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

"A little personal responsibility goes a long way."

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yes, and I bet if the business sector and the government would take their social responsibilities as seriously as those individuals you are preaching to do, I bet it would go an even longer way!!

reply to post by llpoolej


Yeah a lot just went out of business wham bam thank you mam and stuck it to the banks good point there were a few that I used for some of my houses that are now gone so I can relate to what you say.

Dawnstar, I don't disagree with you about the government and corporations. Though, are you taking a stance that since they do it so should private citizens? I do like to think that I am more responsible than the government. Talk about waste

It is like I tell my children, just because their friends do something, or they see it on TV, doesn't make it ok for them to do so.

I know of people who have put 100k of credit card debt in their wife's name, divorced her, had HER declare bankruptcy, ran it through the courts and when it was all said and done, remarried her and no more debt. Pretty slick huh? Doesn't make it *right* morally. It is legal stealing.

Just because one can get away with it, doesn't mean it should be done.

We have made our share of bad financial decisions, but, we dig ourselves out. We PAY our debts even when it is hard.

To say that there are no more subprime lenders operating now is not exactly true. There are still many non conforming lenders out there. Matter of fact we have four different companies that we broker to that are still running and very profitable. The difference now is that ARM's are no longer done on a large scale and the guidelines have tightened up a bit.

The non conforming lenders who have kept themselves afloat all have one thing in common and that is a strong manual underwrite. They do not use automated underwriting programs, instead an actual person reviews the information and makes a decision as to if an applicant can repay. Just the same, those of us who can structure a solid and fair deal for a client will remain in the industry and make a great income. All the mortgage backlash is doing is eliminating the idiots and the crooks from our industry.

Any time a certain business hits it's boom, it attracts every bad element of society due to the ability to make lots of money. Now we are experiencing the result of too many bad loans and too many junk lenders, the market and the industry is correcting itself. It is a positive thing in many ways, and with time there will be options available for people who are stuck in bad loans.

For instance, legislation is being reviewed in the month of February that will raise the maximum loan amounts for FHA loans (govt subsidized) all the way up to $625,000. Currently the max here in NC is $220,000. This change will help out borrowers who have loan amounts over $220k and cannot qualify for a conforming or Alt A loan. The beautiful part about FHA is that they, for the most part, do not take credit scoring into consideration. Instead they look at how bills have been paid and the overall integrity of a borrower. The best part is that FHA will serve as the new sub prime, and will allow people who normally would have a high interest rate to get a rate down in the 5.5%-6.5% range. They even allow 50% + debt ratio in some instances.

If you are stuck in a bad loan right now, FHA will soon be your glimmer of hope. They allow 97% financing with great rates and my opinion is that the gov will expand the FHA guidelines even further in the next few months so that even more people will be able to take advantage of their programs. It will be the federal govt's attempt to help correct the mortgage crisis.


Good luck out there folks. If anyone needs specific advice in regard to their current situation I will be happy to help any way as best I can.

reply to post by BlackOps719


I dont think we were saying they are all gone we were just saying there is a lot of them out of business and they had no regard on who gets hurt. I think that was the point.

I do have to give props to Angelo Mozillo though for turning down 37Million in bonuses and so on and so forth though it is only a fraction of the money he made it is still a step only a few would take..

I think Mozillo got caught up in the dreamy world of everyone needs a house and we are providing the American dream to people who otherwise could not have it,
while good in theory it never works out that way in reality like most ideas and dreams of humanity and peace and all that crap..


2 cents spent
GEO

Check out what these guys are doing with this mortgage mess. I wish i'd have thought of it.

www.youwalkaway.com...

I'm not sure if it's a scam or truly brilliant. What's next "burnitdownfortheinsurance.com"?

Sorry to double post but I can't let anything good be said about Mozillo without mentioning that he started selling shares of his company at about the same time that the worst of the mortgages were being written.

I also believe that BoA most likely said "tan-man this deal is off if you don't drop that severance".

Originally posted by jefwane
What's next "burnitdownfortheinsurance.com"?

Worse, I'm afraid.

When the dust finally settles...shady hard-money guys, pawn-shop owners, and financial ambulance chasers may be the only winners in this deal.

Mr. Mozilo's Insider Trading History is a thing to behold...especially for the year 2007.

I don't want to be unsympathetic, or look smart with hindsight, but I am surprised people have been buying for the last year or two. House prices have clearly been inflated.

Sure, they've been going up for a while, going up a lot, but when they reach the point that they outstrip people's ability to buy them, well, then they have to go down.

Salaries in real-terms have been falling for a while. Banks have been getting 'creative' *cough* to keep on selling debt. It has been clear to me for the last couple of years that the housing bubble had to burst.

I don't mean to be a smart-ass here. I am very sympathetic toward those who got caught in the housing-market crest. My own nephew got caught. He's not a dumb guy, but he just didn't think about it. He kind of sleep walked into it.

Anyway, I hope those in a bad spot can work it out. Armed revolution, anyone?

Haven't read the whole thread so I apologize if it's been mentioned.

H.R.3648 Mortgage Forgiveness Debt Relief Act of 2007 is LAW.

Purpose: To amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.

Link

History has a way of repeating itself...and like the "good" society that we are, we, again, failed to learned from history.

we don't even have to look too far back, just look at the S&L fiasco in the late '80 to give you a glimpse.

But more to the point, yes I agree with many of the posts here in that everyone has blame in this. From the Lender, wanting to "create wealth" for their investors by developing new loan products to qualify anyone as long as you could "fog up a mirror", to the LO (loan officer/broker) pitching the worst loans simply because they had a higher rebate back from the lender. To, the Real estate agent saying "well if I don't sell them a house, someone else will...". And, the buyer having the "flip that house" mentality for the quick buck (not to say that all did that).

We played into the media reports of the great wealth from owning RE (real estate). We envied that "acquaintance" that we heard about making a killing on the sale of their house or the purchase of their new one. This was the new Wii that everyone wanted even to the point of waiting in line overnight so you could get a number for the lottery of the new phase of the new development in the new subdivision. Not enough to go around so the builders went into overdrive and gave us what we wanted along with the Lenders, LO, Realtors and consumers...

So, now what? Well, with the exception of a few areas in the country, most property values are down anywhere between 10%-20%. In CA. alone with lost over 16.0% in 2007 and more specifically in Stockton CA close to 30%.

www.bizjournals.com...

In the last 4 years most first time home buyers and some move ups, got into an ARM 100% financing. Wether it was an 80/20 or single loan. This meant that the new owner was 100% leveraged or "mortgaged to the hilt" therefore no equity to speak of.

To illustrate I'll use WatchingFrom as an example, no ofense WatchingFrom I'm sympathetic to your situation and don't intend this as disrespect, assume that he bought his house in 2005 for $300,000 with, as he stated 80/20, 100% finance. The housing market started slowing in late 2005 and therefore I would assume no appreciation to speak of in 2006. Nevada has been one of the hardest hit places with numbers ranging from 40% in las vegas to 17% in other areas.

www.dqnews.com...

So, lets assume a 17% drecrease. This means that by the end of 2007 his $300,000 home is now worth $249,000

And here is where the real problem is: There is not ONE, not one, lender out there that would be willing to lend (re-finance) his home for $300,000 when the property is only worth $249,000. To compound the problem if the owner has no money to refi, the closing costs would have to be included in the new loan, assume $5000 (on the low end). So now they really need a loan for $305,000.

Make no mistake, the current adminstration plan to save the housing market is a JOKE and a pure political move. Not even the so highly touted FHA will save the day. The maximum LTV (loan to value) that the FHA allows is 97% or in this case $241,530 (249,000x.97). So, WatchingFrom don't hold your breath that the FHA or any other government program will come and save you. Even the increase in loan limits will do NOTHING at all as this only increases loan amounts not LTV nor does it change the lack of equity.

What we need is a loan program that allows an LTV up to or even more than 130% as to cover the the existing loan and closing costs. I highly doubt that any lender out there will risk their behind with such a program in this tumultous market we're in. Additionally, we (our politicians) need to force, not ask, the lenders carrying these ARMs to fixed the rates or even lower the rates of owners at risk of default and currently in default for no less than 10yrs for the market to recover all of the loss.

Continued on the next post

[edit on 1-2-2008 by brownflyer]

[edit on 1-2-2008 by brownflyer]

Until our goverment, yes the ones that work for us and are supposed to protect us, implement this changes there will be no relief for the market or the home owners.

WatchingFrom, sorry I feel like I'm picking on you I apologize, you asked a very important question. Is it prudent for you to try and save the house if the lender adjusts terms. Looking at it from a strictly financial point of view the answer is: You be the judge. Let's look at it:

Starting with the $249,000 from last post, reports indicate that the Nevada market will drop another 15% this year and yet another 10% in 2009. That will get you a net value of $190,485 (249,000x.85=211,650x.90). Again assume you owe $300,000, you've just lost almost $110,000 by the end of 2009.

renorealtyblog.com...

How long will it take you to recover that loss and get into the possitive? If we just take a modest 5% appreciation for the following years begining with 2010.....10 yrs with a value of $310,280 (Historically, the housing market has increased at an average of 3-5%. 5% being aggressive). So, the real question for you is: Are you willing to deprive your family (congratulation btw on yours/wife pregnancy) of the necessities so you can meet this obligation?

As for the suggestion to rent your home out, here are the details. Most "real" investors know that in order to make a property cash-flow positive, they need to put down at least 20% down. So again, lets assume you can rent your home for $1,500 a month (doubtful by your indications). You are now $700 out of pocket not including taxes and insurance (if they're paid separately). You go out and rent a nice little townhouse for $1,300. Now your total montly mortgage/rent obligations are $2,000 (again w/o tax&Ins). You're saving yourself $200 (based on the $2,200 mortgage you have on the house). Is it worth it? Not in my opinion.

As for Rent to Own, nobody in their right mind would be willing to enter into a contract to buy a property at above market price when they can just cross the street and buy one $50-60-70,000 less than what your's is worth.

Yes, the tax relief act link was posted above.

Sorry for the long post.

[edit on 1-2-2008 by brownflyer]

[edit on 1-2-2008 by brownflyer]

reply to post by brownflyer


Thank you for your insightful and knowledgeable posts. Crunching numbers helps explain what is going on.

When I bought my first house in the late 1970's, there were such things as "balloon" payments, which we were advised to stay away from. ARMs were starting to be sold. ARMs were pushed as a way to get into the inflating housing market, if one couldn't quite afford a fixed; buyers were told not to worry, as their rising income would offset any increase in percent. This could work out, as long as income increases.

It dawned on me, that incomes no longer rise as expected, as back then. In fact, with layoffs and/or being forced to take lower wage jobs, ARMs don't seem as sensible as back then.

reply to post by disgustedbyhumanity


Yes because banks are such honest institutions, worthy of our empathy and sympathy.


The fact is there are so many people who ask the bank for help, and the bank refuses.

Both parties are at fault. The banks for their stupid and/or predatory lending practices. And people for buying too much house and keeping up with the jonses.

reply to post by DisabledVet


Again -- you're focused on what I call the high-sell -- selling the dream of success. I won't disagree that there are some who *can* be successful with rental situations. The issue for me is with honest disclosure and that I don't feel you are doing. Honest disclosure requires that you explore the negative what-ifs equally with the postive what-ifs. Without that, you get what we have now... people in over their heads with debt that they cannot afford. People flat out ignored the negative what-ifs and the mortgage lenders certainly did not explain how drastic a monthly payment can go up at the end of an ARM if the interest increased.

While what you propose here can truly help some people, you can also harm an equal number of people by them not being aware of some of the real logisitcal nightmares that can befall them as landlords. That's when your service becomes a disservice. That's what I'm opposed to. If your intent is truly to help people, then give the full disclosure and then people can make a truly informed choice about their given individual situation.

And yes, I do have a much harsher view of people than it sounds like you do. I took my rose-colored glasses of a long time ago. I'm not one of those people who believe that all humans are inherently good. I think that there are pockets of inherently good people and becuase of that inherent goodness, you'll typically find them at the bottom of the economic food-chain.

Originally posted by llpoolej
Dawnstar, I don't disagree with you about the government and corporations. Though, are you taking a stance that since they do it so should private citizens? I do like to think that I am more responsible than the government. Talk about waste

Many things the gov't does actually interfers with people's ability to be responsible! instead of regulating out of control drug and healthcare costs...they try to prevent us from seeking cheaper drugs from canada, kiss big business's ****, and well, just take more and more of our money to give them.

They'll subsidize an $1000 rat infested apt....but then this very act will put the going rate for rental property over the budgets of many people...


yes, there are irresponsible people in the world, lots of them....but then...
the first and foremost primary responsibility that people will recognize and deem most important will be their responsibility to survive! If the government's irresponsible way that they have of throwing money all over the place and their ever so willingness to pass legislation after legislation to please their corporate masters infringe on the people's ability to survive in the world we created for ourselves....well, what can I say....it's the government forcing the people to be irresponsible! we are getting close to that point, if we're not already there.

how can you expect someone making $7 and hour to be entirely responsible for their own needs? not to mention the needs of their families?



[edit on 6-2-2008 by dawnstar]

[edit on 6-2-2008 by dawnstar]

Well, after all this mess, I am grateful for FHA.

WE have low credit scores because of health bills a few years ago, from a seriouse illness. Yet all our bills were always paid on time, we did not use credit cards, we spent what we had. We could have got a house when the interest only was popular, but declined. The housing market in this city was beyond our means and we knew it, so we just rented.

Now , the market is a buyers market. We are finally buying our first home as some have come up we KNOW we can afford. Mortgage will be the same as our current rent. Our credit score is only around 600 from the health bills.
But we have never missed a car payment, phone payment, etc in our 11 years of marrige. But medical debt was impossible to pay when they were charging me 30k a day for a lifesaving medication, no joke, and being in ICU for three months, then having relapses the next two years. Husband at the same job for many years though. We got approved tradional loan, but 20 percent down, and the amount they would lend was too low. No homes in that price here.

So we tried FHA. No problems , we are approved. They looked at the whole picture, and they are leniant on medical. Thank God. First thing I asked for was a lender that had a manual underwritter. They could see we pay our bills. They could see we can afford it. We got approved and are finally getting our first home. FHA will loan you what you can afford. I see no problems raising the loan limits , if the borrower can afford it.

My realtor told me they are seeing a lot more FHA applicants now.
Some people hate the paperwork, but it really was no different that the paperwork we did for a regular loan, except sending in the last 12 months statements of utilities and rent paymemts , etc. In fact we are closing early.

Im glad we never did the arm thing. The house we are getting may not be a mansion, but it is nice, and we can afford it without changing our current lifestyle. Paying what we are already paying so it makes sense.

I think there is enough blame for the current situation to go around to everyone. The preditory lenders who did not explain contracts, the buyers who bought more than they could afford on a gamble.

The there are those who are loosing jobs in todays economy, and loose their home, and I truley sympathize. Sometimes things are just beyond our control, just as it was when I became very ill for years.

I am hoping that the silver lining out of all this will be an education for the banks and the borrowers alike . Dont give loans out to someone who does not have the income to support it, and buyers dont buy what you can not afford now. I can see new laws comming from this situation. Though it worries me that these laws would let people in our situation fall through the cracks, and never be able to get a home.

Ama

More mainstream news about walking away:

Jingle Mail: Leave the keys in the mailbox

Jingle mail is another term that’s making its way around suburban ghettos and corporate boardrooms. Jingle mail is what happens when the zombie slobs leave their house keys in the mail box and “just walk away” from their upside down McMansions.

In America (and wealthier parts of the “West” in general), people don’t have to blow up a natural gas pipeline and shut down a factory or cut enough fiber to crash the NYSE and the NASDAQ market systems for a few minutes, hours or days. Voluntary simplicity, or, living well on very little money, kicks evil people in the nuts and gouges out their eyes. (Pacifists may think of this as sending the enemy Joy and Happiness if they desire.) Doing this in the U.S. has a force multiplier effect because the U.S. is the largest source of the funds that keep the global ponzi scheme running. When people in wealthy countries opt out, the action causes major economic damage to the machine.
…
It’s a matter of hacking The Matrix in an efficient and innovative manner to reduce your monthly expenses to a fraction of previous levels. The extraction/domination system in the U.S. has few effective defenses against people who opt out—to the extent possible—by making smart use of available resources. The system assumes that you’ll stay hooked forever on a lifestyle built around profligate waste and going deep into debt to buy crap that you don’t really want, or need. Indeed, most people are content to go through life this way.

i think (no wait i know) that people who think their is a moral obligation to stay are playing right into the bankers hands.

but before i post a (incriminating statement toward the banks) i would ask those who feel they have a moral obligation to pay if their opinion would change if their was evidence that a banker deliberately tried to take advantage of you, knowing you couldn't pay back the loan, but gave it to you anyway, because they thought they would make money off your moral beleifs.

An economist and historian i frequently follow, spoke that a few years ago how he came across a banker at this function and the banker came up to him (trying to hold back laughter) and said" we had an intellectual breakthrough in understanding for the banks… that changed the whole way they did business...we found the poor are honest!”
they found that for the poor it was "a matter of honor to repay their debt's", and they took this info and appears wagered heavily on the "insight", (this "poor" basically means "non wealthy/rich" ) this is basically saying , let's lend to the poor, in ways they can't payback, that will make us billions, because as a matter of honor they will become debt slaves for life.

audio is the source of the "quote from michael hudson" above from the aug 15 show archive in the following link www.gunsandbutter.net...

I wonder if in a unique sitiation like this you could see why many beleive it is ok to morally walk away.