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The problem with your perception though is that you make quite a few assumptions about his scenario. I don't know all of the specifics of his situation, which is why I don't make judgements about it. It is very possible that he is just barely upside down if at all. There are still people out there that due to the credit crunch and tightening guidelines cannot refinance even though they may be right at or just under 100% loan to value. I do know that he did not purchase at peak prices, and I also know that he put a bit of money down from the sale of his first house.
Also, when I say swing back I don't mean that we'll see what we saw for the past few years. What I mean is when the market stops declining and we start seeing some historical appreciation rates again. Again, you assume too much. So, it is possible that in 5 years they may be able to refi into a fixed rate fully amortizing loan, or perhaps sell and break even so he can buy something a little more affordable or possibly rent. Of course this depends on quite a few variables that noone can really predict. For anyone to claim absolute knowledge of the future is pretty ridiculous, IMO.
FWIW, you and I actually are in agreement on most of the aspects of the effects of Alt-A loans that are yet to be seen. I just think that you're wrong about my friend's particular situation, since the alternative is to give up and walk away.
i personally believe that the minute the fed sees sustained appreciation we will be hit with paul volcker style interest rates. imo that will see of any appreciation.
While it may be "unethical" to walk away from a mortgage, a lot of these folks believed it could work for them because a loan officer/bank told them it could. Yes, their own stupidity, but still. "Everyone else is doing it".....
People that walk away from their mortgages are making a business decision. Just like banks and other businesses that default or go bankrupt. This business decision is based on their financial status, not what is "responsible".
I have a friend that is getting ready to walk away from his interest only turned fixed payment loan. It is $3000 a month. His room-mate has left, and he has been laid off as a mortgage broker. He has a daughter. If it means his daughter can eat and he can survive, he has no qualms walking away. It is a financial business decision for his family.
ilovebdj, the losses from all these people walking away ultimately lands on the taxpayers head because these days our government is socializing the losses of corporate america with all these bailouts. This is the problem why walking away is highly unethical, the rest of us are forced to pay a price for the borrowers irresponsibility.
k374: I completely agree with you. I totally disagree with ilovebdj. The first decision that ilovebdj's friend did was irresponsible, and now he's just making another irresponsible decision. Business decisions should not and are often not separate from ethical decisions, at least not in our society. And yes, we all get to pay for the person's irresponsible decision, whether it's business or not. Just my opinion.
It makes me angry about people that ilovebdj described. You have a kid, you are a single parent. Why would you take on a $3K a month payment and then get a roommate? That shows me you weren't ready for that payment anyway. If it comes down to you and your daughter not being able to eat, don't you think that the $3K was a bit much???
k374: I completely agree with you. I totally disagree with ilovebdj. The first decision that ilovebdj's friend did was irresponsible, and now he's just making another irresponsible decision. Business decisions should not and are often not separate from ethical decisions, at least not in our society. And yes, we all get to pay for the person's irresponsible decision, whether it's business or not. Just my opinion.
sorry bud they're doing what they'll get away with. we all had an opportunity to vote in the primaries. we decided that this issue wasn't worth addressing so now we must lie in the bed we've made.
The right wing/libertarians who think defaulting on a mortgage is immoral and unethical.
Everybody else who thinks it a business decision.
The twain will never meet.
The costs have already been paid by the society. It is not a government thing and likely will not be. The costs are loss of value of property, of stock and bonds, of the dollar.
Direct government costs are pretty much negligible at this point. The proposed bail out will have some costs but likely not that great...but certainly none of those costs have yet been encountered.
The right wing/libertarians who think defaulting on a mortgage is immoral and unethical.
Anyone who thinks defaulting on a mortgage is "immoral" is simply someone posing as a libertarian, IMHO. More likely a right wing neo-bolshevist.
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The costs have already been paid by the society. It is not a government thing and likely will not be. The costs are loss of value of property, of stock and bonds, of the dollar.
It's not being paid by myself other than through real wage declines. I hold zero US dollars.
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Direct government costs are pretty much negligible at this point. The proposed bail out will have some costs but likely not that great...but certainly none of those costs have yet been encountered.
Laughable. Hank Paulson's "bazookanomics" will destroy the dollar.
Fannie/Freddie will not get bailed out despite the talk to the contrary. They'll get the ball rolling then as the currency hyperinflates, they'll stop dead in their tracks. Gold confiscation won't work as the mellow yellow is way to easy to hide and operate within a black market.
Fannie/Freddie are simply too big to bail out. On a positive note, we'll all know our lender personally once again .
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,860,930 times
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Quote:
Originally Posted by ViewFromThePeak
Anyone who thinks defaulting on a mortgage is "immoral" is simply someone posing as a libertarian, IMHO. More likely a right wing neo-bolshevist.
It's not being paid by myself other than through real wage declines. I hold zero US dollars.
Laughable. Hank Paulson's "bazookanomics" will destroy the dollar.
Fannie/Freddie will not get bailed out despite the talk to the contrary. They'll get the ball rolling then as the currency hyperinflates, they'll stop dead in their tracks. Gold confiscation won't work as the mellow yellow is way to easy to hide and operate within a black market.
Fannie/Freddie are simply too big to bail out. On a positive note, we'll all know our lender personally once again .
Once government price controls emerge to combat inflation, unless you've already stocked up on toothpaste, I highly doubt you'll find such a luxury.
Keeping some physical cash is good during the deflationary period prior to the inflation/hyperinflation period. Think of it as a pendulum overswinging towards "cash is king" before moving towards "cash is trash". After that, silver is probably the more practical metal for smaller purchases, as you'd have to shave off a practically invisible amount of gold to purchase a tube of toothpaste.
I anticipate by this time next year I will refuse cash for private transactions where I am the seller.
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We continue beating this to death...
