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 ...
They way the system was supposed to work is that banks would give due diligence to the real worth of a house and use it as collateral.
If a buyer defaults, "No problem". The bank gets a house that they can sell for the amount they lent PLUS they got to keep the 15% or 20% down payment for a big, fat profit.
The way it was working was that banks were cranking out garbage mortgages that they KNEW were garbage mortgages so that they could sell them to YOUR mutual fund.
These idiots were just tools in the con game the banks played. Your mutual fund was the pigeon.
Now, the Government wants "mortgage relief" with our tax dollars for the idiots and the banks want either the taxpayers or the idiots to make sure they lose no money as a result of the con game.
The banks that did this deserve to go bankrupt and deserve to go out of existence. Otherwise, the con game will be repeated in the future.
DISCLAIMER: I have no upside down mortgages. Both of my houses were paid off long ago since I bought houses I could afford, at a realistic price, with 20% down and I avoided the Housing Bubble like the plague since it was an obvious Ponzi Scheme.
“$3000 a month??? That’s about the average gross household income in the US.”
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.
A family member’s child ran up credit card debt while in college then filed bankruptcy upon graduation. He has a lovely home on several acres, cars, jewelry and didn’t suffer any consequences or embarrassment of conscience.
Talk about IRRESPONSIBLE journalism.
I would hope that individual citizens would act more responsibly than corrupt corporations and their government enablers. If not then what are we here for?
bad behavior?
Giving the home back is within the terms of the contract that was signed.
The bank who gave that kid a credit card deserves what they got. He was young and had little or no income.
Who in their right mind would loan money to someone who had no income? Greedy bastards who are trying to work the system, thats who.
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.
Good point.
To some degree it is STILL going on.
It's a long story that I'll skip part of to save typing, but my wife and I bought a house this year. We could have paid cash, but I decided to leave it in the bank and finance. My real estate agent (and they ARE a part of the problem) made some comment like, “I was talking to so and so at the bank, and he mentioned that you guys could easily qualify for a more expensive house.” Now a couple of thoughts came to mind: 1. The bank is not supposed to be discussing my finances with anybody, and 2. He's trying to get me to break a sales contract that I've already committed to.
I said, “yes I know we could afford more, but we can also afford not to, and we chose not to. What's the problem?” He became very defensive, yet continued to pepper me with e-mails about more expensive houses.
A lot of the housing bust was caused by people that wouldn't stand up for themselves being talked into houses they couldn't afford. If you don't chose to be in debt up to your eyeballs, people almost look at you like you're a weirdo!
You wake up, no-one forced anyone to purchase a home.
No just all the idiots who said that renting is throwing money away. Oh and all the real estate agents who screamed buy now before you are priced out forever!
Ha!
No sympathy. Everyone who is under water should walk away. Honor your contract by mailing in the keys.
Wake up, the bankers tanked themselves by saddling a $50k income family with a $2k mortgage payment.
AND yet, you still hear those commercials on radio stations that carry Glenn, Laura, Sean, Rush et. al. to use your home equity to consolidate your high interest credit cards....
Good for you, we also bought much less house than we could have. last year, all so we could go 15 years. Hope to have it paid off much less than that.
Housing as an investment is for suckers. It’s just a place to live.
My understanding is that if the lender forgives the debt, the amount forgiven is considered income.
Yes, that is correct. If you lender foregives your mortgage balance, that balance is then considered income to you.
I'd like to be able to do that without having to correct several times. Why would that be irresponsible?
Well, if you’re in a position that makes you think of walking away, then you should search on the IRS website and find the worksheet form, then do the math and see if you can legally claim insolvency. That would be more liabilities than assets. It would be calculated as of the day before you receive the 1099.
http://www.irs.gov/pub/irs-pdf/p4681.pdf
Sorry, not true in most cases. If you look at the rentals listed in the Sacramento area of California, many if not most state that a foreclosure or short sale on the credit report will not be held against the applicant. So if all of your other bills are current, you should have no problem leasing a home.
The fact is, with so many people losing their homes, whether voluntarily or not, the rental market has adjusted.
I agree with you that the banks didn’t “saddle” them with anything, but the banks were pretty foolish to lend many of these people money. I have a friend who is trying to “get out” of her mortgage now and I NEVER would have lent her money when she was looking to buy a home.
I think both the banks and the individuals are both at fault and have been irresponsible in this situation. The actions of the homeowners is more moreally egregious, though.
A realtor’s advice as to whether you should buy a home is equivalent to a barber’s advice about whether you need a haircut.
Not from the Feds. On the state level, it depends. Most states have passed laws to conform to the federal law. If you lose your home to foreclosure or short sale, and it is you primary home, you probably will not face tax consequences on the forgiven debt.
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