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Before all the members nail the walk-a-ways hide to the wall consider this.......
More than few of the walk-a=ways are quitting on houses that have lost so much value that all their doing is throwing good money after bad. When they have to stay they pay the price they bought the house for in the past not at todays value!
By doing this they are making the banks richer since the banks get the "in the past" price while the homeowner gets screwed big time taking all the value loss right in the wallet!
To be really fair banks should re-adjust the mortgage to reflect todays value but , as we all know, there's no way in hell their gonna do that. So people just walk away figuring, correctly, that their investment is a total loss so why throw more money at it?
One more point......
IF the lenders "get tough" with people that can pay but have a house worth less than what they paid this will set off the second wave of housing collapse as more people come to understand they are in a no win loan. This a case where the banks need to absorb the loss of value due the fact that the banks 'cause the first housing collapse.
WAH! Nobody guarantees that a house will appreciate! Why should the bank or the rest of us take a bath because they bought a house at the wrong time? And don't give me that "we had to" crap; YOU NEVER HAVE TO BUY A HOUSE. YOU CAN RENT.
No sympathy if you walk away but can still pay the mortgage. Tough.
The new lending laws and the new banking polices will in the end reflect just such changes.Its like the new credit card rules;the real effect is that banks will do what the real intent is;choke off credit to those at risk.That si what the real effects are. just as past policy actaully encouraged the opposite.Geithner testified to congress that they are not encouaging banks to save peoples homes that can not afford them. He said the nation needs to get back to the historical 65% of homeownership before the bubble.
See, this is EXACTLY the problem: People DO need to sell who bought at the top (unknowingly). Some need to move NOW for a job opportunity but are so upsidedown through NO fault of their own (due to the foreclosures around them), and they can't afford to bring cash or their life savings to the table. We're able to rent ours out, albeit, at a huge monthly out-of-pocket loss; some cannot do that and they will walk. People will always pick a job opportunity over a house. Why don't the banks or the gov't try to help that group? The ones who just need to sell so they can move, which ironically helps somebody in the new town, by renting or buying THEIR home? AND... here's a bonus: they stay off unemployment b/c they are able to move and take the new job!
It's all such a sad mess. Instead, they just keep giving incentives to 1st time buyers, move-up buyers, and modifications to those will eventually de-fault. I see this becoming a bigger problem in the next couple of years. People will just give up; with each walk-away, your house just keeps losing value and the inventory piles up.
Well back in 1986 when the oil and gas industry bust my parents could not sell their house in Oklahoma. The US Army was sending us away no matter what so they rented it at a loss compared to their mortgage payment. And yeah for a few years financially it was not great times. But they did what they had to do. Finally years later they paid it off, rented it for years and then sold it finally.
We did what we had to do and in the circumstances it was not a wise choice they bought that house. But they owned the problem and worked it out.
The problem I see today is people can't think beyond what is on TV tonight and think years down the road. And yes everyone makes poor financial decisions. Everyone makes mistakes and it's a way to learn. Some people need to learn and own up to it rather than getting a free pass. So they have it a little hard, well who doesn't?
The new lending laws and the new banking polices will in the end reflect just such changes.Its like the new credit card rules;the real effect is that banks will do what the real intent is;choke off credit to those at risk.That si what the real effects are. just as past policy actaully encouraged the opposite.Geithner testified to congress that they are not encouaging banks to save peoples homes that can not afford them. He said the nation needs to get back to the historical 65% of homeownership before the bubble.
Well I hope so.
It seems in recent years the credit risks are partying hard and getting to be irresponsible while the people that manage their money wisely take it in the butt.
Like many other things in life, it's a business decision. If you live in a non-recourse state and would be better-off financially if you walked away, then do it. The lender has legal recourse under the terms of the contract that both parties agreed to follow.
Attempts to bring concepts like "morality" into this whole mess are misguided and misapplied.
See, this is EXACTLY the problem: People DO need to sell who bought at the top (unknowingly). Some need to move NOW for a job opportunity but are so upsidedown through NO fault of their own (due to the foreclosures around them), and they can't afford to bring cash or their life savings to the table. We're able to rent ours out, albeit, at a huge monthly out-of-pocket loss; some cannot do that and they will walk. People will always pick a job opportunity over a house. Why don't the banks or the gov't try to help that group? The ones who just need to sell so they can move, which ironically helps somebody in the new town, by renting or buying THEIR home? AND... here's a bonus: they stay off unemployment b/c they are able to move and take the new job!
It's all such a sad mess. Instead, they just keep giving incentives to 1st time buyers, move-up buyers, and modifications to those will eventually de-fault. I see this becoming a bigger problem in the next couple of years. People will just give up; with each walk-away, your house just keeps losing value and the inventory piles up.
This is absolutely 100% correct! some people do NEED to sell their homes NOW due to job relos,etc....
Have to use all of the foreclosures as comps to their homes due to all of the people who have chosen to walk away....
I say "good" if the banks are able to go after those that walked away simply because they didnt' want to pay their mortgage anymore. The problem is; how do you prove that is what happened?
We know people who did just walk away, they put all kinds of money into their brand new home, new pool,new flooring, ,etc.... and then they couldn't keep up with their idiot mistakes and walked away...
They are now living in a resort community , living the high life ,renting a beautiful home and living life as though that house just never existed.
How is that fair to those of us that do have to sell our home? their home sits empty because they decided they didn't want to pay for it anymore and continue to live their lives as though all is great and others cant' sell their homes and get on with their lives...
Again, it is the responsible ones that are suffering in all of this. The others just don't care.
To be really fair banks should re-adjust the mortgage to reflect todays value
By this extremely twisted logic I assume that when I bought a house in Phoenix in 1998 for $155k that shot up to $365k in 2005, I should have contacted the bank when I sold it so we can adjust the mortgage upward since the house is worth more?
Well, big banks and corporations walk away from real estate deals all the time, and then are often lauded for "making a good business decision", so to speak. Yet, when an individual homeowner does it, they are criticized for their "immoral" behavior. Isn't this an unfair double standard?
The following is a link related to this topic regarding this very double standard:
They already are, except in non-recourse states. People that think they walked away - suprise!!! If you "walked away" you have a nasty suprise coming up, maybe tommorrow, maybe in a decade when you think you are free and clear. Banks are selling these loans to debt collectors for the difference in the short sale, pennies on a dollar, but these collectors will find you - and you just know they will not give up haunting these people until they are dead. I think a whole industry will be created for this purpose alone.
correct, Arizona is a non recourse state, never go after anyone for walking.
correct, Arizona is a non recourse state, never go after anyone for walking.
Correct as far as Arizona being a non-recourse safe walk-away state, perhaps, but no so much about the rest of DD's Gonna-Getcha-Hauntcha-Forever hype.
All states have some limitations of time for actions to bring collections suits. Varies by state. Typically around 4 years, IIRC the longest is 6 years. That is the limit to bring a civil suit for collections.
This is not to be confused with time to collect if one is awarded a court judgment -- which is typically around 10 years. But to even get a judgment there must be a successful civil suit brought and won with a a judgment awarded, first.
Another area of confusion on this is "how long on a credit report?" Typically 7 years max. 10 years for tax liens.
Overall, the banks are way too busy trying to stomp out their own fires, first.
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