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LOL, the people on this thread "get it." http://www.city-data.com/forum/real-...ncome-get.html Read their posts. The lenders told them they were qualified for alot more than they were wanting to spend, yet somehow, they spent wayyy less. Looks like common sense rules the majority.
At the end of the day, no one held a gun to these borrowers head and made them buy a house, much less a house they knew they couldn't afford. I'm sure they felt "entitled" to their McMansions and what not. The borrowers had the final say. Quit blaming realtors and lenders. I'm not saying they're innocent in all this, but the buyers had just as much greed as realtors/lenders and you cannot deny that.
(And another point, is, if your house has lost value, and if you don't have to move, it's not a realized loss yet. Stay. Pay your mortgage. Your value will eventually come back around. Why mess up your credit if you don't have to? It's not like you're going to be able to buy another house for less money if you walk. You won't be buying anything for seven years if you ruin your credit. Geez. And I guess credit destruction will be blamed on something else because no one will want to take responsibility for that, either....)
Please show me where I said buyers did not have blame.
The second bolded statement really does not make sense to me. Why would a buyer who does not have to move and can afford to pay their mortgage abandon their homes and go into foreclosure? Obviously the buyers in this situation either 1. do indeed have to move for what ever reason, 2. can not afford any longer to pay their mortgage or 3. a combination of both. What about military members who get orders in another state and have to move? What about a family who's provider lost their job and need to relocate for employment?
Seriously people need to stop making generalizations. There are ALOT of homeowners being affected by this that were not greedy buyers. They bought into a neighborhood they could ACTUALLY afford, they put down X%, and they did not take out some creative loan to do so. Now because of other irresponsible buyers in their neighborhood they are watching their values plummet, which is not an issue for the ones that do not need to relocate but what about the ones that do for what ever reason? So are you telling me the responsible homeowners deserve what is happening to them as well? Since when did every homeowner become a greedy buyer?
By walking out on a mortgage even when you are able to make payments, if barely, are you acting unethically?
Or are you simply fulfilling the terms of the contract you and the bank agreed to (which in most cases, is that if you did not make your payments, the bank could take your collateral, and that was the extent of the recovery the bank could receive)?
This was the OP's original question which was what I was referring to answer your question: "Why would a buyer who does not have to move and can afford to pay their mortgage abandon their homes and go into foreclosure?"
BTW, I wasn't insinuating you said buyers had no blame. I think you and I can both agree there's enough blame to go around and back again in this housing fiasco...
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Seriously people need to stop making generalizations. There are ALOT of homeowners being affected by this that were not greedy buyers. They bought into a neighborhood they could ACTUALLY afford, they put down X%, and they did not take out some creative loan to do so. Now because of other irresponsible buyers in their neighborhood they are watching their values plummet, which is not an issue for the ones that do not need to relocate but what about the ones that do for what ever reason? So are you telling me the responsible homeowners deserve what is happening to them as well? Since when did every homeowner become a greedy buyer?
Yes, this is true, but I wasn't trying to generalize anything...
My suggestion for the responsible homeowners would be a.) If you don't have to move, don't. This is not the time to be moving up to your next house simply because you want to. Everything is cyclical including housing markets. Value will come back albeit slowly. b.) If you must move and you can't sell, call a property management company and see if you can rent the place.
I just moved from a huge military town (Warner Robins, GA). Alot of folks couldn't unload their properties there so they rent them out in this decline. I don't understand why someone who is going to be stationed in an area for two years would buy a house anyway.
I didn't say every homeowner was greedy. I specifically said those that bought more than they could comfortably afford were greedy. Unfortunately, those people are the reason why the market tanked. At least that's my opinion. The banks didn't cause them to foreclose. That was simply a cause and effect action of someone not paying their mortgage. If the mortgage was paid, the banks wouldn't foreclose, the market wouldn't have tanked, and responsible homeowners wouldn't be upside down. Maybe that's just too cut and dry, but I think of it as a domino effect...
Last edited by PotterGeek; 01-16-2009 at 10:22 AM..
By walking out on a mortgage even when you are able to make payments, if barely, are you acting unethically?
Or are you simply fulfilling the terms of the contract you and the bank agreed to (which in most cases, is that if you did not make your payments, the bank could take your collateral, and that was the extent of the recovery the bank could receive)?
You have a business contract and decide to default on it. The collateral is taken.
Ethics has absolutely nothing to do with it, just ask congress.
If teh home is not worth the loan, then that is the banks fault, not yours. It is their business sense that is questionable. For you it is maybe a smart business decision.
This was the OP's original question which was what I was referring to answer your question: "Why would a buyer who does not have to move and can afford to pay their mortgage abandon their homes and go into foreclosure?"
BTW, I wasn't insinuating you said buyers had no blame. I think you and I can both agree there's enough blame to go around and back again in this housing fiasco...
Yes, this is true, but I wasn't trying to generalize anything...
My suggestion for the responsible homeowners would be a.) If you don't have to move, don't. This is not the time to be moving up to your next house simply because you want to. Everything is cyclical including housing markets. b.) If you must move and you can't sell, call a property management company and see if you can rent the place.
I just moved from a huge military town (Warner Robins, GA). Alot of folks couldn't unload their properties there so they rent them out in this decline. I don't understand why someone who is going to be stationed in an area for two years would buy a house anyway.
I didn't say every homeowner was greedy. I specifically said those that bought more than they could comfortably afford were greedy. Unfortunately, those people are the reason why the market tanked. At least that's my opinion. The banks didn't cause them to foreclose. That was simply a cause and effect action of someone not paying their mortgage. If the mortgage was paid, the banks wouldn't foreclosed, the market wouldn't have tanked, and responsible homeowners wouldn't be upside down. Maybe that's just too cut and dry, but I think of it as a domino effect...
Then it seems we actually agree more than we disagree. The problem I have seen with renting is that the rental market is FLOODED right now with properties (I am speaking of my area specifically). So it is kind of like a catch 22, you have to move, you can't sell your home, and you can't rent it out...then what do you do?
However I still disagree with the highlighted statement. I don't believe for most buyers in this situation that them buying more than they are now finding out they could have afforded was a result of greed; i believe it was a result of misinformation. When lenders were trying to push ARMS up my a$$, I can honestly tell you that NOT ONE of them said by the way...in three years when the fixed period is up your loan payment will begin to very based on prime plus this, that or whatever and therefore your payment could increase $500, $700, $1000 a month. I still firmly believe there was a general lack of ethics with the various industries I noted above during this timeframe. All many of them saw was the mighty dollar.
BTW my comment on generalization was not meant specifically for you. There seems to be a general attitude that ALL homeowners are this and ALL sellers are that, but there is much that we do not know about each situation to make that assessment.
interesting thread
ethics questions---- 6 pages trying to understand why should i have to keep my word.
good faith in contracting,
plays havoc with our divorce rate too.
victims cant keep contracts can they.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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However I still disagree with the highlighted statement. I don't believe for most buyers in this situation that them buying more than they are now finding out they could have afforded was a result of greed; i believe it was a result of misinformation. When lenders were trying to push ARMS up my a$$, I can honestly tell you that NOT ONE of them said by the way...in three years when the fixed period is up your loan payment will begin to very based on prime plus this, that or whatever and therefore your payment could increase $500, $700, $1000 a month. I still firmly believe there was a general lack of ethics with the various industries I noted above during this timeframe. All many of them saw was the mighty dollar.
Okay, I understand this. However, maybe 'greedy' then is a bad word to use. How about "irresponsible"? Seems to me if someone didn't understand what they were signing or what terms they were getting into, they lacked the maturity and knowledge to actually purchase a home. Fair enough?
Are you pathetically trying to suggest that predatory and deceptive lending practices is considered puffing? The mere suggestion indicates to me that you have no idea what you are talking about. This is further proven by the fact that you have to result to ridiculous personal attacks in each of your post. If I, in some way, actually cared about your opinion of me I would show you my resume and CV and you would see how stupid you really sound.
At the end of the day I believe in personal responsibility but I also believe in consumer rights. If any one re-reads my posts nowhere did I state 'let buyers off the hook, they are completely blameless'. However for someone to suggest that individuals in the mortgage industry, appraisal industry, and real estate industry had absolutely no blame for the current market conditions is incredulous to me and i suggest they go back and do a little fact-checking.
Perhaps you should beef up your resume and your "CV" with some reading comprehension classes, unless, of course, you can point out where anyone wrote that RE professionals had absolutely no blame for "the current market conditions," whatever that means.
Borrowers have no right to rely on a real estate agent's prediction that property values will continue going up, nor on the prediction of a mortgage broker that the borrower should be able to refi before the ARM adjusts.
Anyone who thinks that once they hear that claim made, they can close their eyes and be irresponsible is just that. Nor can a borrower cede all responsibility to a real estate agent for determining whether something is a "good purchase." All the warning signs were there for buyers. No one forced them to extend beyond their means or to buy a house at all, for that matter. I'll say it again. If you're not willing to accept the responsibility of your own decisions, you shouldn't participate in risky transactions.
I'm certainly not advocating that any lenders or other RE professionals be excused from any fraudulent activities. But the number of cases of actual mortgage fraud committed by lenders is tiny, at least from everything that has been reported so far. Anyone can claim that they didn't understand the terms of the loan, but you can't avoid responsibility for your own actions by being so careless as to not read your loan documents. And if you don't understand the terms, don't sign or hire a lawyer to explain the terms to you. If you don't, the person to blame is the one looking back at you in the mirror.
Depends on why you're walking out. If you lost a job or lost the means to make your payments then no. If it's because you took out a bigger mortgage than you should have yes. It's one thing to walk away if it's through no fault of your own but, entirely, another if you signed up for more than you should have. You should sell, take your losses and learn a lesson in the latter case.
However I still disagree with the highlighted statement. I don't believe for most buyers in this situation that them buying more than they are now finding out they could have afforded was a result of greed; i believe it was a result of misinformation. When lenders were trying to push ARMS up my a$$, I can honestly tell you that NOT ONE of them said by the way...in three years when the fixed period is up your loan payment will begin to very based on prime plus this, that or whatever and therefore your payment could increase $500, $700, $1000 a month. I still firmly believe there was a general lack of ethics with the various industries I noted above during this timeframe. All many of them saw was the mighty dollar.
Coming from someone who has railed against generalizations, the bolded comment takes a lot of nerve. And omg, you're trying to tell us that you didn't know what the "adjustable" in adjustable rate mortgage meant? Did you even ask why those loans had lower initial rates than the fixed rate loans? And you were trying to impress us with some general reference to your resume? Please.
If someone bought a house, even if it was affordable at the time, and didn't have a secure job or for whatever reason was at the risk of having to move within a few years, that is their own fault. Buying any property, RE or otherwise involves risk. People just need to be responsible for your own actions.
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