Walk away from your mortgage because you were an idiot.

[fade]

Ugh.

According to NPR, apparently the popular thing to do these days is to walk away from a mortgage when your house depreciates EVEN WHEN YOU CAN STILL EASILY AFFORD TO PAY. This sickens me--it's plain old theft. You agreed to pay 400000 for a house, and it's not the fault of your lender if the value is now 200000. There are whole support networks for this now. People tell the stupidest stories. Like "I wanted to be able to afford to do fun things again, so I just walked away." They're taking advantage of protection laws intended to...protect in order to get out of something that merely annoys them they agreed to do with full awareness. It's the same thing as welfare abuse.

 

[David]

How do you "walk away" from owing money? Would this work with other kinds of debts?? Screw you, credit card company! I'm walking away!

 

[Kitty Sinatra]

It works with mortgages because foreclosure on the house essentially counts as "payment in full" preventing the mortgage company from suing you for more cash. It's the same for other loans where collateral is provided, like car loans. Unsecured loans however, like credit cards, you gotta pay off if you want to avoid getting sued for the rest anyway.

Regardless, your credit rating is fucked. Which sucks.

 

[Chibibar]

It works with mortgages because foreclosure on the house essentially counts as "payment in full" preventing the mortgage company from suing you for more cash. It's the same for other loans where collateral is provided, like car loans. Unsecured loans however, like credit cards, you gotta pay off if you want to avoid getting sued for the rest anyway.

Regardless, your credit rating is fucked. Which sucks.

but over time it will get fix so it is temporary or you can pay a service to get it fix.

 

[Kitty Sinatra]

Sure, but then that's fine with me.

I really don't think I have a problem with people walking away from their mortgages. It's the chance that mortgage companies take, and they're not really out anything anyway: They got paid a shit load of interest on what they lent and now own some property that they can sell. If they're stupid about selling it without making more profit that's their own poor business decision.

 

[Chazwozel]

How do you "walk away" from owing money? Would this work with other kinds of debts?? Screw you, credit card company! I'm walking away!

It's a common misconception that it is illegal to be in debt. It's not. You don't owe a bank jack shit once they give you a loan. There is no law that demands you pay them in full on your mortgage or credit card. They can and will send out debt collections agencies on your ass. If you're completely fucked in terms of home ownership and credit cards for the future.


Fade is right. The people walking away from their mortgages are fucking assholes for doing this. They're abusing a system in place for people who can't afford to pay their bills.

 

[fade]

Sure, but then that's fine with me.

I really don't think I have a problem with people walking away from their mortgages. It's the chance that mortgage companies take, and they're not really out anything anyway: They got paid a shit load of interest on what they lent and now own some property that they can sell. If they're stupid about selling it without making more profit that's their own poor business decision.

Remind me never to make a business deal with you. So much for contractual obligations and agreements. It's wrong to walk away from something you agreed to in good faith, especially when you can still comfortably hold up your end of the bargain you struck. Honestly, I find what you're saying equivalent to "I have no problem with people stealing from a convenience store. It's the chance the owner takes. He's not out anything anyway, he has insurance." Besides, I know exactly how much interest I've paid after three years in this house...it ain't anywhere close to the home value. And if the home has dropped in value by halffor the owner, I can guess it's dropped in half (or possibly more) for the bank. I don't care how business savvy you are that isn't happening.

 

[AshburnerX]

If this will make the banks more responsible about who they lend money out too, then at least some good will come of this.

 

[Kitty Sinatra]

A bank. A casino. These are the two businesses I would like to start. There's really no way to lose so long as you make conservative decisions. Whatever loss the House has to absorb, there's still a greater amount of money coming in. It's almost certain.

Well, I'd put in a strip club in one corner of the property, too. I'll call it The Booty Bank.

 

[Chazwozel]

If this will make the banks more responsible about who they lend money out too, then at least some good will come of this.

No, it'll make them pucker up there asses tighter than a snare drum towards legitimate borrowers.

---------- Post added at 09:40 PM ---------- Previous post was at 09:39 PM ----------

A bank. A casino. These are the two businesses I would like to start. There's really no way to lose so long as you make conservative decisions. Whatever loss the House has to absorb, there's still a greater amount of money coming in. It's almost certain.

Well, I'd put in a strip club in one corner of the property, too. I'll call it The Booty Bank.

I'd love to start up a casino, but unless you're living on an Indian reservation, the building costs in Vegas (along with regulations permits and fees ) are enough to make Donald Trump shit his pants.

 

[Kitty Sinatra]

Yeah, I know. It's why I want to become governor of North Dakota. I'd then make casinos legal in one city section where I happen to have bought some land, then open a casino. I want competition - multiple casinos seem to draw in tourists by the plane-full - so you're welcome to buy some of that land in advance . . . I'd appreciate a campaign contribution, though.

 

[TommiR]

If this will make the banks more responsible about who they lend money out too, then at least some good will come of this.

No, it'll make them pucker up there asses tighter than a snare drum towards legitimate borrowers[/QUOTE]
And jack up their interest rates. Higher risk = Higher interest premiums.

Which is bad all round when you think about it.

 

[wikked]

When a house is foreclosed on the bank takes possession of it. They then sell it at auction. If the house sells for less then you owe on it at that time you are still CONTRACTUALLY OBLIGATED TO PAY. Meaning, they can go before a judge and have it taken out of your paycheck, take any income tax refund you may get, or any other way they can find to get it.

There are a few states, I believe florida is one, that they can't. But, the majority of states will make you pay it.

I know this because I am going through it right now.

 

[Shakey]

As someone whose job is dependent on people not doing this right now it bugs the hell out of me. Not the people who fell on hard times that were out of their control, but people who made irresponsible decisions and want to take an easy way out.

As for banks always making money if they play it conservative, bull shit. I'd say yes during a good economy, but when the financial status of someone that holds a loan with you goes down the shitter there is nothing you can do about it. Even good people lose their job in a bad economy, and you can't predict that.

 

[Tinwhistler]

no debt garnishments in Texas.

 

[sixpackshaker]

One thing that banks bet on when giving risky loans is that they will get the house if the mortgage fails. That is the bonus for the banks. And it is a land grab. Don't feel sorry for the banks they will get their money, not tomorrow but the day will come. They can eventually balance what they have been paid on the mortgage vs. the loss they take when they sell the home. Or the bank will just become slum lords and rent the property till it pays for itself.

 

[Shakey]

One thing that banks bet on when giving risky loans is that they will get the house if the mortgage fails. That is the bonus for the banks. And it is a land grab. Don't feel sorry for the banks they will get their money, not tomorrow but the day will come. They can eventually balance what they have been paid on the mortgage vs. the loss they take when they sell the home. Or the bank will just become slum lords and rent the property till it pays for itself.

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.

 

[sixpackshaker]

One thing that banks bet on when giving risky loans is that they will get the house if the mortgage fails. That is the bonus for the banks. And it is a land grab. Don't feel sorry for the banks they will get their money, not tomorrow but the day will come. They can eventually balance what they have been paid on the mortgage vs. the loss they take when they sell the home. Or the bank will just become slum lords and rent the property till it pays for itself.

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.[/QUOTE]

Every bank that failed was just operating with in the law and common decency...

 

[Shakey]

One thing that banks bet on when giving risky loans is that they will get the house if the mortgage fails. That is the bonus for the banks. And it is a land grab. Don't feel sorry for the banks they will get their money, not tomorrow but the day will come. They can eventually balance what they have been paid on the mortgage vs. the loss they take when they sell the home. Or the bank will just become slum lords and rent the property till it pays for itself.

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.[/QUOTE]

Every bank that failed was just operating with in the law and common decency...[/QUOTE]

A lot of banks are struggling because of the problems other banks caused. There is no excuse on either side to take advantage of that.

 

[TommiR]

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.

Every bank that failed was just operating with in the law and common decency...[/QUOTE]
They're businesses. I'm not sure decency in and of itself should be a primary concern.

As companies, banks need to operate in accordance with the law, and there's always an element of risk in any business. If there's nothing in the US federal or state law to prohibit this kind of behavior from a debtor, then I guess that's just a condition the banks need to operate under. But it's my understanding that they generally compensate for risks by increasing interest premiums. So in the end, it seems to me that it is the diligent and responsible Joe Homeowner who ends up footing the bill for this sort of protection legislation. I don't know if such protection is worth it.

All opinions are based on my limited understanding of US law regarding such matters.

 

[phil]

Yeah, I know. It's why I want to become governor of North Dakota. I'd then make casinos legal in one city section where I happen to have bought some land, then open a casino. I want competition - multiple casinos seem to draw in tourists by the plane-full - so you're welcome to buy some of that land in advance . . . I'd appreciate a campaign contribution, though.

I'm on board so far, but what about hookers? Will they be legal in North Dawesome? (I assume you'll change the name once you're in power too)

 

[@Li3n]

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.

Every bank that failed was just operating with in the law and common decency...[/QUOTE]
They're businesses. I'm not sure decency in and of itself should be a primary concern.
[/QUOTE]

Sure it should: http://news.bbc.co.uk/2/hi/asia-pacific/7918129.stm


The sad thing is that one of the 1st things you learn in any economy class is how bubbles always burst: http://en.wikipedia.org/wiki/Tulip_craze But then again the idea is that you only get burn if you're holding it when it goes boom, so why not take the chance and make more money that way.

 

[Shakey]

Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.

Every bank that failed was just operating with in the law and common decency...[/QUOTE]
They're businesses. I'm not sure decency in and of itself should be a primary concern.

As companies, banks need to operate in accordance with the law, and there's always an element of risk in any business. If there's nothing in the US federal or state law to prohibit this kind of behavior from a debtor, then I guess that's just a condition the banks need to operate under. But it's my understanding that they generally compensate for risks by increasing interest premiums. So in the end, it seems to me that it is the diligent and responsible Joe Homeowner who ends up footing the bill for this sort of protection legislation. I don't know if such protection is worth it.

All opinions are based on my limited understanding of US law regarding such matters.[/QUOTE]

Interest premiums are usually based off of what the federal reserve sets as the base rate. It also depends on what the bank is paying out for interest rates for CD's and Savings accounts.

Banks didn't force people to take out over inflated mortgages. That's what I thought this was about.

 

[@Li3n]

Banks didn't force people to take out over inflated mortgages.

They just wanted to profit from it...


But i don't really get why they want to default the houses, where they planing to sell them later or something?! Then again they where stupid enough to get a 400k house...

 

[Shakey]

Banks didn't force people to take out over inflated mortgages.

They just wanted to profit from it...


But i don't really get why they want to default the houses, where they planing to sell them later or something?! Then again they where stupid enough to get a 400k house...[/QUOTE]

They want to default on houses because they owe more on them than they are worth.

 

[TommiR]

Interest premiums are usually based off of what the federal reserve sets as the base rate. It also depends on what the bank is paying out for interest rates for CD's and Savings accounts.

But isn't there also an interest premium based on the risk of default or delay, so that the bank will charge more interest on a loan if credit risk is high? And if the hazard to the risk is that the bank is saddled with a house that's worth less then what the bank ended up paying for it and needs to be content with that, wouldn't it tend to increase the the risk premium on the interests on housing mortgage loans in general, as opposed to a situation where the debtor still owes the balance to the bank? I'm not well-versed enough in banking practices to say for sure, though.

Banks didn't force people to take out over inflated mortgages. That's what I thought this was about.

True, they didn't. But, assuming we're talking subprime here, they did accept their high-risk mortgage loan applications, a business policy which didn't end too well for anybody after the bubble burst.

 

[Kitty Sinatra]

Yeah, I know. It's why I want to become governor of North Dakota. I'd then make casinos legal in one city section where I happen to have bought some land, then open a casino. I want competition - multiple casinos seem to draw in tourists by the plane-full - so you're welcome to buy some of that land in advance . . . I'd appreciate a campaign contribution, though.

I'm on board so far, but what about hookers? Will they be legal in North Dawesome? (I assume you'll change the name once you're in power too)[/QUOTE]

I hadn't thought to change the name :hmm:

Nor had I considered making prostitution legal. I will consider it if I'm plied with the proper "lobbying."

 

[@Li3n]

But i don't really get why they want to default the houses, where they planing to sell them later or something?! Then again they where stupid enough to get a 400k house...

They want to default on houses because they owe more on them than they are worth.[/QUOTE]

Didn't seem to bother them before...

But the idea was that now the prices are down because of the crisis, but they'll probably go back to a comfortable level again in the future, plus if they don't plan on selling it the relative worth atm shouldn't matter all that much.

But i guess cracked was right, people are awful at seeing the future instead of the now.

 

[Shakey]

But i don't really get why they want to default the houses, where they planing to sell them later or something?! Then again they where stupid enough to get a 400k house...

They want to default on houses because they owe more on them than they are worth.[/QUOTE]

Didn't seem to bother them before...

But the idea was that now the prices are down because of the crisis, but they'll probably go back to a comfortable level again in the future, plus if they don't plan on selling it the relative worth atm shouldn't matter all that much.

But i guess cracked was right, people are awful at seeing the future instead of the now.[/QUOTE]

Pretty sure it bothered them before. There were fewer, so it was more manageable.

Head hurts from drinking too much last night. Ouch...

 

[Odie]

Fade I understand your anger, I personally am not really sure how I feel about but in the end I feel like the issue here is one of a moral obligation Vs. a business obligation.

The real question comes down to "Can your morally feel Ok walking away from your obligations knowing you could pay for it, even though it would be hard times?"

People unfortunately do this all the time, it happens in all walks of life. Either it is a responsibility of mortgage payment, car payment even children (speaking of men/ladies who refuse to pay for child support). I know some people would love to say this is a generational thing but in the end there have always been deadbeats. Corporations do this all the time though and we don’t have the same outrage when that happens, should we really hold double standards and treat corporations as these lifeless entities that they claim to be or should they be included in this discussion of moral obligations. Why let one be able to walk away from a contract fairly unscathed and the other be accosted?

http://www.huffingtonpost.com/2010/01/25/dont-look-back-major-play_n_435965.html (heres a new article about this issue)

 

[sixpackshaker]

Nations do it all the time too. Nearly 20 years back Brazil refused to bay back its loans. Now it is doing much better.

 

[zero]

Nations do it all the time too. Nearly 20 years back Brazil refused to bay back its loans. Now it is doing much better.

Come on... we SUSPENDED the payment for 9 months in 87... And every cent of that debt is now paid.
And notice that even the suspension of the payment produced very bad consequences (As anyone could see at the time). As you said, it took more than 20 years to get our credibility back.

About the mortgage, everybody here seems to have forgotten that the "walk away" clause IS PRESENT ON THE MORTGAGE CONTRACT. As those terms were mutually agreed by both parties, I can't see how abiding by them constitute cheating.

 

[Bowielee]

I still have yet to see how this is theft in any way. If anyone loses by walking away from the mortgage, it's the person walking away, not the bank. They are out not only all the money they already have put into the house, but they're also out a house. It's not like the bank refunds them money or anything.

 

[zero]

I still have yet to see how this is theft in any way. If anyone loses by walking away from the mortgage, it's the person walking away, not the bank. They are out not only all the money they already have put into the house, but they're also out a house. It's not like the bank refunds them money or anything.

It is very much possible for the bank to lose money on such operation, and yes, it is even possible that the person who walks away to even make some money out of it. It's still absolutely no theft. The previous agreement between both parties is being respected, nobody is cheating.

 

[Bowielee]

The only way the bank "loses" money is through depreciated value, but seeing as they're just the avenue of lending, they're not really out anything. They lose money on paper, but not any initial investment out of pocket.

I can't even begin to figure how someone could profit from defaulting on a loan. Unless you mean by tax loopholes.

If you want to look at it through the morality lens, yes, these people are hurting the economy more than helping it, but really if they want to drop outrageous monthly payments in favor of paying rent (which they will most likely have to do for the rest of their lives because good luck getting a loan after defaulting on a mortgage), go to town. In the end, they're doing more damage to themselves than anyone else.