According to an article in today’s Wall Street Journal, 23 percent of U.S. homeowners owe more on their mortgages than the properties are worth. That’s 10.7 million households with negative equity in their homes according to the First American CoreLogic report cited.
From the article, “Homeowners in Nevada, Arizona, Florida and California are more likely to be deeply under water, according to the analysis. In Nevada, for example, nearly 30% of borrowers owe 50% or more on their mortgage than their home is worth, said First American.”
See the story here: One in Four Borrowers Is Underwater
50 comments
8430 Castlehawk Court in Somersett, otherwise known as “Somersett Golf” in the slideshow, went NOD last Friday.
One of those 65% of Nevadans who are upside down on their mortgage.
Lets face it, we are in uncharted territory here. More relevant than Guy’s headline of national negative equity is what’s going on in Nevada. Surprised that wasn’t mentioned.
Nevada has 65% of all homeloans underwater. Nevada wishes it “only” had the 25% avg of the rest of the US. Maybe in about 7 years, if all goes swimmingly and the Fed continues to pulverize our currency into dust.
So what are the implications? 2/3 of all homeloans underwater means no move-up buyers. That type of buyer was what fueled the runup of the last 10 years. No move-up buyers means the mid to top end is due to get crushed. Lookout below if you’re trying to sell in Arrowcreek or Montreux today, and you had better reconsider that “low-ball” offer.
“Organic” (non-distressed resales) sales are the lifeblood of any healthy real estate market. You cannot have organic sales when 2/3 of the homes are underwater. Those hapless homeowners are forced to stay exactly where they are. In fact, they couldn’t move if they wanted to. Eventually, many will get foreclosed upon, adding even more (distressed) supply to the market.
Throw in the marginal homeowners and real estate commissions (6%) and costs of sale, and Washoe County likely has >70% homeowners virtually underwater.
Bottom line: there will be no healthy market while so many are underwater. The only cure for that condition is time (with an increase in both employment and housing values). Do you think that’ll be happening anytime soon? Because I do have some swampland up there in Sommersett (sp?)….
Skeptical, of course you are correct. I and others have been saying the same thing for a long time on this blog. Be prepared to hear the Rich Californians Theory, or the Rich Asians theory, or the Rich Retirees Theory, or the Rich Aliens from Another Planet Theory put forth by those who argue that it does not matter that there are few move-up buyers in Reno. The market will be propped up by Rich Buyers From Somewhere Else. It is the same failed argument that was used back in 2003-2006 to explain how Reno’s prices would keep going through the roof even when Reno ran out of qualified buyers.
Seeing Diane’s house go into foreclosure is something of a closing of the circle for the blog. This really isn’t her blog anymore. Maybe it’s time to take down her picture. I miss you Diane.
What skeptical says is not just a theory, it is the fact. It has been pointed out here many times that almost 70% of all sales today produce no move up buyer because they are either banks selling REOs or short sales. Add to those the so-called “equity” sales where there really is no equity, and the “second hand” REO sales by the investors (who don’t move-up) and it is AT LEAST 70% of all sales that generate no move up buyer.
So absent a sudden influx of RI’s Rich Aliens, this market is in deep, deep, trouble for anything but the first time entry level segment.
I miss Diane, too. She was a really good sport about everything. She’s living proof that not all REALTORS™ are dishonest shills. To this day, I don’t know of another real estate blog run by REALTORS™ which doesn’t filter and suppress any viewpoints which don’t parrot the Lawrence Yun/David Lereah spew. She really stood out as a voice of reasoned truth in a sea of sleaze. Best of luck to you, Diane.
I too miss Diane, and wish her well.
There is some good news, though: She got out of her Montage unit.
billddrummer: oh really? that’s news to me. short sale saga coming soon, i promise!
diane, really miss your honesty and insight. wish blessing and prosperity for you and your family.
I’m assuming Diane’s husband got a better job in the Bay Area and they are moving for financial gain. If he lost his job in Reno then I apologize ahead of time for what I’m about to say (and retract every word). It just seems like there is an attitude by some of “you go girl, stick it to those mean banks”.
Did the mean bank twist her arm and make her buy the house in Somersett? Why should everyone else pay for her bad investment? Her defaulting hurts everyone else’s home values. There are a lot of people underwater now. What if they all walked away? I feel really sorry for people who have lost their jobs and can’t sell their homes for what they owe. I don’t feel the same way for people who break an agreement for financial gain.
First of all, hi Diane. I hope all is going well for you/your family in the East Bay.
Second, do we know for certain that Diane/her husband have actually defaulted on their Somersett mortgage [I realize that’s the sentiment, but do we know for sure]? There is a big difference between pursuing a short sale and walking away from a mortgage, and I don’t feel it’s proper to point the finger of blame unless we know for sure [remember, Diane has stated that “the short sale saga (is) coming soon”].
Third although Diane apparently continues to follow this blog, I sincerly hope she isn’t following the advice of those who recommend underwater property owners stick it to their banks by defaulting on their mortgages and walking away. IMO Diane’s far too responsible a person to be taking the easy way out.
Although it may hurt in the short run, if there’s anything I’ve learned about real estate it’s that time heals all wounds and I believe this will be the case here in Reno/Sparks [it may take awhile but if we hang in there, I believe we’ll eventually be rewarded].
Happy Thanksgiving to all and as far as I am concerned, an especially Happy Thanksgiving to Diane and her family.
Smarten I would suggest the fact that the bank has filed a NOD against Diane’s Somersett house is a pretty good indication that the loan is in default.
In fact, the NOD indicates that payment has not been made for several months. The NOD says the May,2009, payment was not made.
But don’t take my word for it Smarten. Doc. # 3823578. It appears that Diane is indeed “walking away”. Which is probably the only sensible thing.
Do banks even agree to short sales when the mortgage is current? I have seen nothing which indicates they do. As long as the borrower is paying, what interest would they have in taking a loss? I think most short sale attempts end up in foreclosure, anyway.
what is this morality play about avoiding/reducing debt?….if it’s legal have at it
it may not be fair, but those are the rules and
people almost never part with their money unless they are legally obligated to
get real
I’m very sorry to hear of Diane’s continuing problems, but then again, I don’t understand why anyone with sane mind would bother with a short sale in today’s market. Banks are not responsive, that is unless they see imminent defaults. Pain to say, but you have to default on the mortgage first before anything can be done. I’m not an advocate of defaulting on financial obligations to better your financial picture, as I’m a guy who advocates social and financial responsibility. That said, Diane, can you please share with us your story in detail now? You’ve been reluctant for a long while to say anything, but perhaps now is the time you can share will us all the Smarten-level of detail in your short sale turned NOD? Can you also touch on the quandry of why you did not discount your home to a fire sale price early on, which might have meant more short sale ‘gap’ but resulted at least in an actual sale (in essence, you chased the market down from our perspective on the blog).
RE: “It appears that Diane is indeed ‘walking away’ which is probably the only sensible thing.”
It’s sensible, ethical and completely legal.
Only a fool would jeopardize his or her financial future by voluntarily remaining in a financially destructive contract which allows you to legally walk away by surrendering the asset.
CL, I suspect that the reason Diane did not discount her asking price to a “fire sale” level is because the bank would not accept such a price level in a short sale. It looks like Diane has had at least two offers, and both ended up falling out of escrow. I can only surmise that the reason they fell out of escrow is because the bank would not accept them. In a short sale, it is not the seller that determines what the property sells for, it is the bank. Hell, I’m sure Diane would have loved to sell the place for $150K and be done with it. What difference does it make to her, as she makes nothing in the deal at any price? It was the bank that would not accept such a low price.
Happy Thanksgiving Day to all.
“what is this morality play about avoiding/reducing debt?….if it’s legal have at it..”
This is what happens when schools care more about teaching multicuturalism than morality and ethics. We get CEO’s pillaging their own companies, treasury secretaries cheating on their taxes while giving away billions of taxpayers money, trial lawyers and their class action scams etc.etc. Everyone for themselves eventually leads to a breakdown in society.
willk; that eventually is here now.
MikeZ states, “only a fool would jeopardize his or her financial future by voluntarily remaining in a financially destructive contract which allows you to legally walk away by surrendering the asset.”
Well if 75% of all Reno/Sparks homeowners are underwater [someone else on this blog made this assessment given 25% of all homes, nationwide, are allegedly underwater], would MikeZ recommend they all walk away from their mortgages because “it’s sensible, ethical and completely legal?”
I’m sorry MikeZ, I disagree because it’s NONE of these.
First, there’s nothing “illegal” per se about defaulting on a mortgage [or any other contract for that matter (unless the mortgagor(s) intend(s) to default at the time of entering into that mortgage)]. So “illegality” is by and large a non-issue when we talk about a short sale.
Second, let’s talk about “ethics.” If one promises to do anything [here, repay a mortgage], is it “ethical” to default assuming one has the ability to perform? I don’t think so. So in my book there’s nothing “ethical” about walking away from a mortgage simply because you’re underwater.
Third, let’s talk about remaining in “financially destructive contracts.” You buy nearly anything [automobile, appliance, furniture, computer, HDTV] with the assistance of financing [which extends to purchases via credit card where you neither have the financial wherewithal nor intent to repay] and the moment you walk out of the store’s door, you’re “underwater.” Does that mean we should all default because our agreement to repay the financing is “financially destructive” to us?
Fourth, let’s talk about contracts which “allow…you to legally walk away by surrendering the asset?” In NV, I’m not familiar with any of these. Perhaps MikeZ can educate me? Mortgages don’t allow mortgagor[s] to “legally walk away” by offering deeds in lieu. We’ve discussed many times on this blog about the potential for a deficiency [whether or not this remedy is exercised by a mortgagee has no bearing upon the “legality” of a mortgagor simply walking away”]. But that potential/lack thereof does not make walking away “legal.”
Finally, let’s talk about the “sensibility” of simply walking away. Basically, MikeZ is telling us that because it makes good business sense, it becomes a savvy “play.” Well again, we could use this same logic to avoid most of our financial obligations [how about court ordered child or spousal support?], couldn’t we?
Although it may make financial sense for underwater mortgagors to simply walk away, IMO there’s nothing “sensible, ethical [nor] completely legal” about doing it! So if you can get your mortgagee to AGREE to a short sale; or loan modification; or refinance; or accord and satisfaction [compromise]; in my book, that’s fine. Or if you want to stop making payments on your mortgage [without the intent of simply walking away] so you have standing to argue for a short sale or mortgage modification; or you want to sue your mortgagee [because it didn’t warn you initially of the potential for becomming underwater] with the same intent; or you want to file a Chapter XI proceeding with the same intent; in my book, that’s fine.
But to simply walk away because “it’s [the] sensible, ethical and completely legal” thing to do? I don’t think so MikeZ.
IMO we need to stop with this mentality that walking away is the “moral” thing to do because it was SOMEBODY ELSE’s fault!
bankrupcy used to be super difficult, had more repercussions and was shameful (kind of like doing real time in prison–that sort of stigma)
only to be used as a last resort
but i don’t write the laws or govern morality, things have changed (its still no cakewalk though)
i don’t know diane, but i would imagine the 2 years to decide how to deal with negative wealth and then the next 3 years trying to start over may be the darkest 5 year period of her life
it would be for me…..i’d take what the system would give me, but I would still ache about what I did
people don’t just ‘walk away’ its a process unique to each persons situation—-i have heard multitudes of second hand stories….its not pretty for a person with any dignity
Smarten posted:
“Although it may make financial sense for underwater mortgagors to simply walk away, IMO there’s nothing “sensible, ethical [nor] completely legal” about doing it!
IMO we need to stop with this mentality that walking away is the “moral” thing to do because it was SOMEBODY ELSE’s fault!”
Say, didn’t you do the exact same thing on your Hawaii property when you sent it into foreclosure, Smarten? You couldn’t get any rental income so instead of continuing to pay, you stuck it to the bank. The hypocrisy is revolting. Methinks your newly found “ethics” have more to do with a fear of your own property value plummeting due to mass walkaways than it does any deeply held moral values. Pardon me while I go vomit.
bob c posted:
“i don’t know diane, but i would imagine the 2 years to decide how to deal with negative wealth and then the next 3 years trying to start over may be the darkest 5 year period of her life
it would be for me…..i’d take what the system would give me, but I would still ache about what I did”
I agree with you, and I’d be willing to bet that’s the case for anyone with a conscience, bob c. Not only that, but those going through foreclosure will find it very, very difficult to find purchase money for another house in the near term. Not only will they have to come up with huge down payments, likely better than 30%, but they’ll face steep rates as well. It’s not over when the bank takes the house by any means.
BB, you need to get your facts straight.
So for YOUR benefit…
1. My statement was that if someone underwater wanted to take advantage of some permissible procedural vehicle to bring about an agreed resolution with a mortgagee, that was acceptable in my book.
2. 30 years ago I had an interest in a Kauai condominium. Hurricane EWA hit [an act of GOD, and a “so called” once in one-hundred year event] and rental income dried up. Still, we hung in there. Then several years lated, Hurricane Iniki hit [an act of GOD and another once in one-hundred year event], and it was over for us; sorry.
3. Part of what we were paying for was PMI which protected not only the lender, but us [per the terms of the policy, the PMI company could not seek reimbursement against us if it had to pay off our lender].
4. So an AGREEMENT was entered into between us and the lender whereby uncontested foreclosure would take place; the lender would then have standing to make claim with our PMI carrier [which would and did make it whole]; and then we would face no liability from our PMI carrier.
So I disagree with you that we did “the same thing on…our Hawaii property.” We DIDN’T just “walk away;” we made every effort to hang in there after the first hurricane; we DIDN’T “stick it to the bank;” we worked in concert with the bank so the PMI we were paying made the bank whole; and, we took advantage of the insurance we had purchased.
Hope you DID vomit before learning the truth because some of us think vomitting isn’t that pleasant an experience to go through.
So where exactly is the hypocrisy BB?
Enjoy your Thanksgiving meal and this time, don’t vomit!
“30 years ago I had an interest in a Kauai condominium. Hurricane EWA hit [an act of GOD, and a “so called” once in one-hundred year event] and rental income dried up. Still, we hung in there. Then several years lated, Hurricane Iniki hit [an act of GOD and another once in one-hundred year event], and it was over for us; sorry…we DIDN’T “stick it to the bank;” we worked in concert with the bank so the PMI we were paying made the bank whole; and, we took advantage of the insurance we had purchased.”
You sent the condo into foreclosure, period, rather than honoring the contract and making your payments. You could have continued to pay, but you chose not to because you felt it was not in your best financial interests. You walked away. Quit trying to put lipstick on a pig. Honoring your commitment would have been paying the note off even if the improved property was reduced to a piece of dirt. Instead, you chose to stick it to the bank and the insurance company.
“She and her husband and their children have moved to California, so that her husband could get good work.” So he was unemployed in Reno or there was a better paying job in Calif.?
“Who benfits from Diane and her husband shelling out $3500 a month on a house they will never again live in and will never get back to even?”
Other people living in Reno? Maybe home prices will get back closer to even sooner if people stop walking away from their homes.
“Yes, Diane overpaid for a house she bought at the height of the bubble. She gambled, and lost. Such is life. Now let her life move on. The bank gets the house back. That was the deal.”
Why should everyone else pay for her gambling losses? Yes, the banks are responsible too with their lending practices but who is stuck bailing out the banks?
“I say to Diane take the $3500 a month and buy clothes for your kids and food for your family and use it to pay all the expenses of raising children.” Don’t forget the big screen TV, x-boxes, new cars. Heck, while your at it if you still have a credit card take it to the limit (and then don’t pay).
So I buy fire insurance BB; a fire burns down my house; the insurance carrier pays off; the lender gets paid because it’s an additional insured; and I’m sticking it to my lender and insurance carrier? That’s exactly what insurance is for.
When a PMI is purchased, it is intended to protect the lender and borrower should default occur [whether as a result of a fire, hurricane or whatever]. Same concept BB.
I think you need to go back to business school.
Or stated differently, why aren’t you chastizing:
Every successful short seller [according to you, by definition the seller must already be in default which is the moral equivalent of foreclosure whether/not an actual NOD is recorded]?
Every successful deed in lieu of foreclsoure [by definition sending the property into foreclosure] grantor?
Every property owner who relies upon insurance rather than his/her earnings to payoff his/her mortgagee?
Me thinks it is you who are the hypocritic.
Truth hurts, eh Smarten? I can tell you’re rattled because you’re hurling insults. Thanks for the laugh! You are now coming across as completely illogical. You preach about morals and ethics, but fall short in your own world. Who’s to say that the lions share of walkaways aren’t paying PMI on their mortgage, Smarten? If they are, does it automatically become “ethical” for them to do so because they are only sticking it to an insurance company and not a bank?
You posted:
“…why aren’t you chastizing:
Every successful short seller [according to you, by definition the seller must already be in default which is the moral equivalent of foreclosure whether/not an actual NOD is recorded]?
Every successful deed in lieu of foreclsoure [by definition sending the property into foreclosure] grantor?
Every property owner who relies upon insurance rather than his/her earnings to payoff his/her mortgagee?”
I’m not “chastising” them because they’re not on this blog preaching morals and ethics all the while engaging in the same behavior they deride, like you. Also remember, I’m not the one preaching ethics and morals- you are. That’s why you’re the hypocrite. I’ve met your kind before- you talk out of both sides of your mouth.
Smarten,
You are in the RRB Hall of Fame. I’ve benefited immensely from your posts, especially regarding the forensics of your recent purchase. 95% of the time, you provide world class contributions that make this blog worth reading.
However….this little battle between you and BB goes squarely and overwhelmingly to BB. You got nailed, and the only thing to do right now is to fess up to the hypocrisy and review your own preaching.
I’d go further and say that all the holier-than-thou posters lambasting folks that are forced to get foreclosed upon ought to do the same.
Bottom line: Wall Street and the politicians who have ruined my country inspire my rage and deserve our ire. Joe Sixpack (or Diane) who got caught in a whipsaw, and who is paying taxes so that Lloyd Blankfein can pull down another $300M this year merits more sympathy than outrage.
OBTW, the bank gets the house. THE BANK GETS THE HOUSE. Do you think any family person relishes walking away from his/her home and uprooting his/her family?
Stop the hypocrisy and focus your rage and disdain upon those who truly deserve it.
BB, you are 100% correct on this one.
RE: “I’m sorry MikeZ, I disagree because it’s NONE of these.”
Really? Not legal? Ok … what law is violated?
RE: “You sent the condo into foreclosure, period, rather than honoring the contract and making your payments. You could have continued to pay, but you chose not to because you felt it was not in your best financial interests. You walked away. Quit trying to put lipstick on a pig.”
Exactly. Thanks for the eye-opening facts, BB.
I had no idea.
On Strategic Defaults from Calculated Risk blog:
Sichelman adds some comments from real estate agents on the ethics of strategic defaults:
Nellie Arrington of Long & Foster Real Estate in Columbia, Md., says it is “morally wrong, legally wrong and just plain wrong” for an owner to walk away from a mortgage he can afford simply because the balance exceeds the value of the underlying property.
And on the other side:
Bob Hunt of Keller Williams O.C. Coastal Realty in San Clemente says the moral duty to protect your family outweighs the moral duty to repay the loan.
“Promise keeping is not the highest moral value,” said Hunt, who before his real estate career taught ethics and logic at the University of Redlands. “If I promised to lend you my gun and you are now in a clearly dangerous psychotic stage, breaking my promise would be the right thing to do, not the wrong thing.”
http://www.calculatedriskblog.com/2009/11/more-on-strategic-defaults.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
I’ve been following this blog since the summer of 2006 when we first moved to Reno after selling our home in Elko. We are still renting. We hoped to be able to buy a home after Christmas when our current lease is up but we are not seeing any reason to do so even now.
I would like to thank both Diane and Guy for this blog and the information that has been shared here. I wish both of them and their families the best.
Funny stuff here for what is supposed to be a real estate blog.
In my experience I have often found that those who set themselves up to be the arbiters of everything that is moral and right are usually the biggest hypocrites
“In my experience I have often found that those who set themselves up to be the arbiters of everything that is moral and right are usually the biggest hypocrites”
Okay, so lets not encourage or teach morality and ethics anymore .
Being the banks and lenders won’t do a loan modification for you if your current with the payments, maybe this is a good move not paying to force the lenders hand in doing a short sale or loan mod
Because someone has made an error in the past does NOT make them a hypocrite! They have learned from that mistake and preach against it. That is WISDOM. Learn from it.
Preach on Smarten, you have a lot to offer. I was applauding your speech! Bear’s only purpose here is to antagonize and point fingers. Seldom does he offer anything of value. Am I the only one who sees his name and scrolls to the next poster?
MikeZ, I think you are intelligent, but not the most moral character.
What may be legal does not mean “moral.” ie, abortion, etc.
If I sign a “promisary note”, which is what a mortgage is, I promise to pay back what I have borrowed. Period. When I was in a car accident and could not work for several years, and we had only $30 a week for food, gas, clothing, etc, I did not walk away from my promise to pay my mortgage. Most of you here would have told me it was okay under my circumstances to walk away. But I did not (never made a late payment either). I wish more people felt this way, the real estate market would not be in nearly the mess it is in now.
“Because someone has made an error in the past does NOT make them a hypocrite! They have learned from that mistake and preach against it. That is WISDOM. Learn from it.
Preach on Smarten, you have a lot to offer. I was applauding your speech! Bear’s only purpose here is to antagonize and point fingers. Seldom does he offer anything of value. Am I the only one who sees his name and scrolls to the next poster?”
The fact that you were not able to see the hypocrisy in Smarten’s posts speaks volumes of your insight. Do you even understand the term “hypocrisy”? Perhaps you can refresh your vocabulary, and while you’re at is, look up BS, because that’s what you’re full of. If you were truly scrolling over my posts, you wouldn’t even be commenting on this exchange. Yawn…
PS- I’m GrizzlyBear now.
CNN Money was just talking about this story as I ran across this thread. Wooow took me a long time to finally reach the bottom.
In reference to the ‘1 in 4′ stat, CNN Money just mentioned 11% of those underwater bought their home in 2009. 2009! They also mentioned many of the people using the $8,000 first time home buyer credit are of the same class of people who shouldn’t have been buying homes back when lending was much looser, and that the tax-credit only builds up a still-destined-to-burst dam slightly taller, temporarily, ‘making new bubbles out of old bubbles.’ Not that I consider CNN a trusted news source, but it was still interesting. Any truth to that? Or are they way off base?
I may be mistaken but isn’t that why you pay into PMI? And isn’t the company collecting the monthly / yearly fees in the risk management business? For profit? And wouldn’t Smarten’s type of loss be exactly what they’d expect?
How come the name change after all this time BB?
I’m actually NOT going to change my name here. My browser remembered it from another site, and I did not change it to BanteringBear which is who I’ve always posted as here. I will continue to do so, it’s just that I didn’t notice it before I entered the post.
You know BB [or GB or whatever], instead of attacking the messenger, you could have attacked or agreed with the message [actually, based upon past posts, I would have thought you agreed with my response to MikeZ]. But that isn’t what you did [in fact, you still haven’t substantively commented] which I think speaks volumes.
I have intentionally withheld responding further to you until now. You state “I can tell you’re rattled because you’re hurling insults.” As the king of insult hurling on this blog, please point to where I insulted you. Did you find my “me thinks you’re the hypocrite;” or, “I think you need to go back to business school;” comments insulting? Honestly BB; I’d like to learn so I can modify my future responses.
In my post which you have attacked as being “hypocritical,” did I not state: “if you can get your mortgagee to AGREE to a short sale; or loan modification; or refinance; or accord and satisfaction [i.e., compromise]; in my book, that’s fine?” Didn’t I state that, “if you want to stop making payments on your mortgage [without the intent of simply walking away] so you have standing to argue for a short sale or mortgage modification; or you want to sue your mortgagee [because it didn’t warn you initially of the potential for becomming underwater] with the same intent; or you want to file a Chapter XI proceeding with the same intent; in my book, that’s fine?”
So rather than simply walking away, here I secured my mortgagee’s consent to the form of resolution [or compromise] I described that rendered the bank whole without incurring additional liability. That’s not “hypocracy” BB; it’s doing exactly what I said was IMO, acceptable.
Now you, MikeZ, CC or whomever might disagree that what I did back then was any different than simply walking away. But it’s certainly not hypocritical and I think you know it’s not [”do you even understand the term “hypocrisy?”]!
None of us [except maybe you] is perfect. Haven’t you ever been sued? How about divorced [or married for that matter]? Have you ever purchased a piece of real property? Have you ever lost money reselling it? How about a stock purchase that went bad? Do you ever do anything stupidly [or hypocritically]?
You told us that your last New Year’s Resolution, was that you were going to make a conscious effort to modify your behavior so you weren’t so insulting to and crticial of others [or do I have this wrong?]. Have you forgotten?
Here we go again, folks.
http://www.huffingtonpost.com/2009/11/28/white-house-plans-to-step_n_372863.html
Time to increase the bailouts. It appears that all the loan modification programs aren’t going as swimmingly as the administration had hoped, and, well, next year is an election year.
You probably don’t need to read anything to know what happens next: more bailouts for more underwater homeowners.
Not to be vicious here, but I stayed out of the housing bubble. I have no debt. I saw that things were crazy and decided to wait it out. I thought, someday things will come back to earth, and then I’ll buy.
Well, not so fast. Just as all the zombie banks are being propped up, all the zombie homeowners will too.
Capitalism? Bull. The reckless get bailed out by the prudent. Instead of the market being able to find its equilibrium and prudent family people like me being able to afford a new home, the govt sees fit to provide tax credits, zero interest ad infinitum, HAMP, and HARP, so the wreckless can continue their profligate ways and the prudent can…….hell, maybe move to Canada (or Russia)…
RE: “MikeZ, I think you are intelligent, but not the most moral character.”
Donna, your morals are yours, and yours alone. You’re not qualified to judge me or anyone else here on morality.
It’s no surprise you were an attorney, Smarten. You should write a paper titled “How My Foreclosure Was Not A Foreclosure”. The lengths you go to…
Yes, gimme money, it is frustrating. Try as they might they’ll never stop the price collapse, they’ll just prolong the pain. The “Making Homes Affordable” program is the biggest joke I’ve ever heard of. Talk about backwards. Rewarding people by essentially lowering the purchase price of their home in hindsight is criminal. It still does nothing to address the affordability problem for current and future buyers. Wages will take care of that. Until then, enjoy the “Greatest Depression”.
Mike Z- concerning Donna’s moral compass,I tend to agree a little bit with both of you which tells me this is a more complicated subject than just saying it’s OK to walk away.
Earlier you wrote ‘It’s sensible, ethical and completely legal.
Only a fool would jeopardize his or her financial future by voluntarily remaining in a financially destructive contract which allows you to legally walk away by surrendering the asset.’
I’m sure there are people out here doing exactly what you’re suggesting and profiting from it- which in no way could be construed as ethical. With a minimal amount of planning you can get up to 15 months free rent, or how about those that have taken out LOC’s worth more than the property, then walking away from the loan.
I don’t think this is the aspect you were suggesting, but from a counterpoint it’s what’s happening, as we’ve read here on this blog before.
Bankruptcy could be said to have the same dilemma built in. If you know the worst is to lose your business, and you have no morals, it’s not hard to profit from declaring it. And with the added bonus of having it be your corporation and not personal, it leave the unethical door wide open to walked through.
Again, I don’t think that’s what you meant, but your comment leaves a lot of room for both sides.
gimme, you are quite right. For the prudent, the sensible, the conservative, the diligent, there is nothing our governemt has to offer. Such are rewarded with .1% returns on their money markets and .75% CDs. In other words, a pox on savers.
Somewhere along the way we lost our compass. The reckless are rescued while the prudent are cast asunder.
Martin, I believe this loss of direction in our society is not accidental, it is planned Change. Canceling-Out the rewards of saving, plus all of these federal spending programs, are together acting to penalize the cautious and bail-out the reckless among us. This amounts to wealth redistribution, whether one wishes to call it that or not.
“Somewhere along the way we lost our compass. The reckless are rescued while the prudent are cast asunder”.
We all have a chance to correct this problem via the 2010 elections. With the entire house and 1/3 of the senate up for re-election. It’s time to get rid of the far left and right leaning members and go for moderates.
It’s no secret that Congress has been approving the laws that have created the problems that led to this mess, for the last decade.
The time is now - get rid of ‘em all!