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"Foreclose me...I'll save money!"

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posted on Jan, 27 2008 @ 08:49 PM
You can argue that I'm intentionally pulling this scam. We weren't behind yet, but we haven't got much in the bank. I can keep paying and get further behind. Or I can ride the wave of the inevitable and not waste another breath on this sinking ship.

Also I didn't mean to put you in a box. I like to think that I'm one of the few who can actually see this from many perspectives. I do realize that everyone looks out for their own greater good. If you're in group 3, that's awesome for you.

By the way this thread should be flagged. I'm all about UFO's, but ET isn't gonna come help any of us out of this mess.

[edit on 27-1-2008 by WatchingFromTheFence]

posted on Jan, 27 2008 @ 08:55 PM

Originally posted by mybigunit

I to have quite a few properites down here in florida but here is the problem Im running into. There are so many properties for rent now since people are waking up and starting to rent them out and alot of people are giving these houses away just to get people in. Ive lost 3 tenants because someone up the road was 500 a month cheaper and Im already taking a loss as it is. Multiply that by several houses and its a chunk of money. I have all houses not condos or apartments. 2 houses I was losing a large sum a month so those are the ones I cut. In theory your statement makes sense but as a real estate investor you should know there is a lot of grey area.

In other recent threads you talk about wanting to borrow money to open another business location as biz is so good, you state that you are making a killing shorting stocks, so things are great, yet you refuse to hold yourself accountable for your bad investments in the real estate market. Once you committed yourself to a monthly payment higher than going rents + some cushion, you made the cardinal sin of investing in real estate.

If the other things you say are true, then there is no way in hell you are just going to be able to walk from these properties. If you did, they will come after you. It may take some time but they will find you and get judgements to seize your other assets. They may let the guy who can't afford his own homestead have a little slack, but someone like you they will chase down and they will get their money+ a boatload of fees and interest.

If you get a margin call at a brokerage do you just walk away as well?

posted on Jan, 27 2008 @ 08:56 PM

Originally posted by Apsaroke
reply to post by DisabledVet

That's a pretty good spiel! Being able to come out on top and all of that. But let's discuss some of the little nasty things that you didn't include in your spin.

1. Even though you *may* get 100.00 a month on top of your mortgage payment, you'll still be saddled with around 30-40% of that loan value counting against you on your debt/income ratio.

2. You'll also need to determine who is going to be responsible for paying the homeowners insurance and property tax. Since property tax ans insurance are rarely the renter's liabilities, be prepared to be saddled with those expenses as well.

3. Also, be sure that 100.00 above your mortgage cost is going to cover any possible repairs to the home that you will be required to fix in a timely manner for your renters. Exactly how old is your roof? Your hot water heater? Appliances? Septic system? HVAC system? Are you ready to spring for that sudden plumbing bill when they clog a line?

4. The assumption that you can nail down 10,000 above your existing loan amount is presumptious at best. Many individuals are upside down on their loans and even if you're not upside down on your loan, you're gambling that your home will not lose more value between the time of your rental start date and the time in which your renters actually can pull financing to purchase from you.

Again...things like this are pitched to those who can't afford it and they're always done with the "pefect scenario" approach. Rarely do you ever hear the dark, little nasties of it discussed in the pitch.

If someone is ready to walk away becuase they can't afford an 800.00-1500.00 mortgage payment, they are most definately NOT in the position to transfer over to a 500.00 - 900.00 rental payment (since they would no longer live in the home) -AND- assume responsibility as a landlord with the financial obligations that are then required to handle that responsibility correctly.

You bring up some good points.

Let me address them specifically:

1) While the mortgage does still show on your credit as you are still the owner of the home, and you still are responsible with the debt, any lender will look at your rental agrement and NOT saddle you with the debt, but instead show the $100.00 as income, negating the covered debt service. SOME again SOME lenders try to play the game that they will only count 60% or whatever...but your using the wrong lender.

2) When I say payment, I mean PITI (Principal Interest Taxes and Insurance) which is normally 99% of the time your total payment. This is the gross number that you start with as your rental rate and increase it certainly if you can to market or slightly below market. So in essence, it is the renter covering those costs and while they are not specifically outlined in the rental agrement, they don't have to be, as the landlord (thats you!) gets to set whatever rent amount you want (To tenant, to low...your losing money)

3) This is the beauty of doing a rent to own often called a lease option. While legally the tenant is renting the home so the quick eviction clauses in your county's landlord tenant act work in your favor, it is the tenants responsibility to maintain the unit as they will be eventually owning it.

Let me tell you, my first rent to own property I set up I JUST finished hammering the rent to own sign in the front yard when I had an applicant which ended up taking the deal...people LOVE rent to own's.

4) Thats all fine and well, as with a Rent to oen contract you can set it up any way you's certainly not presumptuous...and if you know anything about real estate it's defiantly NOT beneficial to be presumptuous...presumption means assumption and you don't have to assume anything with real estate... YOU GET WHAT YOU INSPECT NOT WHAT YOU EXPECT. So you could set up you verbiage as such: At the end of the 12 month rental term tenant X agrees to purchase the property for $110,000.00 or the current market value WHICHEVER IS GREATER. There, now you have secured yourself from having to accept a loss, and you can add the verbiage: If current market value should be less than $100,000 tenant hereby agrees to continue with the rent to own contract until such time as the market value rises above $110,000 at which time they will consummate the purchase of the home.

Your closing statement doesn't give much faith in people and weather or not they are willing to do something to better themselves. Sometimes the greatest risk is not taking one, and in this case I can 100% GUARANTEE YOU that if they leave their home and ditch their mortgage they 100% ABSOLUTELY WITHOUT A DOUBT IN THE WORLD BE IN A MUCH MUCH WORSE SITUATION FOREVER.

posted on Jan, 27 2008 @ 09:02 PM

Originally posted by mybigunit
reply to post by DisabledVet

I to have quite a few properites down here in florida but here is the problem Im running into. There are so many properties for rent now since people are waking up and starting to rent them out and alot of people are giving these houses away just to get people in. Ive lost 3 tenants because someone up the road was 500 a month cheaper and Im already taking a loss as it is. Multiply that by several houses and its a chunk of money. I have all houses not condos or apartments. 2 houses I was losing a large sum a month so those are the ones I cut. In theory your statement makes sense but as a real estate investor you should know there is a lot of grey area.

There is a lot of grey area, but that doesn't meant you cant operate in it. I don't know your current situation, but perhaps instead of playing the rental game play the rent to own.... do something different and you may see that you then stand out from the crowd.

Secondly if you are in the business, you need to GET OUT OF SFR's !!!

SFR's are beholden to the fluctuations in the consumer matter how many SFR's you have and no matter what you are renting them for, you will only ever be able to sell them for their market value.

If you get into multifamily / commercial, it is not the market value of the property but the INCOME that determines it's value...and who, pray tell, has the power to increase the income? YOU the landlord...multifamily and commercial properties allow you to FORCE APPRECIATE that value by raising the rents.

posted on Jan, 27 2008 @ 09:02 PM

You say you think that they are going to hold foreclosure against us forever. With the millions going into foreclosure, I think not. At some point, they will have to loosen the rules. There will be a whole market of people wanting to buy homes again but can't as a result of this being "held against us forever" talk. You think banks and the government won't tap that market? It's money waiting to be made. Besides, I can name like 30 people that I personally know who have defaulted and now own homes and cars, etc.

I have to go to bed.

posted on Jan, 27 2008 @ 09:05 PM
reply to post by disgustedbyhumanity

First off I guess i should of made clear that I am short selling these not just letting them go into forclosure so as far as my credit goes Its a minor blip unlike a forclosure trust me Ive done the research. 2nd off if you think I havent been hit on this your nuts..first off Im losing the money that I put to buy these particular ones plus all the negative rent. So if you think I am walking away unscathed you are mad. Second as the cardinal rule of going neg on rent guy Ive seen this housing crisis coming for a few now so my mentality was that more and more people would have to rent which would drive up rental prices. Well I got the housing problem right but not the fact that everyone and there brother was going to rent out the places for crack money. My point in all this is its easy for people to dog on me for making a bad investment and sticking it to the banks but its ok for bank CEOs to get millions of dollars in bonuses ie citigroup but yet they have cost their shareholders billions and Im one of those shareholders. Theres a double standard and I dont like it. If you look though all my posts im consistant I like things even when it comes to race, money, politics, foreign policy whatever I hate double standards.

posted on Jan, 27 2008 @ 09:08 PM
reply to post by DisabledVet

Yeah I had commercial too and I just got hosed big time. I bought light industrial zoned condos 3 of them and guess what since construction is down no one is renting or buying. Needless to say Im trying to short sale those as we speak too. Ive never been into res condos because they only go up so much.

posted on Jan, 27 2008 @ 09:33 PM
I threatened a car dealership to dump my lease and get me re approved on a purchase or i was going somewhere else
to do it. They did it. Was it morally ok? sheesh i dont know, but if caring $8000 bad equity onto my next purchase
was moral, then i say morality can take a back seat, logic is driving.

I dont understand this whole money thing. I get money, but how is lending money into the economy in order for us to
own a roof over our head ever a good idea? Whos running this ship and how do get them elected out of office?

here is my understanding

the bank gives out the money, so lets say it gives out $1000 devided equally amoung all 100 inhabitants. The bank
has requested 5% interest on each persons $10 loan meaning each person needs to pay back $10.50 and in total the
bank is expecting $1050 in return for all the loans.

Where does the additional $50 come from? does this mean someone has to forclose in order for someone else to honour
their loan agreement?

I dont even want to get into the legality of interest and how it came to be, its here, but someone who is holding
property and says dam those that didnt pay their loans back and bailed, is not making any sense, they had to bail
in order for there to be enough money in the economy for you to pay your loan.

posted on Jan, 27 2008 @ 09:41 PM
reply to post by tom goose

Its funny you say this Ive though about doing this before but not sure how it affects your credit.

posted on Jan, 27 2008 @ 09:50 PM
reply to post by mybigunit

Oh it will probably effect your credit, i just didnt care about mine, i leased a car before i knew about the lending scam, im a little more vigilant now and lot less concerned about my credit score.

I had one creditor tell me he was going to call the police

I dont think lenders want to get into the legality of credit any more than i do, they spread their fear as best they can but in the end it is you investors that are making it all ok for them, so thank you.

posted on Jan, 27 2008 @ 09:53 PM
reply to post by tom goose

LOL anything to help a brother out LOL!!!!

posted on Jan, 27 2008 @ 10:17 PM
There is plenty of blame to go around in regards to this mortgage mess that our country is in. True there have been overzealous borrowers who have doomed themselves by purchasing homes way beyond their financial means. People fall in love with the idea of being homeowners and they are blindly willing to risk signing an ARM or a negative am loan or in some cases over equity loans in order to get into that dream house. Borrowers did have a huge hand in the positions that they now find themselves in.

That being said, I believe that the collapse had a lot more to do with greedy, money hungry, irresponsible lenders out there who were giving these bad loans away like candy. Back in 05 a borrower with a 580 credit score could get a 100% SISA loan, no money down, no income verification, no nothing. People with 600 credit scores could obtain 125% loans, with lenders giving out loans valued at 25% above the homes actual market value. This is the definition of insanity!!

Then there were the companies who pitched the 2/28 ARM loans to poor credit borrowers. They would have a fixed rate for the first two years with the understanding that unless they refi'd again before the end of the two year period the rate would adjust upwards of two to three percent within the first year. Most of these people had terrible credit and poor payment history, and most of these loans were sub prime mortgages that had a initial interest rate of 9%-12%.

It always baffled me how a company could justify giving someone a super high interest rate because they were high risk borrowers. Wouldnt common sense dictate that if they have poor credit and are having a hard time paying their bills as is, that it would be the absolute opposite of responsible lending to give them the highest rates out there when they are the least likely to be able to pay these notes back. If you ask me they were giving these borrowers a grand opportuny to ruin themselves financially.

What you are witnessing right now is the resetting of all of the 2/28 and 3/27 loans done back in 04-06 when the market was flooded with dishonest LO's and lenders. Also realize that these mortgage loan officers are under extreme pressure to sell high rates and high closing costs because it is how the company makes money and directly dictates how much the LO gets paid.

There is little to no incentive to be honest and look out for a borrowers best interest. With many companies, selling a fair deal to a borrower is not acceptable and can even lead to your termination.
The fact is it is and has always been all about the bottom line, and with all of the tricks of the industry and all of the mortgage mumbo jumbo verbage involved, the odds are stacked heavily against you as a buyer.

Fortunately I live in a state that is and has been heavily regulated by the Banking Commission and they scrutinize and seriously limit the amount of fees that can be charged as well as what rates can be given. The down side is most states out there have had virtually no regulation at all until recently, and shady mortgage companies have been making a killing off of the equity of hard working borrowers everywhere.

Another group of dishonest scumbags who had a big hand to play in thise mess were the Realtors, with their 6-8% mandatory commission fees. These people would get a client qualified any way and how on any piece of junk loan they could find, just so they could get paid. I don't think they get anywhere near the amount of blame and shame when it comes to where we are right now.

True, nobody made anyone sign anything they didn't want to sign. But just the same, dangle the cheese in front of hungry mouse and the mouse will bite 9 out of 10 times.

posted on Jan, 27 2008 @ 10:22 PM
reply to post by BlackOps719

Good point about the realtors I didnt even think about them. This is very true what you said. They even had their buddies they would send you to. Good Point

posted on Jan, 27 2008 @ 10:55 PM
Sorry for all of those that are in a bad situation I truly feel for you but you shouldn't feel alone and you aren't alone and will be less alone in the not to distant future..

I wonder if any of you remember in the late 70's when the banks were going to the home owners and saying the value of your house has dropped 25% and we need you to get the balance to us in 30 days or we will have to foreclose on the house, I remember it very well I was a kid then but many of my friends that are older had the savings and loans take back there houses..

At any rate I hate to see anyone walk away from anything but you always have to do what is best for your family first so don't let any criticisms bother you and remember the old saying about He or She who casts the first stone

at any rate people don't know the situations of others and I have a feeling that those who complain about people having to walk away are the ones who stand to lose the most, and you will be able to buy a house again someday
not as far away as you think..

I also agree with the reply about living in your means My wife and I do very well but we set a limit to our spending less than half of what we make a year and we stick to it and for the most part if we can't pay cash we aren't buying.

We live on less that 40K that is our budget if we wanted to buy a new house and it didn't fall in the budget we wouldn't buy it.. we also don't have motorcycles boats big screens and the like but we are comfortable and
living well within our means... and the really big bonus we are gonna retire young enough to enjoy retirement, if the whole freakin country doesn't fall apart first...


[edit on 1/27/2008 by geocom]

posted on Jan, 27 2008 @ 11:10 PM
why not just refinance the loan with a fixed rate. I am a homeowner and constantly get bombarded with offers to refinance. i would never take an adjustable rate on a mortgage. of course, thats how the market is here in Louisiana, it could well be different elsewhere.

posted on Jan, 27 2008 @ 11:12 PM
Forgive me if I seem a little confused with regard to the lending situation. While I'm not a homeowner myself, I have had a fair amount of experience in dealing with bad debt. The way I've understood things, there are two kinds of debts: secured and unsecured.

Unsecured debts are those that are backed up by little or no actual "collateral" which could be seized in the event of a default. Credit card debt is a good example of this. Secured debts, on the other hand, are loans in which there is physical property to which lender holds a potential lien i.e. vehicles, equipment, and especially real estate, which has always been considered the prime example of secured property, as the actual value of the property is close to or equal that of the loan.

Therefore, in the event of a default of an unsecured debt, the lender can always pursue legal resource to obtain the value of the loan by asserting rights to other property, ie auto repossession, wage garnishments, etc., but keep in mind this is a great deal more difficult than it is when dealing with a secured debt.

As you can see, because real property is secured property, lenders have always considered such such loans to be relatively safe. In the event of default, the lender can always obtain the majority of the loan amount by simply re-possessing the property.

Of course, this has traditionally done with the assumption that the value of the property would closely match the value of the loan. If there would ever be a time when the housing prices increase to a level that would be wildly out of step with long-term re-sale expectations, one would expect financial institutions to exercise due caution when considering the purchase of secured loans that, well, might not not be so "secure" after all.

One would think.

Because to not do so would be immensely stupid.

posted on Jan, 28 2008 @ 07:11 AM
Tom Goose, those car dealers probably sat and laughed at you as they made more money on your refi to a purchase. A lease is what it is. Read the contract. You pay for what you use on it. It isn't a rip off, it is a lease. Pay the higher payment and buy a car. No one forces you to lease. And they will love to get you to come back and buy out the lease. Get to sell it twice!

To those that don't understand why high risk/bad credit borrowers are charged more(on all loans) is they are higher risk. They have shown themselves to not pay their bills, so the interest rate is higher to offset the risk.

You will no longer see those 2/28's and 3/27's anymore. Now, if you can't qualify, you don't get a house. There is really no longer a subprime market. At least not subprime lenders.

So, if you are only as smart a mouse, you won't have the temptation of cheese dangling.

People, read your contracts. It is YOUR job to do so. Not the lenders. They are not your mothers. YOU need to look out for your own best interests. It isn't everyone else's fault if you made bad decisions and decided to use way too much credit and then the market turned bad.

I know there were dishonest lenders out there. My company was not one of them. A guy came to work for us who was being shady. He was fired. He was fired for counseling people to fudge their income. He lasted 2 months. I would not work for a company that didn't have the same integrity I do. I did loans for people I knew were going to bankrupt if their life situation changed. I also made sure they were aware of this. Someone else would have done the loan, so, as long as they understood what they were doing, and all was on the up and up. I would do the loan.

CONSUMERS need to have some personal responsibility though. It is your job to read your contract, ask questions and truly decide if it is too much for you. If you do not do those things, well, then it is your fault, not anyone elses.

Heck, the government is bailing out many of those subprime borrowers by making it easy to refi to a fixed. If they did not pay their payments, while it was fixed, whose fault is that???? THE BORROWER!!!!

A little personal responsibility goes a long way

posted on Jan, 28 2008 @ 08:20 AM
IMO you are only as good as your word. If you make an agreement, it is your responsibility to follow through.

That being said, it seems as if the financial and real estate sectors have created a perfect storm to divest the middle class of it's hard-earned money. I'll try not to judge as I don't know what I would do in a similar situation. I hope I never have to find out. However, it seems the tide is turning and is soon to be a tidal wave:

Changing Social Attitudes About Debt

I'ts a great link with lots of other embedded links that source excellent info:

There has been a slow, steady shift in consumer sentiment towards debt since the beginning of the year. For quite some time, many were debating whether it was even happening. At Thanksgiving, the first real hints of what was coming could be found in poor turnout for pre-Christmas sales. Still, most assumed consumers would come through at Christmas like "they always do". Except this time they didn't. Christmas Retail Sales Disappointed in spite of bigger than ever discounts. After Christmas sales disappointed as well.

Consumers Are Retrenching

It's now clear to everyone that Consumers Are Retrenching As The Economy Weakens.
Joi Freemont, a dentist in suburban Atlanta, doesn't have to look further than her appointment book to tell that people are worried about money.

Patients who used to get their teeth whitened all the time "now want to think about it a bit," she said. Braces? "People were getting them for the kids, for themselves, but now they're waiting," she added. And when people get cavities, they have their fillings done one a month, not five or six at a time, she said.

As a result, Freemont and her husband are worried their income could drop and are trying to be more prudent with their money. They're monitoring spending more closely and continuing to whittle down their credit card balances and her dental school debt, she said.
Professor Depew was talking about the above article in point number 3 of of Tuesday's Five Things.

And so the consumer balance sheet repair meme continues to grow. As those who have read Five Things over the past couple of years know, this is not a behavior that began in August or September as the credit crunch began to manifest, it's something that has been building for years.

Consider talk show host and television personality Dave Ramsey. Chances are pretty good that by now you know who Dave Ramsey is, but just in case, he's the host of a popular, widely-syndicated show, "The Dave Ramsey Show," that is heard on the more than 300 radio stations and seen on Fox Business Television.

Ramsey has been talking about the evils of debt and the virtues of debt-free living for more than a decade. In fact, his career began in 1992 when he began selling books on financial health following his own personal bankruptcy crisis in the late 1980s. But only recently has Ramsey really been able penetrate the mass public's consciousness. Why? It's not because Ramsey suddenly improved his message, it's because social mood finally reached a point where his message is not just acceptable but sought out.

posted on Jan, 28 2008 @ 08:24 AM
reply to post by llpoolej

since you are in the industry what about the liability of the lenders?

though I am not sure how this works it seems as if the big banks and companies can write off their debt then so should the consumer

I do agree whole heartedly with you on the read the fine print part
sure for some people it may take hours with a dictionary nearby but it will be worth the saved aggravation.

Please note that I am not taking you to task or anything I am just curious so if I may have mis phrased anything to make you think I am taking you to task I apologize in advance...

also as I stated in my post above live within your means people you really don't need the ultra large flat panel and the boat ad the motorcycle and all of the other crap that goes with those things maintenance fuel insurance so on and so forth,, like I said we live well within our means and are quite comfortable and very happy..

although I am not sure if we will be happy if Meryl Lynch is right about the property dropping 15% this year and 10% next year with possible further losses in 2010


[edit on 1/28/2008 by geocom]

posted on Jan, 28 2008 @ 10:50 AM
Geo, the lenders are no longer in business. They didn't just get to write off the debt and go on with business as usual. They are *gone*. Out of business entirely. I deal with mainly GOOD solid lenders that were not shady at all. The majority had to sell out to larger corporations. Interfirst is no morebought by Citigroup). National City Mortgage wholesale division is no more. Countrywide is about to be bought out.

The subprime lenders weren't even bought out. They just went out of business entirely. Done. Finite.

Dave Ramsey gets on my nerves. YES, his system works. It bugs the crap out of me he preaches from the pulpit of bankruptcy. Yeah, he didn't pay his bills off to begin with, or use his own system. He bankrupted THEN he became an expert on how to live right. Right up there with Dr Laura and her sage advice

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