford the homes, then took out an equity loan, making the loans more than the homes were worth. They spent that money of Frills for themselves and are now walking away from the loans and taking the Frills with them, leaving the mess for us to clean up.
Same thing with the Credit Cards: maxed them all out, take bankruptcy, yet they get to keep all the Frills they purchased.
I simply have no pity for STUPIDITY.
“I think you mean Bankers”
Yes Bankers not bakers. Bakers can only be blamed for making us fat.
“The real blame from the git go is Congress, who allowed the sub prime loans. “
Its really hard to separate Congress from the big bankers. There is a great deal of collusion between the two parties. Congress critters invested heavily, took political donations, took board positions and so on.
“I simply have no pity for STUPIDITY’
People are simply playing the game the Bankers have created. Bankers knew what they were doing, where most people don’t have enough financial sense to know better.
I can’t agree there. I’d wager that somewhere between 10% and 15% of FReepers have been poor. Most Americans have never been poor and never will be. There is a huge gulf between poor and rich, and most of spend our entire lives there in the middle.
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