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The housing crash has come to this: With so many Americans owing more than their homes than they’re worth - in some cases hundreds of thousands of dollars - more are debating walking away, or halting payments they can afford and waiting for foreclosure.
Statistics don’t exist because no one declares their reasons for walking away, but a handful of papers have suggested that there’s something to the anecdotal reports about borrowers “strategically” defaulting on their mortgages.
A top industry consultant suggested today during a meeting with Developments that such defaults may be more common with the younger set (under 30) that didn’t grow up with the pay-your-mortgage-before-everything-else mentality. This generation is more likely to view owning simply as an investment, says John Burns, president of John Burns Real Estate Consulting. Culturally, “it’s more acceptable than it was” during previous downturns, he says.
Indeed. A few months ago in Las Vegas, I met a 26-year-old man who said that in 2007, he put no money down for a $250,000 loan that got him a 1,400-square-foot, four-bedroom home in Northwest Las Vegas. When he spotted a nearby home with the same floor plan-but with a pool and guesthouse - for $100,000, he moved out in January and gave it “back to the bank.”
“Why would I keep paying on a $250,000 loan?” he asked. “I would not ever buy a house again.” (We tried to follow up with this guy, but his number had been disconnected.)
Think about it: If you’re young and unattached, relocating into a rental isn’t that big of a deal. And it may be another seven years before you’re ready to buy again–by then the black-mark is off your credit score. But families have to think about children in local schools, and community ties are more important. For them, a monthly mortgage similar to rent might make staying put - and not having to move an entire household - more logical.
But, should housing prices continue to fall, things could change. Last month, we told you about a professor who argues it’s OK to walk away.
“Homeowners should be walking away in droves,” Brent T. White, an associate professor of law at the University of Arizona, wrote in a discussion paper. “The real mystery is not—as media coverage has suggested—why large numbers of homeowners are walking away, but why, given the percentage of underwater mortgages, more homeowners are not.” (Read his full paper.)
The housing crash has come to this: With so many Americans owing more than their homes than they’re worth - in some cases hundreds of thousands of dollars - more are debating walking away, or halting payments they can afford and waiting for foreclosure.
Statistics don’t exist because no one declares their reasons for walking away, but a handful of papers have suggested that there’s something to the anecdotal reports about borrowers “strategically” defaulting on their mortgages.
A top industry consultant suggested today during a meeting with Developments that such defaults may be more common with the younger set (under 30) that didn’t grow up with the pay-your-mortgage-before-everything-else mentality. This generation is more likely to view owning simply as an investment, says John Burns, president of John Burns Real Estate Consulting. Culturally, “it’s more acceptable than it was” during previous downturns, he says.
Indeed. A few months ago in Las Vegas, I met a 26-year-old man who said that in 2007, he put no money down for a $250,000 loan that got him a 1,400-square-foot, four-bedroom home in Northwest Las Vegas. When he spotted a nearby home with the same floor plan-but with a pool and guesthouse - for $100,000, he moved out in January and gave it “back to the bank.”
“Why would I keep paying on a $250,000 loan?” he asked. “I would not ever buy a house again.” (We tried to follow up with this guy, but his number had been disconnected.)
Think about it: If you’re young and unattached, relocating into a rental isn’t that big of a deal. And it may be another seven years before you’re ready to buy again–by then the black-mark is off your credit score. But families have to think about children in local schools, and community ties are more important. For them, a monthly mortgage similar to rent might make staying put - and not having to move an entire household - more logical.
But, should housing prices continue to fall, things could change. Last month, we told you about a professor who argues it’s OK to walk away.
“Homeowners should be walking away in droves,” Brent T. White, an associate professor of law at the University of Arizona, wrote in a discussion paper. “The real mystery is not—as media coverage has suggested—why large numbers of homeowners are walking away, but why, given the percentage of underwater mortgages, more homeowners are not.” (Read his full paper.)
[quote=KRAMERCAT;11736071]The housing crash has come to this: With so many Americans owing more than their homes than they’re worth - in some cases hundreds of thousands of dollars - more are debating walking away, or halting payments they can afford and waiting for foreclosure.
Statistics don’t exist because no one declares their reasons for walking away, but a handful of papers have suggested that there’s something to the anecdotal reports about borrowers “strategically” defaulting on their mortgages.
A top industry consultant suggested today during a meeting with Developments that such defaults may be more common with the younger set (under 30) that didn’t grow up with the pay-your-mortgage-before-everything-else mentality. This generation is more likely to view owning simply as an investment, says John Burns, president of John Burns Real Estate Consulting. Culturally, “it’s more acceptable than it was” during previous downturns, he says.
Indeed. A few months ago in Las Vegas, I met a 26-year-old man who said that in 2007, he put no money down for a $250,000 loan that got him a 1,400-square-foot, four-bedroom home in Northwest Las Vegas. When he spotted a nearby home with the same floor plan-but with a pool and guesthouse - for $100,000, he moved out in January and gave it “back to the bank.”
“Why would I keep paying on a $250,000 loan?” he asked. “I would not ever buy a house again.” (We tried to follow up with this guy, but his number had been disconnected.)
Think about it: If you’re young and unattached, relocating into a rental isn’t that big of a deal. And it may be another seven years before you’re ready to buy again–by then the black-mark is off your credit score. But families have to think about children in local schools, and community ties are more important. For them, a monthly mortgage similar to rent might make staying put - and not having to move an entire household - more logical.
But, should housing prices continue to fall, things could change. Last month, we told you about a professor who argues it’s OK to walk away.
“Homeowners should be walking away in droves,” Brent T. White, an associate professor of law at the University of Arizona, wrote in a discussion paper. “The real mystery is not—as media coverage has suggested—why large numbers of homeowners are walking away, but why, given the percentage of underwater mortgages, more homeowners are not.” (Read his full paper.)
The housing crash has come to this: With so many Americans owing more than their homes than they’re worth - in some cases hundreds of thousands of dollars - more are debating walking away, or halting payments they can afford and waiting for foreclosure.
Statistics don’t exist because no one declares their reasons for walking away, but a handful of papers have suggested that there’s something to the anecdotal reports about borrowers “strategically” defaulting on their mortgages.
A top industry consultant suggested today during a meeting with Developments that such defaults may be more common with the younger set (under 30) that didn’t grow up with the pay-your-mortgage-before-everything-else mentality. This generation is more likely to view owning simply as an investment, says John Burns, president of John Burns Real Estate Consulting. Culturally, “it’s more acceptable than it was” during previous downturns, he says.
Indeed. A few months ago in Las Vegas, I met a 26-year-old man who said that in 2007, he put no money down for a $250,000 loan that got him a 1,400-square-foot, four-bedroom home in Northwest Las Vegas. When he spotted a nearby home with the same floor plan-but with a pool and guesthouse - for $100,000, he moved out in January and gave it “back to the bank.”
“Why would I keep paying on a $250,000 loan?” he asked. “I would not ever buy a house again.” (We tried to follow up with this guy, but his number had been disconnected.)
Think about it: If you’re young and unattached, relocating into a rental isn’t that big of a deal. And it may be another seven years before you’re ready to buy again–by then the black-mark is off your credit score. But families have to think about children in local schools, and community ties are more important. For them, a monthly mortgage similar to rent might make staying put - and not having to move an entire household - more logical.
But, should housing prices continue to fall, things could change. Last month, we told you about a professor who argues it’s OK to walk away.
“Homeowners should be walking away in droves,” Brent T. White, an associate professor of law at the University of Arizona, wrote in a discussion paper. “The real mystery is not—as media coverage has suggested—why large numbers of homeowners are walking away, but why, given the percentage of underwater mortgages, more homeowners are not.” (Read his full paper.)
Hi
I was informed that if you have a foreclosure your credit card co. can/will freeze your cards. Any truth to this??
Credit card companies can do this at any time with no questions asked.
Yes, CC companies will do a soft pull, taking a look at your current credit file and if they see any derogatory info on the report they will close your cards and may demand payment in full.
If you have a very legit reason for a foreclosure it is best that you add a comment to your credit file in case they pull the file they will see an valid explanation.
You must have some decent credit cards to rebuild your credit score after a foreclosures so do whatever you can to keep any decent cards open with zero or low balances.
Why the **** would you give a house to someone who cannot promise or prove they will pay you back?
I have a background in credit and financing and seen this coming a long time ago. I saw people with FICO scores in the 400's getting home loans and that is scary.
Loaning to people who had did not even have a savings account open and many times had no checking account. No background of financial responsibility at all but they were getting 200-300k homes with no money down.
I have a background in credit and financing and seen this coming a long time ago. I saw people with FICO scores in the 400's getting home loans and that is scary.
Loaning to people who had did not even have a savings account open and many times had no checking account. No background of financial responsibility at all but they were getting 200-300k homes with no money down.
I am young but I rank "excellent" in all 3 credit scores. Know why? I pay my bills on time and only buy within my means.
It is not that hard people. BUY WHAT YOU CAN AFFORD.
Why did they lend to these people who did not even have an account open? Would you lend your $20 dollar bill to a friend who is known for not wanting to work and get money? Would you lend your friend your car when you know he is constantly pulled over and has been in many accidents?
Last edited by Randomstudent; 11-22-2009 at 10:04 PM..
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