[nanwalt3]

I've been reading a lot of posts regarding people in foreclosure and people looking to negotiate a short sale on their home that they owe more on than its worth. My question to all of you is, WHAT IS THE SOLUTION TO THIS LOOMING PROBLEM? This is going to have a trickle down effect and impact everyone in this Country if not the World, so don't get smug with the "won't happen to me" attitude. Let's put our heads together and see if we can find an acceptable solution. Discuss the importance of this to HELP find a solution before it happens to anyone else. Let's get REAL solutions that will work for everyone, not just a few!

[Lincolnian]

The solution is to sell houses in trouble to responsible, fiscally prudent, people at a discount (like myself) after you've reduced our principles due for not being a burden on the US economy and punishing innocent people. Lol!

BTW I bought my first home in 1988 at a younger age at the height of the 80s RE market. I had put 25% down and was paying 11 7/8% mortgage. I couldn't refinance when the value of my condo plummeted 40% until I was no longer upside down. I rode it out and saved my money. I sold the condo in 2004 for slightly less than I paid for it shortly before the market would have moved it into positive territory.

I never thought of walking away from my obligations. That experience resonated as I made future investments and learned not to chase a rising market or hold out for top dollar after a long run.

People who made bad decisions should find a way to meet their obligations even if it means taking a second job, not taking vacations, and curtailing discretionary spending.

Oh and I forgot. Did those people buying with a 1.75% negative amortization teaser ARM realize that they could have gotten a 4.49% fixed two years ago on a more affordable house? That's what I convinced my friends to do at the time.

[Momma_bear]

Originally Posted by nanwalt3

I don't know the solution either, but something has to be done. This is like a ticking bomb that we're all standing around and no one knows how to defuse it. Government bailout that'll be the day. If the Banks lose BILLIONS of dollars WOW it'll be like 1929 won't it. What the OP is going thru is something that has the potential to affect everyone in this Country and it scares the sh*# out of me. We all need to bend over and kiss our butts
because as the saying goes, "by the grace of God."

I really think the banks have to engineer the soloution. I think it is in the banks' collective best interests to try to work with owners like the OP and to refinance the loan, at a reasonable fixed rate rather than foreclose on the property and take large hit on the loan. If borrowers who can afford the payments refuse to work with the bank then the banks will have to foreclose.

I think there are a large number of folks who would be able to afford their mortgage payments if their loans were converted to fixed rate loans at a reasonable rate.

[Wendyb0077]

I really don't feel that there is any short term solution to this growing problem. We are all going to have to ride out the storm. The American Dream is to become a homeowner. People will do what they have to do to get that dream. Unfortunately many people take chances and they also listen to bad advise. Then they bail out. Educate yourselves before you buy a home or get a mortgage that you can't afford. Bigger is not always better (homes that is) and low, low teaser rates come back and bite you on the butt. The # one solution to this growing problem is EDUCATION. Think it out before you buy anything and make sure you can make that payment comfortably. If not and you do not have a way to earn a higher income in the future you may have to rent. Best wishes to all!

Originally Posted by nanwalt3

I've been reading a lot of posts regarding people in foreclosure and people looking to negotiate a short sale on their home that they owe more on than its worth. My question to all of you is, WHAT IS THE SOLUTION TO THIS LOOMING PROBLEM? This is going to have a trickle down effect and impact everyone in this Country if not the World, so don't get smug with the "won't happen to me" attitude. Let's put our heads together and see if we can find an acceptable solution. Discuss the importance of this to HELP find a solution before it happens to anyone else. Let's get REAL solutions that will work for everyone, not just a few!

[nanwalt3]

The 3 prior posts have some really good points, 1.) Find a prudent buyer that is responsible and puts money into the purchase. 2.) The Banks have to try to work out a pymt that the current owner can afford, and it needs to be a fixed rate, not an ARM. (Maybe if they stretched the financing to 40 yrs. the current owners may be able to afford the pymt. and not lose their house.) 3.) Education before people buy... (Maybe new buyers or investors should be required to complete a course in regard to financing a home and down pymts and picking out a starter home that will fit their budget. If they can't pass that course then they shouldn't be approved for the mtge.)
I think the only way this situation can be solved, is for the Banks to try alternative financing to get people out of the pymts they can't handle. Maybe if the Bank and Owner split the amount of value that has been lost, and went from there with a re-structured loan, maybe this will keep a lot of folks from going into foreclosure. If the Banks don't start to work with these people they are going to be very busy in the Real Estate market and still lose Billions of $$$$$.

[FlaLadyB]

Originally Posted by nanwalt3

. If the Banks don't start to work with these people they are going to be very busy in the Real Estate market and still lose Billions of $$$$$.

I totally agree but...a very good friend of mine actually went to the bank and asked about making some kind of arrangement so she would not have to head in to foreclosure. They basically said.. sorry charlie, nothing we can do to help you. To say we both were shocked at that kind of answer is an understatement. Considering that every place you look they are telling people .."go talk to your bank." Obviously not the thing to do since they have that kind of attitude.

Recently there was an online question and answer session with a noted person concerning the market. I posed this question to him and the answer that my friend had received from her bank. His answer was that the banks were not expecting this to happen to this many people and they weren't prepared. He stated that the banks only have time to work with people about to lose their homes, not the ones at the end of the line.

I also asked about the government program for people falling in to the adjusted rate hikes. I was told by a mortgage lender that the only way you can apply for it is to already be BEHIND on your payments, not the ones who want to keep from falling behind. Plus, they had to still be current on all their other bills. Will someone tell me where the sense lies in this thinking?

The banks won't help you till you are already behind and your credit is already ruined. Neither will the government..and its a CRITERIA for help!

My most recent thoughts are that some people, seeing the value of their home go less than what they paid for it, are just jumping ship. If there was some kind of adjustment I am sure they would choose to stay but they are seeing no way out.

[Retiredcoach]

Originally Posted by nanwalt3

The 3 prior posts have some really good points, 1.) Find a prudent buyer that is responsible and puts money into the purchase. 2.) The Banks have to try to work out a pymt that the current owner can afford, and it needs to be a fixed rate, not an ARM. (Maybe if they stretched the financing to 40 yrs. the current owners may be able to afford the pymt. and not lose their house.) 3.) Education before people buy... (Maybe new buyers or investors should be required to complete a course in regard to financing a home and down pymts and picking out a starter home that will fit their budget. If they can't pass that course then they shouldn't be approved for the mtge.)
I think the only way this situation can be solved, is for the Banks to try alternative financing to get people out of the pymts they can't handle. Maybe if the Bank and Owner split the amount of value that has been lost, and went from there with a re-structured loan, maybe this will keep a lot of folks from going into foreclosure. If the Banks don't start to work with these people they are going to be very busy in the Real Estate market and still lose Billions of $$$$$.

If I am a banker, I look at these ideas as throwing good money after bad. I know in the back of my mind that if things get too bad, I have the best backer in the world... the US government. They will serve as my protector to bail my corporation if things go too badly.

Your ideas reflect the optimism of the seventies. The reality of the situation in Florida real estate today is much more dire. For example, let's say that an individual bought a $300,000 home in 2004 on a shoestring budget and with no money down. The home is now worth $250,000 and dropping in value monthly. That is the only aspect of his budget that is truly decreasing, other than the stagnant salary that he has been fortunate to sustain and not lose (but losing buying power continually). His associated home ownership costs have been spiraling upward (insurance, taxes, HOA, maintenance, utilities, etc.) almost daily. His basic life necessities alone are forcing him to make uncomfortable decisions to survive (Maybe this is a reason why crime is also growing/taking its toll).

The bottom line for the hypothetical banker is when do you cut your losses? He has too many borrowers that are being consumed by debt (above/beyond the costs of the mortgage) that he has no realistic means to recover. He is losing money daily due to the fact that the owner of a home in a depreciating economy is holding money that could be utilized elsewhere. He is better served by foreclosing... even at a loss... and lending the reduced proceeds to a more reliable/ profitable borrower. He would be crazy to extend his loan to 40 years... the most significant of life necessities will overrule the monthly mortgage payment any day.

[PATRAIN]

Just walk-away. But, like futuretexan advised, rent first. My brother-in-law just had two co-workers walk on there homes and it freed up a couple of thousand dollars per month for each of them. However, it just happened to be in my b-i-l's subdivision, so, he to is thinking of walking. He purchased his townhome for 212,000. last year and it's now selling for 160'000.00. good luck!

[nanwalt3]

So Retired Coach,,,,You're saying that the Banks will get gov't aid and don't have to worry about losing money? Your comments seem to make a strong case for anyone who's house has decreased in value to walk away and wave good-bye, especially if it was 100% financing. I have no idea why I would want to keep my house under those circumstances??
It seems we've solved this dilema and everyone should start to pack..
Don't you think we will all eventually pay for this in the end? Who allowed the Banks to loan money on a whim? STATED INCOME AND 100% FINANCING, no problem there, right. How would you solve this if the borrowers owed YOU the Money???

[nanwalt3]

The big question is,,,CAN HE MAKE THE PAYMENTS?? You don't walk on the house if it went down in value. You buy a house to live in and most people stay for 5 to 7 yrs. If he bought the house to flip then TOO BAD. If he bought it to live in then stay and things will come around. Some people panic if their house doesn't increase in value in the first 3 mos that they bought it. Relax and live in it the market will right itself. Heck my house took 10 yrs to see any appreciation, but it was MY HOUSE and my pymts didn't go up. With rent you can always count on it going up.

Originally Posted by PATRAIN

Just walk-away. But, like futuretexan advised, rent first. My brother-in-law just had two co-workers walk on there homes and it freed up a couple of thousand dollars per month for each of them. However, it just happened to be in my b-i-l's subdivision, so, he to is thinking of walking. He purchased his townhome for 212,000. last year and it's now selling for 160'000.00. good luck!