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Your creditors can, and probably will, come after you at some point, unless your obligations are forgiven in bankruptcy. You will only exacerbate your situation if you buy another property, while planning to let another one go in foreclosure. Mitigating damages would be looked upon much more favorably than escalating your debt.
Creditors can come after you for a long time and they can continue to tack on fees and charges. If you don't file bankruptcy, you could be summoned years down the road. Lenders don't have to let you do anything beyond what your contract states, and foreclosing doesn't necessary end your obligations. Your lawyer can best advise you.
Beena, I have the upmost respect for your convictions.... Thank you......
formerLVguy, 1st off - Our house will be paid off in 9 yrs... so I don't rent and to quote you "If I buy another house and default on the first, the the economy is even. Get my point?"
Yeah, I get that point, but answer this question - Who covers the loses you had from your previous house? Do you think all these businesses are going to just say We will eat all these costs? Should people not be responsible for any shortfall on the amount they owe on the loan? That would be like borrowing money to play the stock market and saying - oops I have lost alot of money, I think I will walk away......
My wife and I could have jumped on this bandwagon and sold our current house to get the big new house, but we made the decision to be fiscally responsible and not do it. We also show this coming years ago as you can't have those appreciation levels w/o corresponding income gains.... So we also are going to suffer from higher costs because of other people's decisions.
So, I guess to answer your questions, foreclose or not, as long as you make good on
your promise to pay back the loan, if there is a shortfall pay it back over time.....
You must be joking. Do you think anyone buys a home and arrives at their purchase price by taking what they can qualify for and then dividing it by 2? Get real.
Yes. And there are also people like me who buy outright. It's the ones that planned ahead that are going to unfairly bear the burden of the ones that didn't. Granted, there are certain circumstances that are beyond anyone's control -- an unexpected large medical debt for instance. People in that situation cannot be faulted. But buying high and expecting things to never change unless they're in your favor is just asking for trouble.
All the signs were in place to point to the fact that the housing bubble was going to blow -- as far back as 2002 it was pretty plain even to the general public, as long as they chose to see it -- which most of them did not, but allowed themselves to be swept into the frenzy of greed-buying. And now, not only are you looking foolish and feeling the pain of your bad financial decisions, but those decisions and the poor decisions of all the other people in your situation are going to affect the rest of us.
Thank you goodbyehollywood for sticking to the point of my thread.
den1jen, if you read the entire thread you will see that I am being as fiscally responsible as I can, given the situation. Going into foreclosure is my last option. The purpose of this thread to evaluate the worst case scenario of decisions I will be making in the next 6 months. As to who will cover the costs if I default, here's how it will break down:
The condo will go into a foreclosure sale/auction, of the the $329,000 debt, probably $270,000 will be recovered. The balance plus fees are business expenses. Business expenses that one is aware of when one makes the decision to start a business originating loans to purchase homes. Will the lender come after me for the balance? Should the lender come after me for the balance? What about all the homes the lender foreclosed on where the unfortunate homeowner that my friend RoaminRed mentions succomed to circumstances beyond their control? Homes where the lender kept the borrowers equity? Even if the lender didn't keep the unfortunate borrower's equity, they still lost a hell of lot it in the foreclosure sale/auction, and then if there was any equity left after that our good lender soaked up the rest in legal fees, collection fees, etc. Forgive me if I'm not sympathetic to lenders. Trust me, the banks, mortgage brokers, insurers, all have plenty of blood on their own hands.
By the way, people borrow money every day to play the stock market. Geezzz, are you kidding me? How many people get burned everyday by someone that claimed to be a wall street guru, only to lose all the money they were given to invest. You think I'm not bearing any costs here? Like my thread states, I've lost close to 30K already! 30K in cost to float this condo for the 18 months I haven't occupied it.
Good for you for buying small, but who said I bought big and beyond my means? I could have qualified for a $600,000 house at the time I bought the condo, for the record. That's what you people that aren't caught in this housing mess don't understand. You don't know how quickly things changed, you have no idea of what it's like to be in this position. Keep judging my friend, I hope you never have to take off those rose colored glasses.
RoaminRed, you paid cash for your house? Aren't you going to feel dumb when you go to sell the house you paid 300K for and you can only get 100K? All of you high and mighty types need to be thankful that you are in the situation you are in now. But "now" is the key word here. We'll see how your tune changes when change comes a knockin'. One last thing, RoaminRed, I'm not feeling foolish but I am feeling the pain of the situation I'm in, there's no doubt about that. But don't forget you're judging me on hindsight. When I bought that condo in 2005, don't forget that I was the sales agent selling for the developer of the condos. From the time I went under contract to the time I closed, we were selling similar condos for $375,000, and the last phase went for $402,000. And I bought it for $250,000, you're telling me that was a bad decision? If so, I'd like to know what a good decision is. Maybe RoaminRed is really Warren Buffet incognito, becaues he sure is a financial genius.
Let me answer your next question before you ask it...
There were two reason I didn't sell it when they were going for $402K. First, it was my home. Second, the developer had a deeded speculation clause, whereas buyers couldn't sell their unit for one year without giving the gain to the developer. Once I realized I needed to move it was too late to sell. When that poor buyer that paid 402K closed on his new condo, I was trying to sell mine at 349K. Do you think his agent, or his lender, or his appraiser told him not to buy because the same unit is on the resale market for 50K less? No. One of the buyers that paid 402K bought two, one cash and one financed. That poor guy is 80K worse off than me per unit!
Maybe RoaminRed is really Warren Buffet incognito, becaues he sure is a financial genius.
Not hardly. But I have zero debt and I do have both liquid and investment assets, so apparently I've made one or two good decisions along the way despite everything. If an idiot like me can do it, anybody can.
You must be joking. Do you think anyone buys a home and arrives at their purchase price by taking what they can qualify for and then dividing it by 2? Get real.
Why shouldn't I buy another house? If every person and/or entity that ever walked away from a loss was guilted into not moving forward again by people like you then this country would get nowhere. This is my 6th priniciple residence that I've owned, and the first I've considered defaulting on.
Besides, what better thing could I do for the housing market than buy another house? If I default on this house, and then rent, the economy is -1, and that means one more inventory home. If I buy another house and default on the first, the the economy is even. Get my point?
I don't get your point...if you rent 'someone' owns the house you're renting. You're going to occupy only one home so I don't see how you purchasing a home vice renting helps the economy. Every rental home is going to have to be purchased by someone so you can rent from them.
And to answer your question...I certainly considered 'what if I lose my income' prior to purchasing my home and this determined how much home I bought.
So, I have floated this condo for 18 months without occupying it, and you are trying to tell me that I shouldn't have bought it if I couldn't carry it for more than 18 months? Lenders seek 6 month reserves when underwriting a loan. I've tripled that, and can go on longer if I decide that is the best course to take. Again, this thread is about the financial consequences of foreclosure.
As for the equation. It's pretty simple to figure out...I won't defend other than to say one could rent an apartment, not necessarily an investment owned property. If you want a detailed answer, I would remind you that our population grows by 1 million every year, so that's plenty of bodies to fill rental properties. The sooner we trim the inventory of homes to sell, the sooner we'll get through this mess. If I foreclose and rent that's really -2 for the housing market; the house I left, and the house I could have bought.
Stop knitpicking.
Last edited by formerLVguy; 02-22-2008 at 11:14 AM..
1) What about the 75K equity loan you took out, was all that money put back into the house? How does that factor into this? Why 6 months after buying did you take a large loan against the house?
2) 1st you call it a home and then in your reply to me you relate how anything not recovered is a business expense, which is it?
3) So you aren't sympathetic to banks, lenders, etc... Well don't you think I am paying for the attitude down the road? You think anybody that is in business can stay in business very long by eating losses/expenses or do they pass them on?
4) While you are bearing some costs now, should you not bear all costs if you get rid of it one way or another? Refer back to Beena's post he paid off what he owed...
5) Not a question, but a comment....
As to buying small, not knowing what how quickly things change, well I suggest you please ask before making comments that I don't know what it is like.......... I lost a job during a economic downturn just after we bought our 1st house, she wanted to stay at home to raise the children (2), so I ended up working 2 jobs to make ends meet for far longer that I wanted, but even then we looked at the 'what if' scenarios before buying so it was painful, but we planned ahead. I know what it is like.....
6) You speak to RoaminRed about paying cash and talk about getting less than what he paid, do you know if he is trying to sell? If he is not trying to sell than it is not relevant what he could get for it, is it?
7) Your last question to RoaminRed about buying for 250K and being a good/bad decision, who knows for sure, but ultimately it was your decision and shouldn't you
be responsible for that decision? You had access to the same information that I had and you came up with a different result than I did regarding the housing market......
1. answer is stated in the thread.
2. its a business expense for a lender when they write off bad debt, see thread.
3. yes, if you measure the risks vs. the reward properly.
4. no, my lender and I went into this hand in hand. The loan is secured by real property, see thread.
5. good for you, this is my thread, start your own.
6. I said "when" he sells, see thread.
7. I had better information than you - I was selling the same condos and I had all the behind the scenes information that every buyer wishes they had, but I was caught in a market landslide, you just don't get it...
Furthermore, THIS ISN'T ABOUT WHETHER IT IS RIGHT OR WRONG TO GO INTO FORECLOSURE, IT IS ABOUT THE FINANCIAL CONSEQUENCES OF SUCH A DECISION!
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