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Walk away from your mortgage because you were an idiot.
#1
fade
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.
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.
#2
David
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! 
#3
Kitty Sinatra
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.
Regardless, your credit rating is fucked. Which sucks.
#4
Chibibar
Chibibar
but over time it will get fix so it is temporary or you can pay a service to get it fix.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.
#5
Kitty Sinatra
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.
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.
#6
Chazwozel
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.
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.
#7
fade
fade
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.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.
#8
AshburnerX
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.
#9
Kitty Sinatra
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.
Well, I'd put in a strip club in one corner of the property, too. I'll call it The Booty Bank.
#10
Chazwozel
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 ----------
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.
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.
#11
Kitty Sinatra
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.
#12
TommiR
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.
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.
#13
wikked
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.
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.
#14
Shakey
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.
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.
#15
Tinwhistler
Tinwhistler
no debt garnishments in Texas.
#16
sixpackshaker
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.
#17
Shakey
Shakey
Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.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.
#18
sixpackshaker
Every bank that failed was just operating with in the law and common decency...
sixpackshaker
Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.[/QUOTE]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.
Every bank that failed was just operating with in the law and common decency...
#19
Shakey
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.
Shakey
Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.[/QUOTE]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.
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.
#20
TommiR
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.
TommiR
Every bank that failed was just operating with in the law and common decency...[/QUOTE]Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.
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.
#21
phil
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)
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)
#22
@Li3n
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.
@Li3n
Every bank that failed was just operating with in the law and common decency...[/QUOTE]Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.
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.
#23
Shakey
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.
Shakey
Every bank that failed was just operating with in the law and common decency...[/QUOTE]Except for the banks that get shut down. There are no people that work for banks. Just robots out to steal your money.
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.
#24
@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...
@Li3n
They just wanted to profit from it...Banks didn't force people to take out over inflated mortgages.
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...
#25
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...[/QUOTE]
They want to default on houses because they owe more on them than they are worth.
Shakey
They just wanted to profit from it...Banks didn't force people to take out over inflated mortgages.
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.
#26
TommiR
TommiR
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.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.
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.Banks didn't force people to take out over inflated mortgages. That's what I thought this was about.
#27
Kitty Sinatra
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."
Kitty Sinatra
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]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 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."
#28
@Li3n
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.
@Li3n
They want to default on houses because they owe more on them than they are worth.[/QUOTE]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...
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.
#29
Shakey
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...
Shakey
They want to default on houses because they owe more on them than they are worth.[/QUOTE]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...
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...
#30
Odie
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)
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)
#31
sixpackshaker
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.
#32
zero
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.
zero
Come on... we SUSPENDED the payment for 9 months in 87... And every cent of that debt is now paid.Nations do it all the time too. Nearly 20 years back Brazil refused to bay back its loans. Now it is doing much better.
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.
#33
Bowielee
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.
#34
zero
zero
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.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.
#35
Bowielee
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.
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.
#36
fade
fade
Odie,
The difference between this and a deadbeat parent is that people are actually promoting this as a good and right thing to do. There may be walkaways in parenting, but no one says "Hey, good for you Bob! You screwed over your wife and kid." And then Bob goes out and starts a full movement including a website about how to screw your family on their support.
The difference between this and a deadbeat parent is that people are actually promoting this as a good and right thing to do. There may be walkaways in parenting, but no one says "Hey, good for you Bob! You screwed over your wife and kid." And then Bob goes out and starts a full movement including a website about how to screw your family on their support.
#37
zero
zero
Quite easy... Lend $40000 to mr. John Doe backed by a house you though is worth $60000. All of sudden, that said house is worth no more than $20000. Then, mr. Doe defaults on you, using a clause on your contract that allows him to walk away with his debt by giving you his house. Now, you effectively paid $40000 for a house worth no more than $20000.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.
That is very debatable, including what constitutes "to profit". It is evidently profitable to exchange a debt of $40000 for a house worth no more than $20000. Of course, you may argue that mr. Doe effectively "profited" when his property became overevaluated, not when he defaulted on his debt.I can't even begin to figure how someone could profit from defaulting on a loan. Unless you mean by tax loopholes.
#38
TommiR
TommiR
Perhaps one significant issue in why nations and corporations have it easier than private individual in these matters is the scale involved. If one owes the bank say USD100.000 and can't pay it back, it's much the debtor's problem. If one owes the bank several billions and can't pay it back, it becomes a bit of a problem for the creditor as well. In the latter case it is much easier to re-negotiate the contract, which is perfectly legal as I understand. Which I believe is what Brazil did in this case.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.
Hmm, I did not know that. If the 'walk-away' does not constitute a breach of contract, then I guess all is fair and square.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.
#39
Tinwhistler
Tinwhistler
That stuff doesn't stay on your credit report for your entire life, you know.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)
#40
fade
fade
You'd have to show me that walkaway clause. I read every page of my mortgage, to the dismay of the titling company, and I don't recall anything like that.
EDIT: I take that back. I see walkaway clause defined, but I don't see it ever implemented.
EDIT: I take that back. I see walkaway clause defined, but I don't see it ever implemented.
#41
zero
zero
Well, the walkway clause is the very definition of a mortgage, isn't it?You'd have to show me that walkaway clause. I read every page of my mortgage, to the dismay of the titling company, and I don't recall anything like that.
EDIT: I take that back. I see walkaway clause defined, but I don't see it ever implemented.
#42
Adammon
The most obvious is deprecation of value in the original asset. A smart institution will have an allowance for bad debt to a point so this is mitigated slightly. However, the 'walking away' tends to lead to blighted communities - one empty house propagates another, and in most cases, it's the same financial institution (or at least a group of similar FIs) who are responsible for the financing of that neighborhood.
Something a little less known is that to write a mortgage (or any loan) requires a legislated amount of deposits behind it backing it up (Commonly referred to as a reserve ratio or liquidity ratio). Economics nerds will also refer to this as the money multiplier. For a mortgage that is walked away from means that that money is no longer available for lending to someone else. This is direct revenue loss as FIs will keep their ratio as close to the limit as possible to maximize interest revenue. This also hurts the next person who comes in for a mortgage because the likelihood that they'll be declined increases quickly the more bad debt is accrued.
Third, an abandoned property becomes a money pit, requiring upkeep and maintenance all paid for out of pocket by the FI, none of which is cheap. Professional property managers make a mint on these kind of situations. And the type of person who just walks away from a mortgage typically wasn't the type to maintain the property to begin with so there's a lot of 'fixing up' to get it even sellable. As an example, I bought a repo'ed house that didn't have a blade of grass in the entire lot.
Fourth, a primary financial institution is often also the primary insurer, selling Life, Disability, Critical Illness,on that mortgage. All of that revenue (and it is substantial) is lost in an abandoned property.
Fifth, writing a mortgage is a time consuming process. Lenders, lending committees, paperwork, all of those costs are amortized over the life of the property to make it affordable to start the mortgage process.
But hey, as long as the banks are the bad guys, booooya.
Adammon
This shows a very cursory understanding of banking. The bank loses money several ways on a bad loan like this.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.
The most obvious is deprecation of value in the original asset. A smart institution will have an allowance for bad debt to a point so this is mitigated slightly. However, the 'walking away' tends to lead to blighted communities - one empty house propagates another, and in most cases, it's the same financial institution (or at least a group of similar FIs) who are responsible for the financing of that neighborhood.
Something a little less known is that to write a mortgage (or any loan) requires a legislated amount of deposits behind it backing it up (Commonly referred to as a reserve ratio or liquidity ratio). Economics nerds will also refer to this as the money multiplier. For a mortgage that is walked away from means that that money is no longer available for lending to someone else. This is direct revenue loss as FIs will keep their ratio as close to the limit as possible to maximize interest revenue. This also hurts the next person who comes in for a mortgage because the likelihood that they'll be declined increases quickly the more bad debt is accrued.
Third, an abandoned property becomes a money pit, requiring upkeep and maintenance all paid for out of pocket by the FI, none of which is cheap. Professional property managers make a mint on these kind of situations. And the type of person who just walks away from a mortgage typically wasn't the type to maintain the property to begin with so there's a lot of 'fixing up' to get it even sellable. As an example, I bought a repo'ed house that didn't have a blade of grass in the entire lot.
Fourth, a primary financial institution is often also the primary insurer, selling Life, Disability, Critical Illness,on that mortgage. All of that revenue (and it is substantial) is lost in an abandoned property.
Fifth, writing a mortgage is a time consuming process. Lenders, lending committees, paperwork, all of those costs are amortized over the life of the property to make it affordable to start the mortgage process.
But hey, as long as the banks are the bad guys, booooya.
#43
GasBandit
GasBandit
Personally, I see this as the natural outcome of the progression that our society has perpetrated for the last few generations - the "I should be able to do what I want and hang the consequences" mentality that not only infests our teenagers but our bankers, our homeowners, everybody. Somewhere along the line we decided that nothing bad should be allowed to happen to us, even if it was our own fault, simply because we decided it. You see it everywhere - the burglar who sues the burgled for injuries sustained in their house. The sub-prime mortgage given to someone who has absolutely no realistic hope of making the payments if the market fluctuates - which it always does. It's a systemic dysfunction.
Americans in particular have forgotten the point behind the founding of our very country, of the point of sailing across the ocean into untamed wilderness to begin with. Previous to our grand experiment, what you were born into was what you were all your life, and you only possessed what your betters deemed you worthy of possessing. Those who came to America were looking for the chance to thrive or wither by their own machinations - to take their own destiny into their hands and accept the rewards and the consequences because nowhere else could you hope to do that. That means if you screw up, there are consequences - potentially life ruining ones. And just like in more feudal days, misfortune can also find you and ruin you through no fault of your own. But your success was up to you, and you earned your success and kept it. Now we've just regressed back into a desire to be kept, a feudal mentality. Bread and circuses are the order of the day, and so long as we're safe and have cheap food and goods from wal-mart and American Idol to watch on TV at night, we're happy to have surrendered the steering of our own destiny and the reaping of the rewards of our efforts.
Americans in particular have forgotten the point behind the founding of our very country, of the point of sailing across the ocean into untamed wilderness to begin with. Previous to our grand experiment, what you were born into was what you were all your life, and you only possessed what your betters deemed you worthy of possessing. Those who came to America were looking for the chance to thrive or wither by their own machinations - to take their own destiny into their hands and accept the rewards and the consequences because nowhere else could you hope to do that. That means if you screw up, there are consequences - potentially life ruining ones. And just like in more feudal days, misfortune can also find you and ruin you through no fault of your own. But your success was up to you, and you earned your success and kept it. Now we've just regressed back into a desire to be kept, a feudal mentality. Bread and circuses are the order of the day, and so long as we're safe and have cheap food and goods from wal-mart and American Idol to watch on TV at night, we're happy to have surrendered the steering of our own destiny and the reaping of the rewards of our efforts.
#44
Dave
Dave
If you guys knew the fights I've been going through to save my house...
I understand both sides. Many a time I have wanted to just walk away. But I have nowhere to go and this is home, man!
I understand both sides. Many a time I have wanted to just walk away. But I have nowhere to go and this is home, man!
#45
Covar
I'm sorry, I feel no sympathy for a person who looses their house because they can't be bothered to actually know what they were doing when they borrow massive sums of money.
Covar
Remember they're the evil assholes who deserve to be punished because they foreclose on houses of people who a) walk away from it and b) somehow get loans they should have never signed off on in the first place.But hey, as long as the banks are the bad guys, booooya.
I'm sorry, I feel no sympathy for a person who looses their house because they can't be bothered to actually know what they were doing when they borrow massive sums of money.
#46
MindDetective
MindDetective
Said the Libertarian. A free society allows people to be selfish jerks more than in any other type of society. 'Tis the pains of living free.Personally, I see this as the natural outcome of the progression that our society has perpetrated for the last few generations - the "I should be able to do what I want and hang the consequences" mentality that not only infests our teenagers but our bankers, our homeowners, everybody. Somewhere along the line we decided that nothing bad should be allowed to happen to us, even if it was our own fault, simply because we decided it. You see it everywhere - the burglar who sues the burgled for injuries sustained in their house. The sub-prime mortgage given to someone who has absolutely no realistic hope of making the payments if the market fluctuates - which it always does. It's a systemic dysfunction.
#47
fade
Mine seems to be the exact polar opposite of the definition of walkaway clause.
fade
Well, the walkway clause is the very definition of a mortgage, isn't it?[/QUOTE]You'd have to show me that walkaway clause. I read every page of my mortgage, to the dismay of the titling company, and I don't recall anything like that.
EDIT: I take that back. I see walkaway clause defined, but I don't see it ever implemented.
Mine seems to be the exact polar opposite of the definition of walkaway clause.
#48
sixpackshaker
sixpackshaker
These guys that walk away from a mortgage only have to keep their credit clean for seven years. At that point your defaults fall off your credit history. If some one is so upside down on their house that there is no way for them to make their money back in 10 years, they should walk.
My house note is not very bad, and my area has a stable housing market(actually there is not enough housing in town.) That even if I have to sell my house for a loss, I will still get some of my money back. Unlike moving after paying 10 years of rent, of which you get none of it back.
My house note is not very bad, and my area has a stable housing market(actually there is not enough housing in town.) That even if I have to sell my house for a loss, I will still get some of my money back. Unlike moving after paying 10 years of rent, of which you get none of it back.
#49
zero
zero
Please... the moral angle has nothing to do with this particular issue. Nor the banks are all selfish jerks, nor people executing the "walk away clause" on their mortgage contracts are thieves or crooks who want to escape the consequence of their acts.
The banks aren't loosing money because they are being ripped-off by the borrowers. They are loosing money because they overvaluated the security of their lendings. And that's certainly NOT the borrower's fault!
The banks aren't loosing money because they are being ripped-off by the borrowers. They are loosing money because they overvaluated the security of their lendings. And that's certainly NOT the borrower's fault!
#50
fade
All that doesn't mean that (gasp!) I don't agree with you on the point you're making here. Americans in general have become fat lazy slobs looking for handouts. We need to remember the benefits of hard work. We need some national pride again.
---------- Post added at 05:24 PM ---------- Previous post was at 05:21 PM ----------
fade
I had some elaborate treatise here about how the differences in a tight republic and a libertarian ideal are semantic and illusionary to the common man (something I've given a LOT of thought to lately), but it would be better presented in person.Personally, I see this as the natural outcome of the progression that our society has perpetrated for the last few generations - the "I should be able to do what I want and hang the consequences" mentality that not only infests our teenagers but our bankers, our homeowners, everybody. Somewhere along the line we decided that nothing bad should be allowed to happen to us, even if it was our own fault, simply because we decided it. You see it everywhere - the burglar who sues the burgled for injuries sustained in their house. The sub-prime mortgage given to someone who has absolutely no realistic hope of making the payments if the market fluctuates - which it always does. It's a systemic dysfunction.
Americans in particular have forgotten the point behind the founding of our very country, of the point of sailing across the ocean into untamed wilderness to begin with. Previous to our grand experiment, what you were born into was what you were all your life, and you only possessed what your betters deemed you worthy of possessing. Those who came to America were looking for the chance to thrive or wither by their own machinations - to take their own destiny into their hands and accept the rewards and the consequences because nowhere else could you hope to do that. That means if you screw up, there are consequences - potentially life ruining ones. And just like in more feudal days, misfortune can also find you and ruin you through no fault of your own. But your success was up to you, and you earned your success and kept it. Now we've just regressed back into a desire to be kept, a feudal mentality. Bread and circuses are the order of the day, and so long as we're safe and have cheap food and goods from wal-mart and American Idol to watch on TV at night, we're happy to have surrendered the steering of our own destiny and the reaping of the rewards of our efforts.
All that doesn't mean that (gasp!) I don't agree with you on the point you're making here. Americans in general have become fat lazy slobs looking for handouts. We need to remember the benefits of hard work. We need some national pride again.
---------- Post added at 05:24 PM ---------- Previous post was at 05:21 PM ----------
The moral issue is the entire point! I don't care about the bank's bottom line directly. I care about the out and out theft of walking away from something you agreed to pay for because basically you don't feel like doing it.Please... the moral angle has nothing to do with this particular issue. Nor the banks are all selfish jerks, nor people executing the "walk away clause" on their mortgage contracts are thieves or crooks who want to escape the consequence of their acts.
The banks aren't loosing money because they are being ripped-off by the borrowers. They are loosing money because they overvaluated the security of their lendings. And that's certainly NOT the borrower's fault!
#51
sixpackshaker
sixpackshaker
I think our government remembers quite well why many came to these shores... to get the hell out of debtor's prison. That is why it is not a crime to owe money. The bank agreed that the house is worth 400,000 dollars when they made the loan, then they can sell the house for $400,000 to reap their rewards.
#52
zero
zero
Here, let me try to explain in simpler terms...
The thing is, the whole "mortgage" concept add a lot of economic complexity, not to mention the emotional charge associated with the word, so let's forget for a while about it.
Let's suppose GB owns a house. Let's suppose I like GB's house very much, and would like to buy it from him.
I take a good look at the house, and find it's worth, let's say, $200000. In fact, even the market seems to back me up, as many similar houses have been sold for similar prices.
I offer GB 180000 for his house. He, noticing his neighbourhood is becoming infested with leftists like me, doesn't think twice and takes the deal.
A month latter, the prices of the houses plummet and I can't find even $100000 for GB's house.
Now, was GB being a thief for accepting $180000 for a house that's not even worth $100000 now? Was I being a selfish jerk for offering $180000 for a house I though worth over $200000? Are leftists really moving next to GB?
Not one thing, nor another, it's just the way the market works. Now, replace the sale operation for a mortgage operation. Remember, a mortgage is a lend secured by a property, where you either repay the borrowed amount with interests OR transfer the property to the owner. Usually, the value of the property is higher than the debt, but every once and then, the lender will make an evaluation mistake. Is that the burrower's fault? Of course not! Is he allowed to walk away from his debt by transferring his property to the lender? Of course he is!
The thing is, the whole "mortgage" concept add a lot of economic complexity, not to mention the emotional charge associated with the word, so let's forget for a while about it.
Let's suppose GB owns a house. Let's suppose I like GB's house very much, and would like to buy it from him.
I take a good look at the house, and find it's worth, let's say, $200000. In fact, even the market seems to back me up, as many similar houses have been sold for similar prices.
I offer GB 180000 for his house. He, noticing his neighbourhood is becoming infested with leftists like me, doesn't think twice and takes the deal.
A month latter, the prices of the houses plummet and I can't find even $100000 for GB's house.
Now, was GB being a thief for accepting $180000 for a house that's not even worth $100000 now? Was I being a selfish jerk for offering $180000 for a house I though worth over $200000? Are leftists really moving next to GB?
Not one thing, nor another, it's just the way the market works. Now, replace the sale operation for a mortgage operation. Remember, a mortgage is a lend secured by a property, where you either repay the borrowed amount with interests OR transfer the property to the owner. Usually, the value of the property is higher than the debt, but every once and then, the lender will make an evaluation mistake. Is that the burrower's fault? Of course not! Is he allowed to walk away from his debt by transferring his property to the lender? Of course he is!
#53
sixpackshaker
sixpackshaker
Walking away is not theft. Squatting in the house and not paying for it is theft. Walking away is to keep from ruining your life over a major mistake.
#54
zero
What was REALLY agreed upon was to either:
1. Pay the debt with interests.
2. OR transfer the property of the house to the lender.
As the borrower is fully complying with his obligations (by picking option "2"), there's no way this can be considered theft.
zero
And there's where you're wrong.The moral issue is the entire point! I don't care about the bank's bottom line directly. I care about the out and out theft of walking away from something you agreed to pay for because basically you don't feel like doing it.
What was REALLY agreed upon was to either:
1. Pay the debt with interests.
2. OR transfer the property of the house to the lender.
As the borrower is fully complying with his obligations (by picking option "2"), there's no way this can be considered theft.
#55
Shakey
Shakey
So, instead of taking responsibility for your major mistake it's OK to dump it on someone else.
#56
zero
zero
Who's mistake? The only mistake made was during the evaluation of the security. Who made this mistake isn't the borrower, but the lender.So, instead of taking responsibility for your major mistake it's OK to dump it on someone else.
#57
Shakey
Shakey
The borrower didn't agree that the property was worth what it was evaluated as?
#58
zero
zero
Again, check my previous example... If I offer to buy your house for TWICE what it's worth, won't you take it? Would you consider immoral someone who does so?The borrower didn't agree that the property was worth what it was evaluated as?
#59
sixpackshaker
sixpackshaker
You are not dumping it on some one else, you are vacating the bank's property. It is not your property until you finish that last payment.So, instead of taking responsibility for your major mistake it's OK to dump it on someone else.
#60
Shakey
Mortgages are made with the expectation that it will be paid back. The ability to walk away from the loan is there to help protect people. Taking advantage of that because you bought property at the wrong time is immoral to me.
Shakey
Again, check my previous example... If I offer to buy your house for TWICE what it's worth, won't you take it? Would you consider immoral someone who does so?[/QUOTE]The borrower didn't agree that the property was worth what it was evaluated as?
Mortgages are made with the expectation that it will be paid back. The ability to walk away from the loan is there to help protect people. Taking advantage of that because you bought property at the wrong time is immoral to me.
#61
sixpackshaker
sixpackshaker
And both lender and customer are facing the same risks of buying during a hot market. So morality is out the window.
#62
zero
Now, you may not be aware of it, but outside of real-state, this kind of trading on securities is pretty much common place... ever heard of the term "stock option"?
zero
No, no, no... Mortgages are made PRECISELY because there's the expectation the debt won't be paid back. Otherwise, there wouldn't be any need for a security, now would it?Mortgages are made with the expectation that it will be paid back. The ability to walk away from the loan is there to help protect people. Taking advantage of that because you bought property at the wrong time is immoral to me.
Now, you may not be aware of it, but outside of real-state, this kind of trading on securities is pretty much common place... ever heard of the term "stock option"?
#63
Shakey
Now, you may not be aware of it, but outside of real-state, trading of securities is pretty much common place... ever heard of the term "stock option"?[/QUOTE]
Stores expect people to steal, that's why they have security cameras and tags. Because there is an expectation that I will steal it is not immoral to steal from them.
Shakey
No, no, no... Mortgages are made PRECISELY because there's the expectation the debt won't be paid back. Otherwise, there wouldn't be any need for a security, now would it?Mortgages are made with the expectation that it will be paid back. The ability to walk away from the loan is there to help protect people. Taking advantage of that because you bought property at the wrong time is immoral to me.
Now, you may not be aware of it, but outside of real-state, trading of securities is pretty much common place... ever heard of the term "stock option"?[/QUOTE]
Stores expect people to steal, that's why they have security cameras and tags. Because there is an expectation that I will steal it is not immoral to steal from them.
#64
zero
On a mortgage, there is a contract between the borrower and the lender stating explicitly that the lender will pardon the debt as long as the property of the security is transferred to him.
zero
You're pushing it and you know it... There's no contract between the store and the thief that states that they can get whatever they want as long as they don't get cough.Stores expect people to steal, that's why they have security cameras and tags. Because there is an expectation that I will steal it is not immoral to steal from them.
On a mortgage, there is a contract between the borrower and the lender stating explicitly that the lender will pardon the debt as long as the property of the security is transferred to him.
#65
Shakey
Shakey
Of course I'm pushing it.
I still think it is a stupid thing to do. If you can afford the property you bought, but decide to walk away from it because it's not worth as much as you want it to be worth, you're taking advantage of something put in place to protect people.
I still think it is a stupid thing to do. If you can afford the property you bought, but decide to walk away from it because it's not worth as much as you want it to be worth, you're taking advantage of something put in place to protect people.
#66
Chibibar
but then again, I do make careful decision before even getting into the whole deal. (i.e. like refinancing) I got in a good deal for like 4.75% for 15 years.. woot!! 
Chibibar
I feel the same way. I don't think I can walk away since it is my only homeIf you guys knew the fights I've been going through to save my house...
I understand both sides. Many a time I have wanted to just walk away. But I have nowhere to go and this is home, man!
but then again, I do make careful decision before even getting into the whole deal. (i.e. like refinancing) I got in a good deal for like 4.75% for 15 years.. woot!!
#67
zero
But I don't see why should the lender take all the benefits and no risks from the mortgage system. In fact, THAT would be immoral in my view.
zero
Don't be naive... you really think lenders never make profit by executing the securities? In fact, that's precisely what usually happens!!! Often, the debt total is worth a fraction of the security value, and a default on the debt is usually great news for the lender. Of course, sometimes that system fails (such as now).I still think it is a stupid thing to do. If you can afford the property you bought, but decide to walk away from it because it's not worth as much as you want it to be worth, you're taking advantage of something put in place to protect people.
But I don't see why should the lender take all the benefits and no risks from the mortgage system. In fact, THAT would be immoral in my view.
#68
Chazwozel
Chazwozel
I don't know about you monkeys but I was pretty proud of myself for being a home owner at age 24 through my own grit and grime. I'll be damned if I ever rent again.
#69
Shakey
Shakey
I'm not saying you should never walk away from your mortgage. What I'm saying is if you take advantage of the situation by walking away from a mortgage you can afford simply because it's not worth as much as you want, it is not right. Twist it any way you want, it's still wrong.
I never said there should be no risks to the banks.
I never said there should be no risks to the banks.
#70
zero
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000 just because I can afford it, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.
zero
I see your point, but consider the following scenario...I'm not saying you should never walk away from your mortgage. What I'm saying is if you take advantage of the situation by walking away from a mortgage you can afford simply because it's not worth as much as you want, it is not right. Twist it any way you want, it's still wrong.
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000 just because I can afford it, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.
#71
Covar
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000 just because I can afford it, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.[/QUOTE]
Because at the time of purchase you agreed on the value of the house. You and the bank both agreed on the value, if it were to go up should the bank be able to take the house?
Covar
I see your point, but consider the following scenario...I'm not saying you should never walk away from your mortgage. What I'm saying is if you take advantage of the situation by walking away from a mortgage you can afford simply because it's not worth as much as you want, it is not right. Twist it any way you want, it's still wrong.
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000 just because I can afford it, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.[/QUOTE]
Because at the time of purchase you agreed on the value of the house. You and the bank both agreed on the value, if it were to go up should the bank be able to take the house?
#72
zero
zero
Should the borrower default his debt? Of course he should! Just never forget that per the mortgage contract the option belongs to the borrower,Because at the time of purchase you agreed on the value of the house. You and the bank both agreed on the value, if it were to go up should the bank be able to take the house?
#73
Shakey
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.[/QUOTE]
You are dumping your bad investment off on someone else. Not because you can no longer afford it. Not because you need to feed your family. Not because there is no other way out. It's because you are mad that your gamble in real estate didn't pay off like you had wanted. It's greed, plain and simple.
Shakey
I see your point, but consider the following scenario...I'm not saying you should never walk away from your mortgage. What I'm saying is if you take advantage of the situation by walking away from a mortgage you can afford simply because it's not worth as much as you want, it is not right. Twist it any way you want, it's still wrong.
I owned a house valued in $200000. I did a mortgage on such house amounting to $180000. Right after that, prices plummeted, and the mortgaged house isn't worth more than $100000 now.
I ask you... why should I pay to a bank $180000 for a house not worth more than $100000??? Again, to simplify it, forget the debt and consider I am BUYING the house. It doesn't make sense to pay $180000 for something worth $100000, now does it?
A mortgage is in no way different than that. You either pay and have the security property, or don't pay and let the lender have the security. Quite and simple.[/QUOTE]
You are dumping your bad investment off on someone else. Not because you can no longer afford it. Not because you need to feed your family. Not because there is no other way out. It's because you are mad that your gamble in real estate didn't pay off like you had wanted. It's greed, plain and simple.
#74
zero
What matters again is... WHO made the bad investment after all? The borrower or the bank who accepted an over evaluated security? Again, think about it like that: Should I feel bad for selling a house for $200000 (market price) if right after that the prices plummet and that house isn't worth more than $100000? Should I contact the buyer and give him back $100000? You know, most people feel relieved when they sell right before a market crash...
zero
Is it? Is that really clear cut? What is necessary "to feed your family" anyway? The basic needs so they don't starve to death of freeze in the winter? Or the necessary to ensure your kids grow up healthy? What about their education? One may think public education isn't enough, and may want to save some money for their kids college, instead of investing in overpriced housing. And isn't ALL of that plain greed in the end? And does it really matter to this subject? I mean, I would love to discuss the benefits of socialism over the cut-throat capitalism (and trust me, I am so leftist you would think Krisken is Mr. Milton Friedman himself), but really I fail to see what that would add to this discussion.You are dumping your bad investment off on someone else. Not because you can no longer afford it. Not because you need to feed your family. Not because there is no other way out. It's because you are mad that your gamble in real estate didn't pay off like you had wanted. It's greed, plain and simple.
What matters again is... WHO made the bad investment after all? The borrower or the bank who accepted an over evaluated security? Again, think about it like that: Should I feel bad for selling a house for $200000 (market price) if right after that the prices plummet and that house isn't worth more than $100000? Should I contact the buyer and give him back $100000? You know, most people feel relieved when they sell right before a market crash...
#75
Odie
My example about the deadbeat parent was just that an example, i wasnt trying to say that it was a "right thing to do" just trying to give example of people walking away from responsiblities that they should feel an obligation to. I feel like my problem with this whole situation is that we hold 2 standards and that people get the shaft an lose of respect in their community for doing something that is consider a "normal" business practice.
How do you feel about PMI? (Private mortage insurance)
I know it drives me insane, Banks will keep that little tax on you until you reach a magic number (certain % of the principal) where they feel you have shown your own ability to pay off your mortgage, yet what they really are doing is trying to get as much money out of a homeowner whom may need a break to cover payments or may fall behind. The Bank/Loan holder will act like the victim if you leave but wont help by removing that tax. I feel like the money the homeowner is paying in PMI could be used to pay down the princpal rather then pay some ridiculous insurance. Thus getting the bank to a happy medium and where they can feel comfortable about the loan.
Excuse any spelling mistakes Ive never been a great novelist
Odie
Chaz, I know the feeling, being 25 and a home owner was a great feeling... I can say now currently that i worry about being underwater but my situation has not looked so dire that i thought i would never make it out. I just talked with my wife about the fact that due to the economy rather then moving into a better fit house for ourselves and children in 5 -10 years time , we may have to look at a longer schedule or readjust our current home to fit our needs if and when we have children.I don't know about you monkeys but I was pretty proud of myself for being a home owner at age 24 through my own grit and grime. I'll be damned if I ever rent again.
Fade,Odie,
The difference between this and a deadbeat parent is that people are actually promoting this as a good and right thing to do. There may be walkaways in parenting, but no one says "Hey, good for you Bob! You screwed over your wife and kid." And then Bob goes out and starts a full movement including a website about how to screw your family on their support.
My example about the deadbeat parent was just that an example, i wasnt trying to say that it was a "right thing to do" just trying to give example of people walking away from responsiblities that they should feel an obligation to. I feel like my problem with this whole situation is that we hold 2 standards and that people get the shaft an lose of respect in their community for doing something that is consider a "normal" business practice.
How do you feel about PMI? (Private mortage insurance)
I know it drives me insane, Banks will keep that little tax on you until you reach a magic number (certain % of the principal) where they feel you have shown your own ability to pay off your mortgage, yet what they really are doing is trying to get as much money out of a homeowner whom may need a break to cover payments or may fall behind. The Bank/Loan holder will act like the victim if you leave but wont help by removing that tax. I feel like the money the homeowner is paying in PMI could be used to pay down the princpal rather then pay some ridiculous insurance. Thus getting the bank to a happy medium and where they can feel comfortable about the loan.
Excuse any spelling mistakes Ive never been a great novelist
#76
@Li3n
@Li3n
@Shakey
Dude, while it's stupid unless you bought the house to sell it (like Dave said, it's home, it's current value is nothing compared to it's value over time), it's not wrong because that's how mortgages work... and not because of any imposed protection, but because that's how the whole system came about. Remember A Christmas Carol, when the couple was happy that Scrooge died because the new creditor wouldn't take their house if they where a little late with the payments?!
Dude, while it's stupid unless you bought the house to sell it (like Dave said, it's home, it's current value is nothing compared to it's value over time), it's not wrong because that's how mortgages work... and not because of any imposed protection, but because that's how the whole system came about. Remember A Christmas Carol, when the couple was happy that Scrooge died because the new creditor wouldn't take their house if they where a little late with the payments?!
#77
Odie
Odie
Scrooge doesnt die. Does he? Wait, What version is this? Damm you Brain on a tripod, im going home to read my Dickens.Dude, while it's stupid unless you bought the house to sell it (like Dave said, it's home, it's current value is nothing compared to it's value over time), it's not wrong because that's how mortgages work... and not because of any imposed protection, but because that's how the whole system came about. Remember A Christmas Carol, when the couple was happy that Scrooge died because the new creditor wouldn't take their house if they where a little late with the payments?!
#78
GasBandit
GasBandit
So what you're saying is the natural outcome of a free society is to not desire a free society? :hmmm: Not sure I agree with you there.Said the Libertarian. A free society allows people to be selfish jerks more than in any other type of society. 'Tis the pains of living free.
#79
Adammon
Acutally, there's a certain logic there around achieving a societal equilibrium, a balance between order and chaos. A completely free society devolves into (or is intended to be) Anarchy. And naturally rules and laws supercede that freedom. We can look at the beginning of the fight for American independence as an example of a free society slowly evolving into form. At the same time, an overly structured and strict society will fight for more freedom, like China currently.
The natural equilibrium of society does not necessarily reflect the wants and needs of an individual.
Adammon
So what you're saying is the natural outcome of a free society is to not desire a free society? :hmmm: Not sure I agree with you there.[/QUOTE]Said the Libertarian. A free society allows people to be selfish jerks more than in any other type of society. 'Tis the pains of living free.
Acutally, there's a certain logic there around achieving a societal equilibrium, a balance between order and chaos. A completely free society devolves into (or is intended to be) Anarchy. And naturally rules and laws supercede that freedom. We can look at the beginning of the fight for American independence as an example of a free society slowly evolving into form. At the same time, an overly structured and strict society will fight for more freedom, like China currently.
The natural equilibrium of society does not necessarily reflect the wants and needs of an individual.
#80
@Li3n
The one with the Ghost of Christmas Future... (i'm sure i saw it in the recent Jim Carrey version, and i think it was in the original work too).
@Li3n
Scrooge doesnt die. Does he? Wait, What version is this? Damm you Brain on a tripod, im going home to read my Dickens.[/QUOTE]Dude, while it's stupid unless you bought the house to sell it (like Dave said, it's home, it's current value is nothing compared to it's value over time), it's not wrong because that's how mortgages work... and not because of any imposed protection, but because that's how the whole system came about. Remember A Christmas Carol, when the couple was happy that Scrooge died because the new creditor wouldn't take their house if they where a little late with the payments?!
The one with the Ghost of Christmas Future... (i'm sure i saw it in the recent Jim Carrey version, and i think it was in the original work too).
#81
Shakey
What matters again is... WHO made the bad investment after all? The borrower or the bank who accepted an over evaluated security? Again, think about it like that: Should I feel bad for selling a house for $200000 (market price) if right after that the prices plummet and that house isn't worth more than $100000? Should I contact the buyer and give him back $100000? You know, most people feel relieved when they sell right before a market crash...[/QUOTE]
You're making it more complicated than it is. If it makes you feel better that it's the banks responsibility, go for it. It's easy to blame the banks.
In the end, the borrower stepped up and said "Hey, I would like to buy this property." Your examples only make sense if you feel no obligation to pay back money you loaned. The ability to back out of a mortgage is there to protect people from getting into a hole they can never get out of. Not as an easy way out of a bad decision. If you feel there should be no personal responsibility attached to taking out a mortgage, well I just have to disagree.
---------- Post added at 02:02 PM ---------- Previous post was at 01:53 PM ----------
Shakey
Is it? Is that really clear cut? What is necessary "to feed your family" anyway? The basic needs so they don't starve to death of freeze in the winter? Or the necessary to ensure your kids grow up healthy? What about their education? One may think public education isn't enough, and may want to save some money for their kids college, instead of investing in overpriced housing. And isn't ALL of that plain greed in the end? And does it really matter to this subject? I mean, I would love to discuss the benefits of socialism over the cut-throat capitalism (and trust me, I am so leftist you would think Krisken is Mr. Milton Friedman himself), but really I fail to see what that would add to this discussion.You are dumping your bad investment off on someone else. Not because you can no longer afford it. Not because you need to feed your family. Not because there is no other way out. It's because you are mad that your gamble in real estate didn't pay off like you had wanted. It's greed, plain and simple.
What matters again is... WHO made the bad investment after all? The borrower or the bank who accepted an over evaluated security? Again, think about it like that: Should I feel bad for selling a house for $200000 (market price) if right after that the prices plummet and that house isn't worth more than $100000? Should I contact the buyer and give him back $100000? You know, most people feel relieved when they sell right before a market crash...[/QUOTE]
You're making it more complicated than it is. If it makes you feel better that it's the banks responsibility, go for it. It's easy to blame the banks.
In the end, the borrower stepped up and said "Hey, I would like to buy this property." Your examples only make sense if you feel no obligation to pay back money you loaned. The ability to back out of a mortgage is there to protect people from getting into a hole they can never get out of. Not as an easy way out of a bad decision. If you feel there should be no personal responsibility attached to taking out a mortgage, well I just have to disagree.
---------- Post added at 02:02 PM ---------- Previous post was at 01:53 PM ----------
This is an imposed protection.and not because of any imposed protection
#82
@Li3n
@Li3n
Nope, the house is used as collateral, the only protection is that in these situation the banks aren't allowed to wiggle out of the deal they made...
#83
zero
zero
Yeah.. I kinda feel he still get it backwards...Nope, the house is used as collateral, the only protection is that in these situation the banks aren't allowed to wiggle out of the deal they made...
#84
@Li3n
@Li3n
The banks give you money with the idea that you either provide them a steady income over time or if you fail that they take the house...
EDIT: Oh, another post...
EDIT: Oh, another post...
#85
Shakey
Shakey
No, it's that banks cannot go after the borrower for any additional losses. If a bank can only get 200k back on a 400k loan due to the value of the home dropping they cannot go after the borrower for the difference. If the banks could, they would.Nope, the house is used as collateral, the only protection is that in these situation the banks aren't allowed to wiggle out of the deal they made...
#86
@Li3n
@Li3n
BTW, the collateral post was made before i saw he added the thing about imposed protection.
Which was the deal they made and the risk they took...
Same as how the defaulter can't ask for his money back if the house actually went up in price...
No, it's that banks cannot go after the borrower for any additional losses. If a bank can only get 200k on a 400k loan they cannot go after the borrower for the difference. If the banks could, they would.[/QUOTE]Nope, the house is used as collateral, the only protection is that in these situation the banks aren't allowed to wiggle out of the deal they made...
Which was the deal they made and the risk they took...
Same as how the defaulter can't ask for his money back if the house actually went up in price...
#87
MindDetective
Don't think I even implied that, actually. Just saying that if you want a free society, you have certain consequences that accompany that, including but not limited to self jerks who feel entitled. Ultimately I think SOME regulations are necessary (and I don't speak for society) BUT they should be derived from psychological and sociological principles of human and crowd behavior, particularly when people are likely to act in a manner that is ultimately detrimental to society as a whole. I think taking this approach would lead to LESS regulations (but not necessarily the same as we currently have) but better targeted. Ideally penalties and rules optimized to the give and take involved in the regulatory process.
In summary: Less regulations, yes, but evidence based ones designed to allow freedom wherever possible and to limit harm to society whenever necessary. Even in this scenario, you'll have selfish jerks still.
MindDetective
So what you're saying is the natural outcome of a free society is to not desire a free society? :hmmm: Not sure I agree with you there.[/QUOTE]Said the Libertarian. A free society allows people to be selfish jerks more than in any other type of society. 'Tis the pains of living free.
Don't think I even implied that, actually. Just saying that if you want a free society, you have certain consequences that accompany that, including but not limited to self jerks who feel entitled. Ultimately I think SOME regulations are necessary (and I don't speak for society) BUT they should be derived from psychological and sociological principles of human and crowd behavior, particularly when people are likely to act in a manner that is ultimately detrimental to society as a whole. I think taking this approach would lead to LESS regulations (but not necessarily the same as we currently have) but better targeted. Ideally penalties and rules optimized to the give and take involved in the regulatory process.
In summary: Less regulations, yes, but evidence based ones designed to allow freedom wherever possible and to limit harm to society whenever necessary. Even in this scenario, you'll have selfish jerks still.
#88
Shakey
Same as how the defaulter can't ask for his money back if the house actually went up in price...[/QUOTE]
That's fine, and I'm not saying it's a bad thing. It's actually good. The question is, do you feel it is OK to take advantage of those rules because you made a bad investment. Would it be a good financial decision to do it? Yes. I personally think it's a crappy thing to do.
Shakey
Which was the deal they made and the risk they took...BTW, the collateral post was made before i saw he added the thing about imposed protection.
No, it's that banks cannot go after the borrower for any additional losses. If a bank can only get 200k on a 400k loan they cannot go after the borrower for the difference. If the banks could, they would.Nope, the house is used as collateral, the only protection is that in these situation the banks aren't allowed to wiggle out of the deal they made...
Same as how the defaulter can't ask for his money back if the house actually went up in price...[/QUOTE]
That's fine, and I'm not saying it's a bad thing. It's actually good. The question is, do you feel it is OK to take advantage of those rules because you made a bad investment. Would it be a good financial decision to do it? Yes. I personally think it's a crappy thing to do.
#89
@Li3n
@Li3n
I don't know about it being a good financial decision either, you loose all the money you already paid back and the house. Then if the house's value goes up you loose even more.
But if you're saying it's crappy because it might affect the economy negatively, sure, i can see that, but not if you're saying it's crappy because you made a deal etc.
But if you're saying it's crappy because it might affect the economy negatively, sure, i can see that, but not if you're saying it's crappy because you made a deal etc.
#90
Chazwozel
Chazwozel
FOR THE LOVE OF FUCKING GOD! THE WORD IS SPELLED "LOSE" NOT "LOOSE" (like your whore of a mother). THAT'S TWO PEOPLE IN TWO SEPARATE POSTS!!!!!!!!!
#91
zero
Ah, et pendant que j'y suis, vas te faire enculer, connard.
zero
So yeah, English is NOT my first language (not even my 2nd), and yet I make an effort to communicate to assholes like you. As such times I can't help but wonder if its worth the effort. Mind you, I got your precious spelling right the first time, but got derailed by the mistake, that, you pointed it yourself, is abounding on this thread. I'm sorry if that hurt your linguistic sensibilities, and let me ensure you, it won't happen again.FOR THE LOVE OF FUCKING GOD! THE WORD IS SPELLED "LOSE" NOT "LOOSE" (like your whore of a mother). THAT'S TWO PEOPLE IN TWO SEPARATE POSTS!!!!!!!!!
Ah, et pendant que j'y suis, vas te faire enculer, connard.
#92
GasBandit
Acutally, there's a certain logic there around achieving a societal equilibrium, a balance between order and chaos. A completely free society devolves into (or is intended to be) Anarchy. And naturally rules and laws supercede that freedom. We can look at the beginning of the fight for American independence as an example of a free society slowly evolving into form. At the same time, an overly structured and strict society will fight for more freedom, like China currently.
The natural equilibrium of society does not necessarily reflect the wants and needs of an individual.[/QUOTE]
I don't think it's any sort of equilibrium as much as a cycle. If it were equilibrium, we would reach a point where no further change precipitated once the equilibrium was reached. Rather, I think it is more cyclical in nature. Much as I hate to bring up the old chestnut of the "tyranny leads to revolution leads to freedom leads to prosperity leads to complacency leads to dependency leads to tyranny" bit, I think it's more along the lines of what we're seeing.
GasBandit
So what you're saying is the natural outcome of a free society is to not desire a free society? :hmmm: Not sure I agree with you there.[/QUOTE]Said the Libertarian. A free society allows people to be selfish jerks more than in any other type of society. 'Tis the pains of living free.
Acutally, there's a certain logic there around achieving a societal equilibrium, a balance between order and chaos. A completely free society devolves into (or is intended to be) Anarchy. And naturally rules and laws supercede that freedom. We can look at the beginning of the fight for American independence as an example of a free society slowly evolving into form. At the same time, an overly structured and strict society will fight for more freedom, like China currently.
The natural equilibrium of society does not necessarily reflect the wants and needs of an individual.[/QUOTE]
I don't think it's any sort of equilibrium as much as a cycle. If it were equilibrium, we would reach a point where no further change precipitated once the equilibrium was reached. Rather, I think it is more cyclical in nature. Much as I hate to bring up the old chestnut of the "tyranny leads to revolution leads to freedom leads to prosperity leads to complacency leads to dependency leads to tyranny" bit, I think it's more along the lines of what we're seeing.
#93
Chazwozel
Ah, et pendant que j'y suis, vas te faire enculer, connard.[/QUOTE]
Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
Chazwozel
So yeah, English is NOT my first language (not even my 2nd), and yet I make an effort to communicate to assholes like you. As such times I can't help but wonder if its worth the effort. Mind you, I got your precious spelling right the first time, but got derailed by the mistake, that, you pointed it yourself, is abounding on this thread. I'm sorry if that hurt your linguistic sensibilities, and let me ensure you, it won't happen again.FOR THE LOVE OF FUCKING GOD! THE WORD IS SPELLED "LOSE" NOT "LOOSE" (like your whore of a mother). THAT'S TWO PEOPLE IN TWO SEPARATE POSTS!!!!!!!!!
Ah, et pendant que j'y suis, vas te faire enculer, connard.[/QUOTE]
Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
#94
Chibibar
There are personal moral and then there are legal moral.
Chibibar
That is more of a personal moral obligationI'm not saying you should never walk away from your mortgage. What I'm saying is if you take advantage of the situation by walking away from a mortgage you can afford simply because it's not worth as much as you want, it is not right. Twist it any way you want, it's still wrong.
I never said there should be no risks to the banks.
There are personal moral and then there are legal moral.
#95
zero
zero
Well, see? NOW I'm offended. I'M BRAZILIAN DAMMIT. Yes, since JCM isn't really after you those days, our Ministry of Flamewars with Chazwozel appointed me as his replacement. I realized you wouldn't really get "vá tomar no cu seu viado", and somehow remembered you could read French (my 2nd language).Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
#96
Green_Lantern
I just posting here to inform that I think it is wrong and not above theft to walk away from a debt.
Also, I am a fellow brazilian, that just understood what you said, and also, I am queer as 3 dollar bill, guess who just got reported?
Green_Lantern
Well, see? NOW I'm offended. I'M BRAZILIAN DAMMIT. Yes, since JCM isn't really after you those days, our Ministry of Flamewars with Chazwozel appointed me as his replacement. I realized you wouldn't really get "vá tomar no cu seu viado", and somehow remembered you could read French (my 2nd language).[/QUOTE]Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
I just posting here to inform that I think it is wrong and not above theft to walk away from a debt.
Also, I am a fellow brazilian, that just understood what you said, and also, I am queer as 3 dollar bill, guess who just got reported?
#97
zero
zero
Yep, I know, I though about you after I posted it. I wont defend myself, I kinda hoped you would miss it. Anyway, am sorry for that, and I'll take anything the admins think I deserve (and please, don't cut me any slack for this apology. I was way out of line).I just posting here to inform that I think it is wrong and not above theft to walk away from a debt.
Also, I am a fellow Brazilian, that just understood what you said, and also, I am queer as 3 dollar bill, guess who just got reported?
#98
Gusto
Gusto
Bring it back a bit guys.
#99
Krisken
I say eat the poor. Plus, Bauer is right. Feed the poor, and they breed.
Krisken
I say eat the poor. Plus, Bauer is right. Feed the poor, and they breed.
#100
Chazwozel
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.
Chazwozel
Well, see? NOW I'm offended. I'M BRAZILIAN DAMMIT. Yes, since JCM isn't really after you those days, our Ministry of Flamewars with Chazwozel appointed me as his replacement. I realized you wouldn't really get "vá tomar no cu seu viado", and somehow remembered you could read French (my 2nd language).[/QUOTE]Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.
#101
zero
zero
Too late Chaz, I already pwned myself on the thread. Again, deeply sorry Green Lantern, a more personal apology is sent on PM.OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.
#102
Krisken
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.[/QUOTE]
That there is some sound advice. Maybe it would hold more weight if you would heed it as well.
Krisken
Well, see? NOW I'm offended. I'M BRAZILIAN DAMMIT. Yes, since JCM isn't really after you those days, our Ministry of Flamewars with Chazwozel appointed me as his replacement. I realized you wouldn't really get "vá tomar no cu seu viado", and somehow remembered you could read French (my 2nd language).[/QUOTE]Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.[/QUOTE]
That there is some sound advice. Maybe it would hold more weight if you would heed it as well.
#103
Kitty Sinatra
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.[/QUOTE]
That there is some sound advice. Maybe it would hold more weight if you would heed it as well.[/QUOTE]
Would it be humorous if I said "The same applies to you, pal?"
Kitty Sinatra
Well, see? NOW I'm offended. I'M BRAZILIAN DAMMIT. Yes, since JCM isn't really after you those days, our Ministry of Flamewars with Chazwozel appointed me as his replacement. I realized you wouldn't really get "vá tomar no cu seu viado", and somehow remembered you could read French (my 2nd language).[/QUOTE]Only a Frenchman would be so offended... <turns nose up into the air>
*English isn't my first language either, jackass. Want a cookie?
OHHHH! Swearing at me in another language. I'm shaking in my boots. Loose/Lose is a pet peeve of mine, so just pull the piranha out of your ass and calm down.[/QUOTE]
That there is some sound advice. Maybe it would hold more weight if you would heed it as well.[/QUOTE]
Would it be humorous if I said "The same applies to you, pal?"
#104
zero
zero
yeah, yeah, now let's move on, shall we? Chaz already educated me on the fine subtleties of the English Language, Green Lantern exposed me as an homophobic S.O.B., Gusto conceded me some hard-earned points, heck, we even have a picture of Milton friggin' Friedman on the thread. Too much is too much, time to move this back on its rails.
Soo... mortgage, right? As I see it, to make a mortgage is not too different from selling your house to a bank and then buying it back slowly. Is it really immoral to decide not buy back something because you decide it is no longer worth it?
<edit - double post>
Soo... mortgage, right? As I see it, to make a mortgage is not too different from selling your house to a bank and then buying it back slowly. Is it really immoral to decide not buy back something because you decide it is no longer worth it?
<edit - double post>
#105
Green_Lantern
Yes, a lot.
Green_Lantern
On the context of a mortgage?Soo... mortgage, right? As I see it, to make a mortgage is not too different from selling your house to a bank and then buying it back slowly. Is it really immoral to decide not buy back something because you decide it is no longer worth it?
Yes, a lot.
#106
zero
zero
Right. So let's get back to hypothesis... Consider the following scenario... Right before signing your mortgage contract, you ask your manager: "I may run away from this debt by transferring the property of my house to you, right?" and he replies "Sure, no problem!". Would you still object?On the context of a mortgage?
Yes, a lot.
#107
Green_Lantern
Likely.
Green_Lantern
Right. So let's get back to hypothesis... Consider the following scenario... Right before signing your mortgage contract, you ask your manager: "I may run away from this debt by transferring the property of my house to you, right?" and he replies "Sure, no problem!". Would you still object?[/QUOTE]On the context of a mortgage?
Yes, a lot.
Likely.
#108
zero
Likely.[/QUOTE] Well, uhn... I suppose that's one of those "Let's agree to disagree" situations then...
zero
Right. So let's get back to hypothesis... Consider the following scenario... Right before signing your mortgage contract, you ask your manager: "I may run away from this debt by transferring the property of my house to you, right?" and he replies "Sure, no problem!". Would you still object?[/QUOTE]On the context of a mortgage?
Yes, a lot.
Likely.[/QUOTE] Well, uhn... I suppose that's one of those "Let's agree to disagree" situations then...
#109
@Li3n
*Takes mental note to always use loose instead of lose and vice-versa.
@Li3n
FOR THE LOVE OF FUCKING GOD! THE WORD IS SPELLED "LOSE" NOT "LOOSE" (like your whore of a mother). THAT'S TWO PEOPLE IN TWO SEPARATE POSTS!!!!!!!!!
*Takes mental note to always use loose instead of lose and vice-versa.
#110
TommiR
TommiR
I'm with zero on this one, assuming I have correctly understood how the house mortgage loans are set up in the United States. In my view, the biggest determining factor on this is that mortgages are business transactions, with a contract which defines the obligations for both parties. And apparently the contract provides the debtor with the option to walk out, a risk I assume the bank is fully aware of and has decided to accept upon approving the loan application. Walking out may or may not be very gentlemanly or ladylike depending on your personal view, but if it is clearly stated in the contract that it is permissible and is without disagreements on interpretation, then I think we are talking about a perfectly legitimate option for the debtor, and not some legal loophole some deadbeat is exploiting. So I'm having a hard time seeing it as cheating.
#111
Green_Lantern
Likely.[/QUOTE] Well, uhn... I suppose that's one of those "Let's agree to disagree" situations then...[/QUOTE]
Indeed, yes.
edit:
One of the things that piss me off the most is people doing bad things (specially taking advantage of others) and thinking is okay only because they can do it.
Green_Lantern
Right. So let's get back to hypothesis... Consider the following scenario... Right before signing your mortgage contract, you ask your manager: "I may run away from this debt by transferring the property of my house to you, right?" and he replies "Sure, no problem!". Would you still object?[/QUOTE]On the context of a mortgage?
Yes, a lot.
Likely.[/QUOTE] Well, uhn... I suppose that's one of those "Let's agree to disagree" situations then...[/QUOTE]
Indeed, yes.
edit:
One of the things that piss me off the most is people doing bad things (specially taking advantage of others) and thinking is okay only because they can do it.
#112
zero
zero
Of course, bad things are despicable, no arguing there, but then, do you thing it's wrong for a bank to take the sole house of someone how had a string of bad luck?One of the things that piss me off the most is people doing bad things (specially taking advantage of others) and thinking is okay only because they can do it.
#113
TommiR
However, I see none of the above applying to the case of a mortgage loan. The financial institutions definitely understand what the terms of their own contracts mean, and have accepted the risks involved in what is through-and-through a business deal. If the debtor is fully within his rights to walk away on the debt, then, personally, I see nothing wrong with them taking that legitimate option.
Edited to add:
I'd like to see the bank meet them half-way on this, but if that is not possible or the bank chooses not to, I don't think there is any wrong-doing involved.
TommiR
If I may interject in the conversation, I must say I agree with you on that. I think it is definitely wrong to take advantage of others when they are weaker than you, do not fully understand what they are getting themselves into, trust you not to trick them, or are disadvantaged in some other form in relation to you.One of the things that piss me off the most is people doing bad things (specially taking advantage of others) and thinking is okay only because they can do it.
However, I see none of the above applying to the case of a mortgage loan. The financial institutions definitely understand what the terms of their own contracts mean, and have accepted the risks involved in what is through-and-through a business deal. If the debtor is fully within his rights to walk away on the debt, then, personally, I see nothing wrong with them taking that legitimate option.
Edited to add:
Personally, I must say I see little wrong with that. A bank is acting fully within their own rights in doing so, and I assume the person whose house is being taken fully understood the risks involved when he/she took that loan. In entering into a contract with the bank, they assumed a set of obligations which the bank is entitled to expect them to fulfill. If they fail to live up to their end of the bargain, then, in my view, they must accept the consequences.Of course, bad things are despicable, no arguing there, but then, do you thing it's wrong for a bank to take the sole house of someone how had a string of bad luck?
I'd like to see the bank meet them half-way on this, but if that is not possible or the bank chooses not to, I don't think there is any wrong-doing involved.
#114
Green_Lantern
When they gave you money for the right of doing so, No.
edit:
elaborate: I think the bank is his full rights of doing so, the two parts made a deal, usually, it would be better if both walked away without problems, but if one of they has "bad luck" the resposable thing to do is face consequences, like a grown up boy does.
I understand the need of law that protect people who can't pay and would end up loose everything and get poor, proverty causes more proverty, violence and in general, the society stagnation, so those laws are made to benefit SOCIETY, and not the bastards that go and abuse they sistem for they own greed reasons.
Green_Lantern
Of course, bad things are despicable, no arguing there, but then, do you thing it's wrong for a bank to take the sole house of someone how had a string of bad luck?[/QUOTE]One of the things that piss me off the most is people doing bad things (specially taking advantage of others) and thinking is okay only because they can do it.
When they gave you money for the right of doing so, No.
edit:
elaborate: I think the bank is his full rights of doing so, the two parts made a deal, usually, it would be better if both walked away without problems, but if one of they has "bad luck" the resposable thing to do is face consequences, like a grown up boy does.
I understand the need of law that protect people who can't pay and would end up loose everything and get poor, proverty causes more proverty, violence and in general, the society stagnation, so those laws are made to benefit SOCIETY, and not the bastards that go and abuse they sistem for they own greed reasons.
#115
zero
In fact, I even dare to guess the bank is a little bit more capable of evaluating the risks of the real state market than your average mortgage taker...
zero
So there you go, when they gave the money, they also conceded the right to the borrower to quit his debt with his house.When they gave you money for the right of doing so, yes.
In fact, I even dare to guess the bank is a little bit more capable of evaluating the risks of the real state market than your average mortgage taker...
#116
Green_Lantern
In fact, I even dare to guess the bank is a little bit more capable of evaluating the risks of the real state market than your average mortgage taker...[/QUOTE]
I misreaded your post, I updated since.
Green_Lantern
So there you go, when they gave the money, they also conceded the right to the borrower to quit his debt with his house.When they gave you money for the right of doing so, yes.
In fact, I even dare to guess the bank is a little bit more capable of evaluating the risks of the real state market than your average mortgage taker...[/QUOTE]
I misreaded your post, I updated since.
#117
zero
Here, let me give you a personal example (As you know, there are no Mortgages in Brazil, the law here explicitly forbids the taking of one's sole house).
I own a tech company startup. In order to get cash for the initial company development, I borrowed money from a bank (BNDES).
Notice that money is fully backed by other securities. Even so, the bank insisted on a particular clause on our contract. After a five-year period, the bank can. at his discretion swap the debt by a fraction of my company (yes, even if I'm more than willing to repay the debt).
Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
That's just a mortgage scenario reversed.
zero
Fair enough. In the case of a real state devaluation, it's the bank who had bad luck and should face the consequences of it.elaborate: I think the bank is his full rights of doing so, the two parts made a deal, usually, it would be better if both walked away without problems, but if one of they has "bad luck" the resposable thing to do is face consequences, like a grown up boy does.
Here, let me give you a personal example (As you know, there are no Mortgages in Brazil, the law here explicitly forbids the taking of one's sole house).
I own a tech company startup. In order to get cash for the initial company development, I borrowed money from a bank (BNDES).
Notice that money is fully backed by other securities. Even so, the bank insisted on a particular clause on our contract. After a five-year period, the bank can. at his discretion swap the debt by a fraction of my company (yes, even if I'm more than willing to repay the debt).
Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
That's just a mortgage scenario reversed.
#118
Green_Lantern
Here, let me give you a personal example (As you know, there are no Mortgages in Brazil, the law here explicitly forbids the taking of one's sole house).
I own a tech company startup. In order to get cash for the initial company development, I borrowed money from a bank (BNDES).
Notice that money is fully backed by other securities. Even so, the bank insisted on a particular clause on our contract. After a five-year period, the bank can. at his discretion swap the debt by a fraction of my company (yes, even if I'm more than willing to repay the debt).
Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
That's just a mortgage scenario reversed.[/QUOTE]
Yeap, it is.
Green_Lantern
Fair enough. In the case of a real state devaluation, it's the bank who had bad luck and should face the consequences of it.elaborate: I think the bank is his full rights of doing so, the two parts made a deal, usually, it would be better if both walked away without problems, but if one of they has "bad luck" the resposable thing to do is face consequences, like a grown up boy does.
Here, let me give you a personal example (As you know, there are no Mortgages in Brazil, the law here explicitly forbids the taking of one's sole house).
I own a tech company startup. In order to get cash for the initial company development, I borrowed money from a bank (BNDES).
Notice that money is fully backed by other securities. Even so, the bank insisted on a particular clause on our contract. After a five-year period, the bank can. at his discretion swap the debt by a fraction of my company (yes, even if I'm more than willing to repay the debt).
Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
That's just a mortgage scenario reversed.[/QUOTE]
Yeap, it is.
#119
TommiR
So you believe fair play and common decency should take precedence over contractual obligations?
Edited to add:
Apparently, the bank saw it necessary to add this clause to zero's loan contract. If they were prevented from doing so by some means, or from enforcing the clause, then I guess either the interest rate zero has to pay would be higher, or he would not have gotten the loan in the first place (meaning, no company). That wouldn't be very nice, either.
TommiR
Yeap, it is.[/QUOTE]Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
So you believe fair play and common decency should take precedence over contractual obligations?
Edited to add:
Apparently, the bank saw it necessary to add this clause to zero's loan contract. If they were prevented from doing so by some means, or from enforcing the clause, then I guess either the interest rate zero has to pay would be higher, or he would not have gotten the loan in the first place (meaning, no company). That wouldn't be very nice, either.
#120
Green_Lantern
So you believe fair play and common decency should take precedence over contractual obligations?[/QUOTE]
Absolutely.
I still fail to realize why this would make walk away from the mortgage something right.
Green_Lantern
Yeap, it is.[/QUOTE]Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
So you believe fair play and common decency should take precedence over contractual obligations?[/QUOTE]
Absolutely.
I still fail to realize why this would make walk away from the mortgage something right.
#121
zero
The issue is, often "fair play" and "common decency" become subjective matters, not easy to adjudicate, while contractual obligations are (hopefully) clear cut. For instance, one may argue that it violates the "common decency" to take someone's last house and send him to live on the streets. On the other hand, it may be argued that "fair play" means "abide by your contractual obligations".
---------- Post added at 04:18 PM ---------- Previous post was at 04:13 PM ----------
).
zero
That's not an objectionable viewpoint, of course.So you believe fair play and common decency should take precedence over contractual obligations?Green_Lantern;335168 said:Yeap, it is.Now, let's consider the scenario where I hit the jackpot big time, my company in five years end up with a market value much higher than anyone could have foresee. Do you think it is wrong for the bank to insist on the swapping clause, owning a part of my company worth a LOT more than the money he lend me initially?
The issue is, often "fair play" and "common decency" become subjective matters, not easy to adjudicate, while contractual obligations are (hopefully) clear cut. For instance, one may argue that it violates the "common decency" to take someone's last house and send him to live on the streets. On the other hand, it may be argued that "fair play" means "abide by your contractual obligations".
---------- Post added at 04:18 PM ---------- Previous post was at 04:13 PM ----------
Ditto on the interest rate. Of course, the bank is giving me a lower interest rate in order to have a chance to grab a part of a successful company. I of course think the terms are fair and square, and won't object in case they decide to exert the swap clause (well, of course, in that case I will probably be a rich manApparently, the bank saw it necessary to add this clause to zero's loan contract. If they were prevented from doing so by some means, or from enforcing the clause, then I guess either the interest rate zero has to pay would be higher, or he would not have gotten the loan in the first place (meaning, no company). That wouldn't be very nice, either.
).
#122
Green_Lantern
Green_Lantern
Notification, whem I said "Yeap, It is" I as only agreeing that the situation was the reverse of a mortgage.
#123
Chibibar
Chibibar
Well... this is why amortization comes into play (at least in the U.S.)
Normal home loan works like this.
You borrow 100,000$ at 6% loan for say.. 15 years.
The first 3-5 years (usually or 4-8 years for 30 year loan) are mostly INTEREST first then later pay the actual equity. I originally borrow for 30 years and I can tell you after 3 years I have VERY little equity when paying 1200$ a month (interest, equity, and escrow for property tax) The banks have set it up like this for years in CASE people DO walk away from their home. Sure it sucks, but at least they "made" money (off interest) hopefully before you walk away.
Also when you walk away, you lose any equity in it since the bank still holds the title. It is all in the 20+ pages of contract (yea I recently sign a bunch in December when I refinance to 15 years and 4.75% woot!) Now of course the bank DO lose some money over time if they can't resell the home, but they are not in total lose since hopefully they get "paid" from all the interest before the people walk away (and equity) now the longer it is on the market, the more money they will lose since there are basic maintenance (yard works, fixing it up and property tax) but.... in Texas there are homes like HUD, VA, and FHA that sell home "as is" at a lower price. The new owners usually fix it up or get loans to fix it up (part of the deal) which bank can recover.
Now of course, in our current market, the banks do get hurt a lot more since it is HARDER to sell a home now. It also doesn't help it is harder to get a LOAN now since banks are going into "conservative" mode with all the banks needing help due to "loose" (use correctly) lending practices
Normal home loan works like this.
You borrow 100,000$ at 6% loan for say.. 15 years.
The first 3-5 years (usually or 4-8 years for 30 year loan) are mostly INTEREST first then later pay the actual equity. I originally borrow for 30 years and I can tell you after 3 years I have VERY little equity when paying 1200$ a month (interest, equity, and escrow for property tax) The banks have set it up like this for years in CASE people DO walk away from their home. Sure it sucks, but at least they "made" money (off interest) hopefully before you walk away.
Also when you walk away, you lose any equity in it since the bank still holds the title. It is all in the 20+ pages of contract (yea I recently sign a bunch in December when I refinance to 15 years and 4.75% woot!) Now of course the bank DO lose some money over time if they can't resell the home, but they are not in total lose since hopefully they get "paid" from all the interest before the people walk away (and equity) now the longer it is on the market, the more money they will lose since there are basic maintenance (yard works, fixing it up and property tax) but.... in Texas there are homes like HUD, VA, and FHA that sell home "as is" at a lower price. The new owners usually fix it up or get loans to fix it up (part of the deal) which bank can recover.
Now of course, in our current market, the banks do get hurt a lot more since it is HARDER to sell a home now. It also doesn't help it is harder to get a LOAN now since banks are going into "conservative" mode with all the banks needing help due to "loose" (use correctly) lending practices
#124
@Li3n
@Li3n
Oh for crying out loud... the reason the bank is gonna loose money is because the prices went down hard, and with all the houses they already got from people that didn't manage to pay their mortgage they can't even sell the house (which is what started the crisis), if that was not the case they might even have made a profit... heck, they still might if the loan was paid long enough to match the fall in price (of course not as much as if they where paid in full). Actually that's the whole point of why the banks have that in their contracts...
And it's not like the state could actually go around looking at everyone's bank account/salary to see if they could afford it anyhow, so it's not like any law to prevent this would have worked.
EDIT: didn't read Chibibar's post,
And it's not like the state could actually go around looking at everyone's bank account/salary to see if they could afford it anyhow, so it's not like any law to prevent this would have worked.
EDIT: didn't read Chibibar's post,
#125
Chibibar
Lets say it is originally a $400,000 home. I borrow $400,000 (100% loan but I pay all the closing cost) at 9% (it is possible) for 30 years.
Lets say Smart Bank loan me the money (they don't own the home) I own the home for 5 years. According to the amortization calculation on http://www.amortization-calc.com/ when I calculate 400,000 at 9% pay 5 years so far
I paid around $107,000 in INTEREST alone already and about $16,500 in principal.
So lets say the house value drop to 200,000 (it happens) and I walk away.
The bank made money by $123,500 (interest and principal) total so far.
Now of course the bank will ALSO own the house since they hold the deed also which is only worth 200,000. So they "lost" the interest they could have gain for the next 25 years which is (758,656 - 123,500 = 635156) at least "possible lost" since they could sell the home again.
Now of course if the bank could not sell the home, there is a lost of paying property tax (I think they pay this not sure) and maintenance (rarely most of the time they just leave it as it and just have the yard mow) If the monthly cost could be around 833$ a month on property tax (base on 2.5% give or take) + 35$ a month lawn mowing
If they manage to sell the home to a new person they will make the money back via interest even if it is 200,000 at 5% (current market) for 15 years Interest: $84,685.71
So the only "loose" money (ha-ha) is the interest the bank could have earn BUT if they hold the house for a year then they will start losing 10,000 a year in property tax + lawn mowing (all utilities are off)
Chibibar
well, that kinda depends on the situation.Oh for crying out loud... the reason the bank is gonna loose money is because the prices went down hard, and with all the houses they already got from people that didn't manage to pay their mortgage they can't even sell the house (which is what started the crisis), if that was not the case they might even have made a profit... heck, they still might if the loan was paid long enough to match the fall in price (of course not as much as if they where paid in full). Actually that's the whole point of why the banks have that in their contracts...
And it's not like the state could actually go around looking at everyone's bank account/salary to see if they could afford it anyhow, so it's not like any law to prevent this would have worked.
EDIT: didn't read Chibibar's post,
Lets say it is originally a $400,000 home. I borrow $400,000 (100% loan but I pay all the closing cost) at 9% (it is possible) for 30 years.
Lets say Smart Bank loan me the money (they don't own the home) I own the home for 5 years. According to the amortization calculation on http://www.amortization-calc.com/ when I calculate 400,000 at 9% pay 5 years so far
I paid around $107,000 in INTEREST alone already and about $16,500 in principal.
So lets say the house value drop to 200,000 (it happens) and I walk away.
The bank made money by $123,500 (interest and principal) total so far.
Now of course the bank will ALSO own the house since they hold the deed also which is only worth 200,000. So they "lost" the interest they could have gain for the next 25 years which is (758,656 - 123,500 = 635156) at least "possible lost" since they could sell the home again.
Now of course if the bank could not sell the home, there is a lost of paying property tax (I think they pay this not sure) and maintenance (rarely most of the time they just leave it as it and just have the yard mow) If the monthly cost could be around 833$ a month on property tax (base on 2.5% give or take) + 35$ a month lawn mowing
If they manage to sell the home to a new person they will make the money back via interest even if it is 200,000 at 5% (current market) for 15 years Interest: $84,685.71
So the only "loose" money (ha-ha) is the interest the bank could have earn BUT if they hold the house for a year then they will start losing 10,000 a year in property tax + lawn mowing (all utilities are off)
#126
fade
fade
Man, you guys have a radically different idea of the home owner/bank relationship than I do, is all I can say. It almost seems like you guys think of the bank as a principal investor in the home as a self-run business, and the owner is the customer. I don't think about it that way at all. I think of the owner as, surprise, the owner, and the lender as, surprise, the lender, who is making an investment in the owner's interest, not the home. When the customer walks away, he's leaving the bank with an undesired commodity in "exchange" for his lost interest. That's like leaving a computer program source code in place of a car at the dealership. Sure, to you as a programmer, it's a salable, desirable commodity, but the dealership wanted your money. They take the code because it's the only thing of value they can legally get from you, but it's a big hassle. And it's wrong, because you used a protection clause (essentially garnishment) in place of money. On top of all this you're doing this when you have more than enough money to pay for the car, simply because you like think it's uglier than the neighbor's shiny newer model. Boo-frickin'-hoo. You chose the car. You entered the contract. You may have adhered to the letter of the contract, but not the spirit, by using a loophole that exists for protection just because you're being a whiny baby.
I mean is it the credit card company's problem that your gold watch is outdated and worth less than you paid for it? Should you dispute charges? After all, gold typically appreciates. You could point out again the legalities and the contracts, but really, I find that meaningless in the face of what I thought was an obvious ethical no-no.
I mean is it the credit card company's problem that your gold watch is outdated and worth less than you paid for it? Should you dispute charges? After all, gold typically appreciates. You could point out again the legalities and the contracts, but really, I find that meaningless in the face of what I thought was an obvious ethical no-no.
#127
zero
zero
Yeah, well, you may want to rethink that. Usually, when the borrower defaults his debt, the bank makes a PROFIT out of the house (granted, that's not what's happening now, but that's the way things are).Man, you guys have a radically different idea of the home owner/bank relationship than I do, is all I can say. It almost seems like you guys think of the bank as a principal investor in the home as a self-run business, and the owner is the customer. I don't think about it that way at all. I think of the owner as, surprise, the owner, and the lender as, surprise, the lender, who is making an investment in the owner's interest, not the home.
#128
Chibibar
unlike other commodity (like cars, food, oil etc etc) land does not really depreciate (there is a finite amount) the house on the other hand can depreciate but land is always good. I don't think it is as "undesirable" but it is harder to move, but it can be move (i.e. sold) at a later date. Now if I were to leave a car, that car would not worth as much say.... 1 year or 2 years from now, but land (and sometimes the house ON the land) retains it value much longer than a couple of years.
Chibibar
Yeah, well, you may want to rethink that. Usually, when the borrower defaults his debt, the bank makes a PROFIT out of the house (granted, that's not what's happening now, but that's the way things are).[/QUOTE]Man, you guys have a radically different idea of the home owner/bank relationship than I do, is all I can say. It almost seems like you guys think of the bank as a principal investor in the home as a self-run business, and the owner is the customer. I don't think about it that way at all. I think of the owner as, surprise, the owner, and the lender as, surprise, the lender, who is making an investment in the owner's interest, not the home.
unlike other commodity (like cars, food, oil etc etc) land does not really depreciate (there is a finite amount) the house on the other hand can depreciate but land is always good. I don't think it is as "undesirable" but it is harder to move, but it can be move (i.e. sold) at a later date. Now if I were to leave a car, that car would not worth as much say.... 1 year or 2 years from now, but land (and sometimes the house ON the land) retains it value much longer than a couple of years.
#129
AshburnerX
AshburnerX
Not to mention the fact that land also has several factors that can increase it's value exponential, such as nearby development.
#130
Green_Lantern
unlike other commodity (like cars, food, oil etc etc) land does not really depreciate (there is a finite amount) the house on the other hand can depreciate but land is always good. I don't think it is as "undesirable" but it is harder to move, but it can be move (i.e. sold) at a later date. Now if I were to leave a car, that car would not worth as much say.... 1 year or 2 years from now, but land (and sometimes the house ON the land) retains it value much longer than a couple of years.[/QUOTE]
Unless when Lex Luthor destroys it with kriptonite.
Green_Lantern
Yeah, well, you may want to rethink that. Usually, when the borrower defaults his debt, the bank makes a PROFIT out of the house (granted, that's not what's happening now, but that's the way things are).[/QUOTE]Man, you guys have a radically different idea of the home owner/bank relationship than I do, is all I can say. It almost seems like you guys think of the bank as a principal investor in the home as a self-run business, and the owner is the customer. I don't think about it that way at all. I think of the owner as, surprise, the owner, and the lender as, surprise, the lender, who is making an investment in the owner's interest, not the home.
unlike other commodity (like cars, food, oil etc etc) land does not really depreciate (there is a finite amount) the house on the other hand can depreciate but land is always good. I don't think it is as "undesirable" but it is harder to move, but it can be move (i.e. sold) at a later date. Now if I were to leave a car, that car would not worth as much say.... 1 year or 2 years from now, but land (and sometimes the house ON the land) retains it value much longer than a couple of years.[/QUOTE]
Unless when Lex Luthor destroys it with kriptonite.
#131
@Li3n
I don't see what difference it makes in your approach frankly. The bank never did it because it helps someone, but because it makes them money.
@Li3n
I wonder if these guys are also getting rid of their cars because they're worth less then when they bought them (which happens right away after you bought it)?!Now if I were to leave a car, that car would not worth as much say.... 1 year or 2 years from now, but land (and sometimes the house ON the land) retains it value much longer than a couple of years.
The lender is making an investment in their own interest... that applies to all loans that have an interest attached. The house is collateral, what the bank is investing in is the revenue they will be getting one way or the other (from interest or from selling the house if the owner defaults).fade said:I think of the owner as, surprise, the owner, and the lender as, surprise, the lender, who is making an investment in the owner's interest, not the home.
I don't see what difference it makes in your approach frankly. The bank never did it because it helps someone, but because it makes them money.
#132
Chibibar
Chibibar
^-- This is the MAIN reason for banks, to make money. It is a privatize institution with government help (FDIC and such) but like all private business, they are to make profit. Granted that the current market houses are not being paid but the bank will own lots of land. Depending on where, the banks could essentially "change" a local area (within reason) into different zones IF they own a tons of property in an area, but like I said before, unlike other commodity, land will still retain its value WELL after this houses crisis while other commodity won't last as long.I don't see what difference it makes in your approach frankly. The bank never did it because it helps someone, but because it makes them money.
#133
chakz
chakz
Wow, your like a sleazy early nineties action movie/post apocalyptic villain.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.
#134
Kitty Sinatra
Kitty Sinatra
If only I had a surprisingly fitting surname like Hogg.
#135
chakz
Hmm I should have said dystopian rather than post apocalyptic. My bad.
Just watch out for the cryogenicly frozen/time traveling ragtag, misfit teenage heroes who have incredible luck and fighting abilities.
chakz
Nah you'd have name like dolson or skyker. You'd have slicked back hair and a tiger striped suite you'd have ceased power after the environment went kaputz and your goal is to wipe out the homes of the poor people in your polluted megalopolis so you can build an ultra casiino.If only I had a surprisingly fitting surname like Hogg.
Hmm I should have said dystopian rather than post apocalyptic. My bad.
Just watch out for the cryogenicly frozen/time traveling ragtag, misfit teenage heroes who have incredible luck and fighting abilities.
#136
Kitty Sinatra
Kitty Sinatra
I'm already building an army of fembots. First, they'll do all my political canvassing; few voters will be able to resist their charms. Then once I'm installed as Supreme Leader of North D'awesome they'll be my bodyguards and enforcers. No misfit teenage hero will be able to overcome their horny urges.Just watch out for the cryogenicly frozen/time traveling ragtag, misfit teenage heroes who have incredible luck and fighting abilities.
#137
Bowielee
Bowielee
So, then you'll be taken down by a renegade group of teenage girls, then?
#138
Kitty Sinatra
Kitty Sinatra
If I'm fated to go down, I think it would be quite nice to go down on a group of teenage girls.
#139
Bowielee
Bowielee
Thought this article was pretty pertinent for this thread.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
#140
Chibibar
Chibibar
ah good stuff. so the banks (lenders) do have some recourse they can take. There is a lesson in the following quote.Thought this article was pretty pertinent for this thread.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.READ EVERYTHING before you sign. Yes it is over 50 pages of document, but at least READ it (I did when I originally sign AND refinance AND have an agent with me to make sure I am doing it correctly)
#141
zero
zero
"Deficiency Judgement", eh? That's pretty funny... I suppose then that in the cases where the foreclosure sell results in PROFIT to the lender, the burrower is entitled to receive the difference, right?Thought this article was pretty pertinent for this thread.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
#142
Bowielee
Bowielee
Well, at least Fade and GL can rest easy knowing that those dastardly people who skipped out on their loans will be getting their comeuppance.
#143
Chibibar
You know.... I do wonder about that. I mean if the banks can go after YOU for leaving, I'm sure it should work in reverse!!
Chibibar
"Deficiency Judgement", eh? That's pretty funny... I suppose then that in the cases where the foreclosure sell results in PROFIT to the lender, the burrower is entitled to receive the difference, right?[/QUOTE]Thought this article was pretty pertinent for this thread.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
You know.... I do wonder about that. I mean if the banks can go after YOU for leaving, I'm sure it should work in reverse!!
#144
Tinwhistler
Tinwhistler
but of course, it doesn't work in reverse.
Which is why I have no sympathy at all for the banks in this situation.
Which is why I have no sympathy at all for the banks in this situation.
#145
sixpackshaker
sixpackshaker
Tacking on $65k to $400k debt will matter very little for some one that will just ride the tide until their credit clears up.Well, at least Fade and GL can rest easy knowing that those dastardly people who skipped out on their loans will be getting their comeuppance.
#146
Chibibar
True, but this one will ride with you upto 20 years. I am not sure if it can be cleared with Bankruptcy in some states (some can like they did in the article) but the banks will usually do this if.
Guy A bought a house for 400k, market crashed and house only REALLY worth 125K, he can't sell it to make any profit, ditch it and living ok (he has a job, everything is paid on time) so the bank will try to sell the house, if the bank succeed and only sold it for 200k, then if Guy A owe 380k, then Guy A now has a debt of 180k to the bank.
Guy B bought the same home, but lost his job, divorce, and lose his home, if he didn't recover in 5 years (article said upto 5 year wait) and still in deep in debt, the bank might just write it off.
@Tinwhistler: I would have to agree, I don't think the owner will get it. That mean with the right lawyer, a person could get out of that debt too since the bank clear it BUT also, if a person is going to sell it, make sure the bank sign a form to RELEASE all debt relating to the home
Chibibar
Tacking on $65k to $400k debt will matter very little for some one that will just ride the tide until their credit clears up.[/QUOTE]Well, at least Fade and GL can rest easy knowing that those dastardly people who skipped out on their loans will be getting their comeuppance.
True, but this one will ride with you upto 20 years. I am not sure if it can be cleared with Bankruptcy in some states (some can like they did in the article) but the banks will usually do this if.
Guy A bought a house for 400k, market crashed and house only REALLY worth 125K, he can't sell it to make any profit, ditch it and living ok (he has a job, everything is paid on time) so the bank will try to sell the house, if the bank succeed and only sold it for 200k, then if Guy A owe 380k, then Guy A now has a debt of 180k to the bank.
Guy B bought the same home, but lost his job, divorce, and lose his home, if he didn't recover in 5 years (article said upto 5 year wait) and still in deep in debt, the bank might just write it off.
@Tinwhistler: I would have to agree, I don't think the owner will get it. That mean with the right lawyer, a person could get out of that debt too since the bank clear it BUT also, if a person is going to sell it, make sure the bank sign a form to RELEASE all debt relating to the home