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The lenders are 100% to blame in this BECAUSE it was VERY WELL KNOWN that the money they were lending was to absolute delinquents of the lowest order with no income and zero history of fiscally responsible behavior. This was not some devious plan orchestrated by the borrowers to scam the bank. These are DELINQUENTS and this is how they act normally. The banks knew everything VERY WELL and despite this played this game because of their greed. The handed out what was essentially *free* money.
The expectation that they would get it back was ludicrous given the quality of borrower. If I give $100 to a homeless man and he gives me his word that he will return it am I not an absolute fool if I expect to get my $100 back? And if I cry around that I am not getting my money back people will TELL ME that I am a fool for giving it to him in the first place and to *deal with it*.
This Youtube view sums up the whole thing quite nicely:
K.. roaming red (no surprise you are an atheist!!).. And these comments are not directed to you RoamingRed.. we know you have NO feeling whatsoever!!
I'm not sure why RoamingRed and I have to keep simplifying this concept:, "Neither a stupid borrower nor a lender be".
PS Hey, RoamingRed. It doesn't matter what religious beliefs we have. When they disagree this vehemently, sooner or later they start yelling, "Crucify him, crucify him!".
My husband and I are getting ready to sell our house. We have about 30K of equity in our house, but the market is not good so I'm not sure if we will get any of that back. However, we have children and when it comes down to it putting food in their mouths comes before anything else.
Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
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As the OP, I, originally, did ask about deliberately walking away, however, as the thread has progressed, it can be added should one walk away depending on your personal situation? In a way, that would be "deliberately" walking away, although not with malice. I think this thread has brought up important points. Thanks!
I personally would not walk away,If I had to choose what bills were to be paid I would pay my mortgage,necessary utilities and food.I would dump the cell phones,internet be extremely frugal.If need be credit card companies would wait for their money,but they would get paid.To me the house comes first.
I personally would not walk away,If I had to choose what bills were to be paid I would pay my mortgage,necessary utilities and food.I would dump the cell phones,internet be extremely frugal.If need be credit card companies would wait for their money,but they would get paid.To me the house comes first.
Someone just posted a YT video for a call in radio show. Interestng stuff.
The host mentioned the possibility of "write downs" of mortgage principal. For example, if you have a 400K mortgage and recent comps show up as 300K from a downward market trend, the bank could write down 100K of the mortgage in exchange for 10 or 20K cash as a good faith the borrower will stay in the house and take care of it rather than having little to lose by "walking away".
He also takes a jab at Dave Ramsey, but that's another deal.
Almost 10 minutes, but REALLY good material and leaves you thinking. I do feel bad for the poor guy who called in.
Peter Schiff has it right. Once you take away the myth that owning a house is the ticket to easy street and equity building-by-default you take away the incentive to put any stock in the purchase of a home. Putting a lot of cash down on a property nowadays is stupid. Borrowing against the property in hopes to get in it is also stupid. The wise thing to do is to rent to your comfort level, instead of trying to buy onto your comfort level.
Of course this will never take on since we as a society have a huge entitlement complex, which is being shattered more every day by the inflatonary pressures of the weakening dollar and the fed reserve kicking the money-printing machine into "ridiculous speed" (I love Spaceballs lol). This market is adjusting and needs to continue to adjust. This won't sit well with people with 20+% down on their homes, and it won't sit well with the adjusting ARM crowd either. Those who will come out unscathed out of this mess are the people who do not look at homes as an ATM machine, don't have an entitlement complex of owning a 50%-above-median price home for your area as a first house, and don't put a whole lot of cash into a house just to see it evaporate and then cry about life not being unfair. The more you think of a house as an asset that CAN depreciate the more conservative you will be in investing your cash and the less starry eyed you will be about some picket fence dream.
There is no sense into holding on to a house that's upside down, but that's the person's own fault and the credit hit the individual takes on foreclosure is a lesson learned. I for one will continue to rent happily until prices drop to where I can comfortably own a house I enjoy, while preserving a stable savings plan. And the issue with households with kids is also a self-appointed one. I know people with children who rent happily. Don't like living in apartments or small houses? Don't have 6 kids. you have six kids and need a 5 bedroom house but don't want to live in the projects that's your own fault too.
Ok off the soapbox lol.
Does anyone know if a bank will do a mortgage principal writedown if it will affect your credit?
Good question. I never thought of that. Peter's theory has yet to play out on a wide scale and your mileage may vary, but I'm sure some lenders are doing it. It's a negotiation tactic for sure to bluff a lender into believing that you'll mail the keys back in if they don't agree to a writedown.
Keep in mind they won't give you one for free even if they offer it. You have to offer something as incentive. Perhaps 10% of the principal write down in cash. So, if you want a 100K writedown, offer 10 or 20K in cash for trade. In that case, I cannot imagine why they'd ding your credit but anything's possible.
Best of luck to you!
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