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Old 06-13-2008, 07:54 PM
 
Location: Heartland Florida
9,324 posts, read 24,754,781 times
Reputation: 4969

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Good for them! Dump the overpriced home and get one you can afford. Hopefully this helps accelerate the real estate price declines. The sooner this stupid bubble pops the better we all will be. My life has been almost on hold for the last 4 years because of this stupidity. We have to develop new sources of energy, new ways to work and new ways to improve our food supply. The sooner the real estate money drain is dead, the faster we can make progress again.
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Old 06-13-2008, 08:12 PM
 
Location: Chino, CA
1,458 posts, read 3,061,976 times
Reputation: 555
Quote:
Originally Posted by tallrick View Post
Good for them! Dump the overpriced home and get one you can afford. Hopefully this helps accelerate the real estate price declines. The sooner this stupid bubble pops the better we all will be. My life has been almost on hold for the last 4 years because of this stupidity. We have to develop new sources of energy, new ways to work and new ways to improve our food supply. The sooner the real estate money drain is dead, the faster we can make progress again.

I'm not sure how them buying another home and dumping their current one would make the bubble pop faster... please explain? Them buying, makes the prices of the house they buy stabilize... and the area they leave worse. It's just a property/wealth transfer (making the new area better while making the old area worse). If they foreclosed on their original place... and wasn't able to buy another place... then I could see that making prices and the bubble drop faster. I think it'll just make desirable/better areas prices stabilize and make bad area into slums/ghost towns. Meanwhile those wanting a better area gets screwed.

-chuck22b
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Old 06-13-2008, 08:17 PM
 
Location: Heartland Florida
9,324 posts, read 24,754,781 times
Reputation: 4969
If they pay far less for a new home than their old one was "worth" it would tend to cause others to doubt the value of real estate and help increase fall of values. Then when the old place is foreclosed and comes up for sale it will be worth even less than the new one sold for. This could also remove some demand for rentals, which would tend to be hard on investors who need rental income to keep them afloat.
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Old 06-13-2008, 09:57 PM
 
Location: Chino, CA
1,458 posts, read 3,061,976 times
Reputation: 555
Quote:
Originally Posted by tallrick View Post
If they pay far less for a new home than their old one was "worth" it would tend to causeothers? do you mean their neighbors? they're the ones that are going to be "surprised" when the lawn starts dying... and the house becomes REO. I don't think people usually announce that they are going to walk away. So there wouldn't be any pre-foreclosure price depreciation. Also, the foreclosure would of happened either way whether he stays or goes... and the price at the old place would of depressed accordingly. If you mean the new place... they don't know anything about the old place.. and the neighbors assume that the market is picking up. to doubt the value of real estate and help increase fall of values. Then when the old place is foreclosed and comes up for sale it will be worth even less than the new one sold for. This could also remove some demand for rentals, which would tend to be hard on investors who need rental income to keep them afloat.
not sure if I follow your logic.... if they leave the current place.... no one at their previous place would know that they left until it forecloses. meanwhile, the place that they buy a new place people would think that there is interest in that area and assume that the market there is stabilizing.

here's the math:
Buy another house, then foreclose:
Buy +1
ForeClose -1
= 0 net gain or lossed ... meaning a transfer of wealth between the old place to the new place - zero-sum gain

Loose to foreclosure:
ForeClose -1
= -1 = general loss in market, and prices depreciate in one location... no gain in another location.

Short Sale, then purchase:
Short-Sale: -1
Buy +1 = 0 net gain or lossed... also a transfer of wealth but the person would have a reduced hit on their "good" credit

The only thing I see with the buy then walk, is that the person has no responsibility, and doesn't care about their credit.

-chuck22b
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Old 06-14-2008, 08:18 AM
 
Location: America
6,993 posts, read 16,063,164 times
Reputation: 2083
^^

Well that and the fact it will decrease home prices in the old neighborhood. Thats a good thing though given these properties are over valued.
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Old 06-14-2008, 09:13 AM
 
5,413 posts, read 10,364,845 times
Reputation: 4503
Quote:
Originally Posted by chuck22b View Post
not sure if I follow your logic.... if they leave the current place.... no one at their previous place would know that they left until it forecloses. meanwhile, the place that they buy a new place people would think that there is interest in that area and assume that the market there is stabilizing.

here's the math:
Buy another house, then foreclose:
Buy +1
ForeClose -1
= 0 net gain or lossed ... meaning a transfer of wealth between the old place to the new place - zero-sum gain

Loose to foreclosure:
ForeClose -1
= -1 = general loss in market, and prices depreciate in one location... no gain in another location.

Short Sale, then purchase:
Short-Sale: -1
Buy +1 = 0 net gain or lossed... also a transfer of wealth but the person would have a reduced hit on their "good" credit

The only thing I see with the buy then walk, is that the person has no responsibility, and doesn't care about their credit.

-chuck22b
Yeah, we got the part about not caring about credit and the "moral" issues (btw, just how does one act "immoral" to a corporation? They are a fictional being and are amoral by their nature).

Here is the price drop mechanism. The established prices ONLY truly drop at the time of the buy and sell transaction. That is what the basis of the estimated values have to finally rest on.

Let's call the To Be Bailed House -- A
Let's call the House they are buying -- B

When ARM Owner A buys House B at a discounted price of down 30 to 40% (already dumped on the market), that is a reduced price sale. That establishes a lower price and therefore, lower value.

When House A -- now bailed from -- goes up for sale, it will also sell (eventually) for a discount. Maybe even 50% as the market is now in full collapse. Again, that low sale price establishes the lower value.

And the downward spiral begins. And we are talking 30 to 50% steps downward. If this spreads, the collapse will go faster than the run-up -- as they often do.

I suspect you get all that, but just do not like it?

And I guess the banks figured they had these folks trapped in their crooked loans?

Here is what the banks missed on their harvest plan -- they forgot to nail the exit doors shut for the folks they planned on screwing with the ARMs.

But watch the banks run to Congress for some emergency Home Owner Screwing -- er, I mean "Bank and Property Value Saving" -- legislation to stop or even force reversal of the activity.
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Old 06-14-2008, 12:02 PM
 
48,508 posts, read 88,794,510 times
Reputation: 18192
I don't know where TexP lives but I'm doing fine as are most peole. he unemployment rate is low and really low unless your in a area with a depressed economy. Nothning like even the 70's recession. Inflation is not bad considering the number of homes being foreclsed and the prce of gas. Heck even their teh europeans have lived with high gas prices for decdes.Its the people that panic that are and will be hurting. Seems like TEXP already is the way he talks.Kind f reminds you of teh peole who panioced at Y2K and predicted doom.
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Old 06-14-2008, 12:20 PM
 
Location: America
6,993 posts, read 16,063,164 times
Reputation: 2083
Quote:
Originally Posted by texdav View Post
I don't know where TexP lives but I'm doing fine as are most peole. he unemployment rate is low and really low unless your in a area with a depressed economy. Nothning like even the 70's recession. Inflation is not bad considering the number of homes being foreclsed and the prce of gas. Heck even their teh europeans have lived with high gas prices for decdes.Its the people that panic that are and will be hurting. Seems like TEXP already is the way he talks.Kind f reminds you of teh peole who panioced at Y2K and predicted doom.
inflation not bad, where in bizarro world? If you are using the CPI to base your argument on then I suggest you do further research into the issue.
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Old 06-14-2008, 12:28 PM
 
2,197 posts, read 6,934,671 times
Reputation: 1698
So the key assumptions that some of you are using is that all ARMs are "crooked" and every person who took an ARM got screwed? How do you figure?

I have taken out numerous ARMS over the years, and I always got exactly what I signed up for. ARMS were very useful tools for the self-employed and those who wanted maximum leverage in an appreciating market environment. The terms were fully disclosed, nobody made it a secret that the loans would be resetting and by how much and the index was clearly specified. In fact, the "spread" was a negotiating point and an easy way to evaluate competing loan products. I had to initial each of these points to confirm that this had been disclosed to me and that I understood all these things. Then I had to sign and date at the bottom. So anybody who DIDN't understand and signed and initialled anyway is getting exactly what they agreed to. They screwed themselves. Making bad decisions and poor choices generally gets you burned.

If the terms weren't disclosed, then it's a different story and, yes, the bank deserves to take the hit. But saying that all ARMS were crooked and all borrowers got duped is just plain wrong. If most people would simply READ their loan docs, they'd find that they're heaping their blame on the wrong doorstep. And if they're not, then few would dispute that they be given recourse.
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Old 06-14-2008, 12:33 PM
 
Location: Texas
4,937 posts, read 7,160,304 times
Reputation: 5512
Quote:
Originally Posted by goodbyehollywood View Post
So the key assumptions that some of you are using is that all ARMs are "crooked" and every person who took an ARM got screwed? How do you figure?

I have taken out numerous ARMS over the years, and I always got exactly what I signed up for. ARMS were very useful tools for the self-employed and those who wanted maximum leverage in an appreciating market environment. The terms were fully disclosed, nobody made it a secret that the loans would be resetting and by how much and the index was clearly specified. In fact, the "spread" was a negotiating point and an easy way to evaluate competing loan products. I had to initial each of these points to confirm that this had been disclosed to me and that I understood all these things. Then I had to sign and date at the bottom. So anybody who DIDN't understand and signed and initialled anyway is getting exactly what they agreed to. They screwed themselves. Making bad decisions and poor choices generally gets you burned.

If the terms weren't disclosed, then it's a different story and, yes, the bank deserves to take the hit. But saying that all ARMS were crooked and all borrowers got duped is just plain wrong. If most people would simply READ their loan docs, they'd find that they're heaping their blame on the wrong doorstep. And if they're not, then few would dispute that they be given recourse.
good post. I'm tired of these consumer's rights advocates that keep pushing this message that people got screwed by big bad banks. the people that signed the loans are just as at fault as the banks that knew these people wouldn't be able to pay back the money when rates reset. Let the borrowers and the banks eat it. I don't give a damn about either party in this case.
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