michal1980 said:Can people that keep saying its ok to walk away, find anything that really matters anymore? Are there any rules that shouldn't be broken? Should everyone be able to walk away? Why not? In fact every american that has a loan should just stop paying. Why bother. whats the point?No. Nothing matters anymore. The end of the world is coming.

Seriously, in 99% of cases, it makes financial sense to continue paying the loan. For the OP, it does not make financial sense to do so.

The bank (like many others) miscalculated its risk. If the industry needs to reevaluate its lending practices (it does), then so be it.

Incarnate said:NorthStar2020 said:The bank has already priced this event into their interest rate calculations.
No they did not. Thats why so many banks are going under or having problems. They priced some forclosures into the interest rate, but they did not price in this many forclosures, and a loss in home values this large.

Ok, let's not be too literal here. The banks intended to price that risk into their interest rate calculation. Obviously, they didn't do a very good job of it.

Turning this back from an ethical debate, I think this thread raises an important question.....Which states are non-recourse and under what condition?

Obviously, paralleling this information with areas of huge price appreciation during the bubble would indicate where large gluts of "voluntary" foreclosures will most likely occur, futher driving down housing prices.

Could be useful information for someone who's trying to feel out the bottom before making a home purchase......

Incarnate said:NorthStar2020 said:The bank has already priced this event into their interest rate calculations.
No they did not. Thats why so many banks are going under or having problems. They priced some forclosures into the interest rate, but they did not price in this many forclosures, and a loss in home values this large.And because they were silly enuf to fail to do their due diligence, hard working Americans should be debt slaves to keep them afloat, right? That's just dumb.

kenblakely said:Incarnate said:NorthStar2020 said:The bank has already priced this event into their interest rate calculations.
No they did not. Thats why so many banks are going under or having problems. They priced some forclosures into the interest rate, but they did not price in this many forclosures, and a loss in home values this large.And because they were silly enuf to fail to do their due diligence, hard working Americans should be debt slaves to keep them afloat, right? That's just dumb.
All the due diligence in the world doesn't buy you a crystal ball

OP may have a hard time getting a mortgage in 2010, He will be upside down and lendors will still be shellshocked....Even with great credit, mortgages are becoming harder to find, there just isnt as much liquidity there.

Lendors share a large portion of blame for the current situation and housing crisis, and they will not hesitate to screw over OP by not offering a fixed rate mortgage. I think what OP might need to look at is predictions of interest rates because they may be tied to the house and the ARM for some time.

why add more money to a bad situation. walk and start over. If you have a good job, I would not care about credit score. I will take $100K over credit score anyday.

kenblakely said:BassKozz said:kenblakely said:Incarnate said:NorthStar2020 said:The bank has already priced this event into their interest rate calculations.
No they did not. Thats why so many banks are going under or having problems. They priced some forclosures into the interest rate, but they did not price in this many forclosures, and a loss in home values this large.And because they were silly enuf to fail to do their due diligence, hard working Americans should be debt slaves to keep them afloat, right? That's just dumb.
All the due diligence in the world doesn't buy you a crystal ballOh, I get it. People smart enuf to run major banks and investment houses weren't smart enuf to see that the mortgage industry was gonna implode. Please.
too many variables... Sure they probably had a hunch, but for every analyst who said "the sky is falling" there was another who was saying "don't jump off this gravy train"

Mulligan said:Wow, really tough situation. First I wish you the best of luck. My problem with this and I know two people going through the same thing is that your house will "probably" never be an asset - as long as you own it. It its worth $275k and you paid $410k, then you are upside down $135k. If we bottom out in a few years and your house bottoms at $275k and returns to normal appreciation (depending on area) lets say that's 4% annual. I don't have a financial calculator, but at that rate you probably be lucky to break even in 50 years. So you would end up paying several hundred thousand dollars for a house that is worth $400k in thirty years. I think that means 30 years of PMI too. There is obviously a lot of speculation here, but according to the average returns on real estate, you are screwing yourself I think. Maybe short sale and a happy retirement? If this were me, I would risk my future on a building.

1.04^30 = 3.24

He isn't upside down $135k, he put 5% down in cash. If it drops in value to 275k in two years he will only owe ~350k on it given minimum payments. I don't think its worth trashing your credit because your house is worth 75k less than the mortgages. It doesn't matter where he bought into the cycle, if he keeps his place looking nice for 10+ years he will come out ahead.

zski1 said:kenblakely said:And because they were silly enuf to fail to do their due diligence, hard working Americans should be debt slaves to keep them afloat, right? That's just dumb.

Borrowers failed to do their due diligence as well. How many of us saw that home prices were escalating irrationally, knew the bubble was going to pop, and still bought property anyway? I don't think there are very many innocent parties on either side.

-z

Agreed, the whole bubble and everything associated with it is disgusting. Greed and ignorance are abundant on both sides. My opinion for the OP is that banks will screw you using whatever tools are available to them - they care nothing for you. Why should you care for them? A default is not illegal and one of the tools available to borrowers. The banks used to require 20% down as contingency for defaults, but they were stupid enough to stop that practice so let them die.

What would the bank do if the role was reversed?

vxmike said:What would the bank do if the role was reversed?
I'm sure the bank president wouldn't ever sleep again - knowing how you are suffering. I'm sure the share-holders would weep daily for you.