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Good luck renting if they run a credit check.. also get ready for a whopper of an increase in auto insurance and possibly being passed over for a potential job. to boot that property would probley even appreciated over time to make this drop a moot point.
getting caught in a down turn happened to me 1n 1987 when i bought my first investment property 2 weeks before the stock market crash.
that killed real estate, when the smoke cleared i was down 30%.
today even after our drop id gladely take a few more of those properties at that peak price i payed back then ... they are up so much i dont even remember the drop back then usually
Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That's freeing up cash to use in other ways. Ms. Richey's family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. "We're saving lots of money," Ms. Richey says.
When you are living in a home and not paying your mortgage it opens up a lot of new money for fun things to do. I wonder if that money could have been used towards their car paymet or credit cards ?
And our govt wants the banks to work with homeowners to let them stay in their homes longer before foreclosure.
When you are living in a home and not paying your mortgage it opens up a lot of new money for fun things to do. I wonder if that money could have been used towards their car paymet or credit cards ?
And our govt wants the banks to work with homeowners to let them stay in their homes longer before foreclosure.
Is something wrong here ?
Well stupid is as stupid does. But the only part I see wrong is the banks not kicking these people out of the homes. Otherwise let the people default, their credit will be screwed for years and they will have to rent. Meanwhile they will have more cash on hand but no credit.
I'm sick of the Government bailing people like Mr Richey and Mr Fernendez out. They should pay for their stupid decisions not me.
It's one thing if you've lost your job and don't have the wherewithall to pay your debts...but if you have the ability and resources to pay your debts and you choose not to....
This is steadily becoming the rule rather than the exception....
On the bright side, at least they are not squatting...Yet!
This is steadily becoming the rule rather than the exception....
I don't know about that.
A story about mom going back to work ot kids going to a community college for 2 years instead of away to school does not make as good a story or link to a story, as strategic default.
Nor in mine, at least not in my price range. My house is still worth approximately what I paid for it in 2003. If I defaulted, I would be walking away from about 25% equity.
In addition, it would cost me about $150-200 more per month to rent my own house in my market than it costs me in PITI payments.
Easiest way to fix this particular problem is to go back to recourse loans for those that are unable to show severe financial hardship (i.e. job loss, unexpected medical expenses etc.). Even then, some will be able to show this hardship that arent truly experiencing it, and others will just take the bankruptcy route, but making the borrowers be (truly) responsible for the balance of their loan would make many more people think before they go on cruises with money that is owed to someone else.
This is another situation illustrating the blame can be shared from the government down to the homeowners who are using the extra savings to buy crap they really don't need.
The biggest blame should be laid at the foot of the banks. Everyone knows they are insolvent. They can't seize these homes because that would mean recognizing the losses on their books, which in turn affects the values of other securities they hold or would need to build capital reserves to cover losses for.
So they let people like this think there's no consequences for strategically defaulting.
Let me tell you, when the SHTF in another 1-2 years, that's when the banks that allowed them to walk today will come a knocking looking to garnish wages and claim assets to offset the losses today. CA may be a no-recourse state but I'm fairly sure that's the exception and not the rule. If someone pulled this where I live in Maryland, eventually the bank would come after them with legal action.
If the banks were forced to recognize the losses, it'd be like a band aid, the government could do 1 large bank bailout, and we'd probably be on our merry way. Instead we're looking at something like Japan, where after 20 years of government stimulus and intervention they still face deflation and never really recovered. Of course our problems will be worse since we have no strategic holdings and pay for everything with our bonds.
Expect many more stories like this in 2010 before these people end up homeless in 2011 asking "how did this happen to me".
Also FWIW the rest of the world is on to us...we had a terrible, terrible, 30 year bond auction today. 4.52% and 2.45 bid to cover. Yikes. That is awful.
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