Upside down on house (looking ahead)

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.

We've turned into a country that barely produces anything anymore. We've exported jobs en masse. People get rich/want to get rich from accomplishing nothing tangible. That's what's destroying this country.

rant over

Looks like Arizona is non-recourse

That said, unless OP can show that the HELOC was purely for home improvements, OP may be on the line for taxes if it goes unpaid.

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.

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

Hi. I wouldnt pay the bank any more than the mortgage amount at the present. Even if you paid $50k to them you are still in default if you happen to miss a payment or two. No one can predict 3-4 years ahead with any certainty,everything changes. Look at your cash flow. If you have cut back on expenses etc, you have done all you can. Property value is all market driven, yes sentiment plays a part however if you are happy with the house have a good job I would ride it out. Remember mortgage options change as banks try to make money by lending money. The worst mistake people make is not evaluating their situation and relying on what other people are saying in the media. Good luck.

BassKozz said: kenblakely said: Oh, 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"Yeah, see - that's the rub. These people make their money analyzing risk. that is their job. They performed poorly and tried to stay on the gravy train too long. Heck - even Kenny Rogers could tell you that you gotta know when to walk away and know when to run.

Too many variables my 8utt. variables are these guys' stock in trade. They traded poorly and now they get to take a beating. The beating in this case is a guy walking away from the grand opportunity to be a debt slave for the next 20 years. BooHoo - too bad for them.

Incarnate said: tdf2001 said:
A home is a place to live, not an investment vehicle.


Speak for yourself. There's millions of landlords out there. Not everyone buys a home as a place to live. It is a business asset and business decisions should be applied based on financial conditions of the owner and market.

SS7Man said: Incarnate said: tdf2001 said:
A home is a place to live, not an investment vehicle.


Speak for yourself. There's millions of landlords out there. Not everyone buys a home as a place to live. It is a business asset and business decisions should be applied based on financial conditions of the owner and market.

That's not buying a home; that's buying a house.

The confusion between the two may have led to some of these instabilities in the market.

Quick update. The house next door is now listed at $235k and I believe an offer has been put in.

Imagine you went 0% down on a $500k house in CA, now worth $250k, in a way out suburb. You can afford to keep paying. Is there anyone here, despite all the talk of morals, who can seriously say they wouldn't at least strongly consider walking? I imagine most people would.

I'm in CA and according to Zillow, I'm down $50K since I bought my condo two years ago. I've already paid off the second loan ($18K) and $15K on the principal. I'm not panicking.

I don't see that the OP was even asking about walking away but that seems to be the big debate here. What if they OP takes your advice and trashes his credit and then the housing market turns on a dime and improves? The OP would have trashed credit and then would probably not be able to take advantage of the increase in home values. While this situation is not too likely, our current housing situation was considered unlikely as well.

OP, what actions have you taken since the original post? Have you approached your lenders to see if they are open to a mortgage modification?

tdf2001 said: Let's keep morality out of this.

Sentiment like this is what got our country to this point.

you can choose to walk away for the benefit of you and your family or you can choose to stay for the benefit of the bank.

your choice.

You have a real tough choice.

1.) Save your family and walk away
2.) Do everything possible and continue to pay off the mortgage so you can save the bank and the CEO so he can continue to earn $20 millions a year.

Tough choice in tough time

WalStMonky said: ^^^You have shot an arrow through the heart of the members of the S&P 500 anti-defamation league. I can see them twitching and convulsing at the thought of anyone questioning that the bank should be paid, and that the CEO has earned his multi-millions. Have a little sympathy, eh? These people really believe that corporations can do no wrong, and that the corporations needs trump those of natural human beings. There are many, many members that frequent these threads you know.

The creation of a false dichotomy, in this case saving your family versus paying a CEO, is the type of logical fallacy employed by populists to manufacture hatred and rage against corporations. The fact of the matter is that the decision to pay or not pay your mortgage is never going to impact a CEO's pay - but if enough people do it, it will impact the pay of all those "little people" who work for banks and don't get paid the big bucks. But of course, if you were to frame this in the correct way - that if everyone abdicated their personal responsibility it would likely harm your average low level bank employee - then you can't generate the hatred/anger needed to make corporations look evil.

magika said: WalStMonky said: ^^^You have shot an arrow through the heart of the members of the S&P 500 anti-defamation league. I can see them twitching and convulsing at the thought of anyone questioning that the bank should be paid, and that the CEO has earned his multi-millions. Have a little sympathy, eh? These people really believe that corporations can do no wrong, and that the corporations needs trump those of natural human beings. There are many, many members that frequent these threads you know.

The creation of a false dichotomy, in this case saving your family versus paying a CEO, is the type of logical fallacy employed by populists to manufacture hatred and rage against corporations. The fact of the matter is that the decision to pay or not pay your mortgage is never going to impact a CEO's pay - but if enough people do it, it will impact the pay of all those "little people" who work for banks and don't get paid the big bucks. But of course, if you were to frame this in the correct way - that if everyone abdicated their personal responsibility it would likely harm your average low level bank employee - then you can't generate the hatred/anger needed to make corporations look evil.

Just because you couch it in these terms doesn't mean it's so. Your entire argument is premised on what's going to happen to strangers, in this case the 'low level' people. So riddle me this, what if the person upside down is one of those 'low level' employees? Regardless, I take care of me and mine before I worry about strangers. If walking away from my mortgage is indicated as being in our better interests I will do so in a NY minute and without compunction. But don't let it worry your S&P 500 ADL heart too much, as it would be an extreme case before I saw it as being beneficial. Something along the lines of a dirty bomb being set off by terrorists in downtown DC. I'm far enough away that the bomb likely wouldn't affect me directly, but close enough that I'd be lucky to get 20k for my home in such an event. I've already had an object lesson in just how much walking away from a $100k in debt could cost in future earnings because of ending up with horrid credit. But I'm certainly not going to do something against my family's better interest because of concerns over what might happen to some stranger, whether a CEO or a 'low level' employee.

The problem is that now the masses are starting to act like the immoral management who created this whole mess. People bought in knowing if prices continued to go up they could make a ton of money and if they went down they could always hand over the keys. Lenders similarly were offloading the mortgages onto unsuspecting pension funds (who are allowed only to purchase AAA rated material) and later, when the private markets wouldn't touch the stuff at face value, they went back to selling them to fannie and freddie. Everyone involved made significant sums of money off securitizing and selling this garbage (including RE agents who made their % on every flip, made more money on inflated prices, and are currently making money selling REOs). Those responsible won't have to pay the bill, the pensioners, naive investors (who were applying historical rates of default to a market/system unlike anything before), and the taxpayer (that is, the next generation, because the current and last one don't pay their bills). Whether their companies fail or not, most are on a dozen other boards and even if they are kicked from them, they will find themselves in places of power again (using the same connections that got them where they currently are) when things die down, just as the engineers of the S&L crisis did before them.

OP's "lender" for his primary mortgage is probably just a servicer, so by stiffing them he isn't even harming the originator that poorly mispriced risk (especially when dealing with deadbeats) and likely did so intentionally simply to rack up on fees (and commissions for the actors). And if not, he said it is in Chap 11, so the loss on his mortgage will just be passed on to their lienholders.

If the borrowers honored their contracts to the best of their ability, as they generally did in the great depression, the chaos and transfer of wealth would be minimized. I think instead they will continue to pass the bill and we'll all have a rocky future. As for government preventing this kind of thing; they obviously didn't learn from the S&L scandal nor Enron/Worldcom/Adelphia. In fact they and the regulators they have comissioned have been complicit in these Ponzi schemes and I don't see that changing in the future, even with the new FASB rules coming next year. There's just too much money and power available on a national level and very little public interaction and oversight.

InfiniTrent said: tdf2001 said: Let's keep morality out of this.

Sentiment like this is what got our country to this point.you're right... it had nothing to do with out-of-control and unregulated lending activity and everything to do with a lack of morality on the part of borrowers. <rolleyes>