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 ...
It may be an option. But do you think you can just hand over the keys and walk away from the obligation without consequences? Ever heard of a default judgement?
Show me in the documents where the value of the house was guaranteed never to go down. The lender is not responsible for the value of the collateral increasing or decreasing.
Idiots.
Sure, I've heard of it, and that's the thing. You'll hear about it a lot more than you'll actually see it.
Actually I’m not hearing about it at all. Most people don’t seem to understand that (with some exceptions in some states) the lender can pursue the defaulted borrower for any losses it incurs associated with the sale of the collateral. Otherwise, the mortgage contract would amount to nothing more than a rental agreement.
I guarantee you that if the banks ever thought the collateral would go down and if they had to own the paper themselves...
20% down would be a minimum requirement.
They will be living in a relative’s basement.
A credit check is also one of the first steps in being reviewed for a US government security clearance -- from "Secret" and upwards.
If someone can't use a credit card responsibly, I agree. But, otherwise, it's a necessity for anyone that travels even occasionally.
Car rental agencies and hotels put a hold on your credit account, effectively pre-authorizing a charge when you pick up the car or check-in. The amount is typically the expected charge at the end, plus a bit extra.
If you use a debit card, they lock up that amount in your account, perhaps making it difficult to spend that money on something else. Some car rental agencies don't accept debit cards at all when you pick up the car -- you have to use a credit card. When you return the car, you can instead pay your bill with your debit card.
Back when money market rates were much higher, I charged everything and paid off my bill every month before it was due -- pocketing the interest I earned on the funds until I had to pay the bill. These days, the short-term interest rates make this much less worthwhile, but it's hard to break the habit: I haven't paid credit card interest for nearly two decades.
I have this problem, as well. In my case, I have several credit cards that I use for small transactions every month to keep them active. I got dinged because "I had too many credit card balances", but all of them were $100-$200 except the one that had a large balance awaiting reimbursement.
I have found that a business credit card (tied to an employer ID number, rather than Social Security number) doesn't show up on my personal credit report. However, you have to go through the effort to set up an S-corp or LLC, and do all the associated paperwork every year even if you never book any revenue for the "business".
“As a family member, I did not think bankruptcy was “the only way out”. just sayin “
That wasn’t my point. They loaned money to a college student, not to his dad the wealthy contractor. They made a stupid business decision and deserved what they got.
I don’t advocate for bankruptcy, just for the banks to bear the consequences of their decisions.
You're right, but the lack of judgement and character of the buyers is only one part of the problem. The supply has been way over built. The govt with it's CRA and riduculous mortgage programs is another part and the banks securitizing sub prime loans and passing them off on others who thought they were good loans is also a part of it.
Property managers are left with a less qualified consumer base with an abundance of product on the market. What would you have them do, sit with vacant units and go broke or try and make the best of a bad situation.
Absolutely true. I have no sympathy for people who CAN pay, they just don't WANT to. But for the people who it honestly comes down to paying their mortgage OR feeding their family, I don't blame them for walking away.
Not only that, but how many of these people could easily afford their mortgages, but then they lost their job(s) in this wonderful economy, so they're forced to make the debt-vs.-food choice?
Not everyone in a bad situation is just a parasite looking to screw over the taxpayer...
I agree.
The increasing call for people to blow off their obligations just because they don't like the way the housing market is going is very wrong, but there comes a point where a person simply cannot make it work.
When the bank makes the loan, they are accepting the risk that the borrower may not repay, and they (should) price the loan accordingly.
It's not borrowers job to bail out banks, or Fannie or Freddie. It SHOULD be the shareholders' problem.
But the lender knows that they're assuming risk in the case of default. They even require borrowers to purchase mortgage insurance to help mitigate that risk!
Default is a cost of doing business. If the banks don't like defaults, they could try a little underwriting for a change.
Look, it's just business. The borrower isn't married to the lender; they're doing business together. Yes, these borrowers made a poor decision to buy in an overvalued market. But the lenders made a poor decision to lend, with the full knowledge that they could be on the hook. It makes no sense to say the borrowers have some moral obligation to bail out the banks' poor decisions as well as their own.
For the record: I have NO SYMPATHY for someone who defaults on an obligation even though they have the ability to pay. I really hope they suffer the consequences, which they apparently have not really thought through. I'm done discussing this. Frankly, the attitiude of some FReepers on this subject is pretty disappointing.
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