http://finance.yahoo.com/news/Owners-Stop-Paying-Mortgage-nytimes-4276925797.html?x=0 Discuss. I am on the fence here. On one hand, people got way out of control with the housing market boom. Getting in houses they could not afford. Getting second and third mortgages and treating their houses like ATM's. On the other hand, banks made sneaky loans and loosened up their own lending standards to get more loans because of appreciating values. I guess both sides piss me off, but I feel like an idiot for paying my mortgage on time and being responsible for the loan I took out. It bothers me that just because their home lost value they can just walk away like that. It bothers me that people had their entire nest egg tied up to their home, just like my parents do. It bothers me period. What say you? BTW, please do not turn this into a political discussion.
I have zero respect from someone that ceases paying on their mortgage. The money they borrow doesn't belong only to the evil bank. They had no problem taking the money or buying more house than they could afford to the point of making it a specualtive investment. The invested and lost. That said, I disagree with bailing the banks out as well. They were indeed irresponsible in making loans to people that never should have been approved.
Its pathetic on both sides. I despise banks with a passion and stay pissed off about the fact that I've tried a simple refinance repeatedly to lower my interest rates but can't because of foreclosures. In the meantime, my credit is approved without a problem. Then there's these jackasses causing the foreclosures dragging the rest of our houses resale rates into the gutter. It's a vicious damn cycle. That being said, I cannot tolerate someone walking on their mortgage. I bust my ass to pay each month, even with a high interest rate. They can suck it the hell up, too, and quit dragging the rest of us down. What is pathetic is I've had actual banks and mortgage brokers tell me directly just to stop paying two or three months and the bank will renegotiate my interest rate. Including officers at the bank holding our mortgage (Wells Fargo pieces of crap). Its a load of crap and a gamble that 1) could at best hurt your credit, or 2), at worst, bank could say screw you and not only not renegotiate the rates but start foreclosure proceedings on your house. It's friggin' ridiculous. Even had one mortgage broker say to walk away and they would finance us on a different house after we walk away. Yeah, right. By the way, walking away can haunt you for seven to ten years, easily.
There's so much questionable and illegal crap that's been floating in the mortgage and home industry for years, it's not even funny. It's just now all come to a head and the decent people are getting caught in the crossfire.
The banking industry couldn't do it without the help of flawed regulations to begin with. Even people with a basic concept of finance realize that 'no interest' and 'balloon rate' mortgages are destined to keep borrowers in debt for longer periods at greater amounts then they could ever afford under normal circumstances. These practices should never have been allowed from day one. I blame the borrowers, the banks and the Fed for this.
You sound pretty upset about your ordeal. Listen, I'm a loan officer for a major lender. PM me your situation, I might be able to find a solution that others are not willing to discuss because they only consider loan modifications right now.
Blaming consumers is not entirely off-base but it certainly isn't where most of the blame should lie. Lenders, brokers, banks, financial planners, the media, etc. all hyped home ownership as the sure fire way to financial freedom. To many, it seemed like no-brainer. Most relied on these "experts" to give them the lowdown on the benefits and the risks involved and they were either mislead or given bad information by those entrusted with helping them wade through the process. Strategic defaults are now a fact of life. Big business (including the big banks) have always used strategic defaults as a means of doing business. Only this time, they're on the losing end of the deal. With property values having plummeted, many are left with a choice of fulfilling their financial and moral obligations by continuing to pay their mortgages on a property that may take 5, 10 or even 15 years just to reach its prior value. Or, people can simply walk away, rent something, and use the money saved to invest elsewhere - perhaps in a retirement or college fund. Doing what's best for one's family is number one. Sure there are some assholes taking advantage of the situation, and it can and does hurt those in the neighborhood who've stuck around. But for many if not most, walking away is simply a wise, though clearly painful, financial decision to make. And I should add: Lenders aren't helping the situation one bit by refusing to work with most of those begging for help in the form of loan modifications, etc. So they not only helped create the problem, the are perpetuating it by their refusal to cooperate with those in need of help.
Walking away is one thing. Not paying and daring the lender to toss you is entirely different. The loss actually goes to the shareholders, depositors and taxpayers, not some building know as the "bank".
Most mortgage loans these days are bought and sold many times over. In fact, a huge amount have been chopped up and sold in bundles as shitty investments. It's these investments that have done us in. But good ol' Uncle Sam (us taxpayers) have stepped in and bailed everyone out. Other than what another abandoned house does to a neighborhood, one more foreclosure doesn't mean squat in terms of the big picture.
the unfortunate consequence of the loan modification process, is that it was flawed from jump street. The media got the basic launch of that program and made it sound as if every homeowner in america can get it. It just isnt the case with it. Now, I dont do loan mods, my company isnt geared up for that, but I have certainly spoken with enough people and done my own research to talk anyone out of it if they have a better option.
When I got my loan they had to disclose the percent they keep (claimed it was law). They were high 90's which I liked as I did not want to have to drive 12 hours to wring some morons neck when the bank screwed up. The loan has been at that bank for the entire time and is almost paid off. I think the local credit union I am in has a similar record of retention. The ones bundling were running the ragged edge and wanted to dump the liability ASAP. I have no sympathy for the banks and little to no respect for someone that I know has walked on a loan (though there is cases I would have sympathy for).
I agree with this totally. There are occasions, especially in this day and time, when things really are out of the homeowner's control. The ones I feel NO pity for are the idiots that got the interest only and balloon loans and immediately went out and got new cars and such with the difference in payments. All going on the "ass"umption that they would be able to sell or refi their house before the note came due. Those cases of greed annoy the hell out of me. And I know several idiots first hand that did this.
I work with a couple that is doing this right now. They make a combined $160k/year and walked away. Of course they managed to go on vacation this year and get a new vehicle. Irresponsible and the irony is this guy is a program manager at work. He can't manage his own life and he does an equally bad job here.
+1 I bought no house. I lent no money. I should not be asked to contribute in no way to assit. Pity should not be expected of me. You play, you get burn. That goes for both bank and individuals. Your problem not mine. I am sitting on the fence. Hoping that the system is allow to self adjust to real value. Maybe then, I will buy (but only that which I can afford).
In my honest opinion, something needs to happen in regards to the appraisal situation. The methodology currently being used only allows for sales in your immediate area, foreclosures included. This is, in all honesty, not a fair situation. You can no more prove to me that my house that is currently being occupied, maintained and improved is comparable to a foreclosure that has been abandoned for several months forward. At some point, a line needs to be drawn and the other methods of appraisal need to be implemented to get fair values back online. At this point, areas are going from "artificially high" in regards to real estate values to "artificially low". This is perpetuating the problem.
