If your mortgage was too far "underwater", would you ever consider a "strategic default"? (short sale, foreclosure)

[sonarrat]

No. If I could afford another property, I'd just go ahead and buy another one and rent it out. Real estate is not meant for speculation, it's meant to be the ultimate "buy and hold."

[mateo45]

So just for curious, does all this mean that things like bankruptcies, mortgage defaults, and (temporarily) tanked credit scores are getting to be not such a "big deal" anymore, at least as far as public opinion, or "discretionary decisions" like hiring and landlords, etc.?

[Curmudgeon]

Originally Posted by sonarrat

No. If I could afford another property, I'd just go ahead and buy another one and rent it out. Real estate is not meant for speculation, it's meant to be the ultimate "buy and hold."

Hear! Hear! Our house is our home and was purchased just for that purpose, not as an investment.

Originally Posted by mateo45

So just for curious, does all this mean that things like bankruptcies, mortgage defaults, and (temporarily) tanked credit scores are getting to be not such a "big deal" anymore, at least as far as public opinion, or "discretionary decisions" like hiring and landlords, etc.?

I think that at some point in time the chickens will come back to roost!

[NewToCA]

Originally Posted by mateo45

So just for curious, does all this mean that things like bankruptcies, mortgage defaults, and (temporarily) tanked credit scores are getting to be not such a "big deal" anymore, at least as far as public opinion, or "discretionary decisions" like hiring and landlords, etc.?

I don't know, but I hope not. I suspect those going through the process are assuming that so many folks will have their scores lowered that what is considered an acceptable risk by lenders will be altered too.

They might be right, but hopefully they will find this not to be true.

[EscapeCalifornia]

Originally Posted by NewToCA

I don't know, but I hope not. I suspect those going through the process are assuming that so many folks will have their scores lowered that what is considered an acceptable risk by lenders will be altered too.

They might be right, but hopefully they will find this not to be true.

Lenders are actually tightening their requirements. But remember, the impact on one's credit score lessens with time and eventually the bankruptcy or foreclosure falls off completely.

[jbunniii]

I think strategic defaults are great, for two reasons. One is that more distressed inventory on the market will help bring prices back to normalcy; the other is that it will encourage lenders to adopt more sensible lending standards in the future instead of loaning to everyone with a pulse. That's great news for anyone who wants to buy a house but doesn't want to see prices driven up by jackasses who can only temporarily "afford" what they are bidding.

[LexusNexus]

The country is still reeling from the residual effects of a disastrous George Bush presidency. It will take time to regain footing, but this is well on the way to happening under this administration. President Obama's presidency will have a positive impact on the fortunes of California I believe.

I don't believe in "walking away" from mortgage obligations. Ruining your credit is never a good option. I would try to rent it first for a year before selling it. Better to preserve my credit rather than live like a mope for the next 7-10 years, struggling in vain to regain creditworthy respectibility.

[EscapeCalifornia]

Originally Posted by Alexus

The country is still reeling from the residual effects of a disastrous George Bush presidency. It will take time to regain footing, but this is well on the way to happening under this administration. President Obama's presidency will have a positive impact on the fortunes of California I believe.

I don't believe in "walking away" from mortgage obligations. Ruining your credit is never a good option. I would try to rent it first for a year before selling it. Better to preserve my credit rather than live like a mope for the next 7-10 years, struggling in vain to regain creditworthy respectibility.

So its better to lose money every month renting it out and living like a mope trying to stay afloat paying on a property that's hopelessly under water?

[LexusNexus]

Originally Posted by EscapeCalifornia

So its better to lose money every month renting it out and living like a mope trying to stay afloat paying on a property that's hopelessly under water?

If you can convert it to a business (property that you are renting out, not your primary residence), you can write off the losses as business expenses. Presumably, with someone else paying a portion of the mortgage each month, you should be able to make up the difference to preserve your credit and meet the monthly obligation. Find a cheap place to rent, then reevaluate in a year. If the situation hasn't improved, sell it through a short sell. The bank has two options: It can write off its loss (diff between what it received from the sale of the place and what is owed) and add it to your income for the year or it can forgive this difference. If they add as income, you can offset this with claims for business expenses. If they forgive, you still claim the business expenses.

There is also no guarantee that the property will remain "hopelessly underwater" during this post-Bush recovery, even with Republican obstructionists doing their best to stall progress. This is Republican anti-Obama think and it has no basis in reality.

[Curmudgeon]

Originally Posted by Alexus

he country is still reeling from the residual effects of a disastrous George Bush presidency. It will take time to regain footing, but this is well on the way to happening under this administration. President Obama's presidency will have a positive impact on the fortunes of California I believe.

There is also no guarantee that the property will remain "hopelessly underwater" during this post-Bush recovery, even with Republican obstructionists doing their best to stall progress. This is Republican anti-Obama think and it has no basis in reality.

How refreshingly non-partisan of you.

I guess the annointed one is the answer to all our dreams! How did the country last and prosper for over 200 years without him?

Be real!