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But you can rent out your property and rent another property to lower your payments until the market comes back.
Let's say your payment on your mortgage, all in, is $1,000/mo. You can rent it for $600/mo. You get to write off the other $400/mo plus any expenses in fixing it (that you can't when it's your primary residence). So now you've got to find something to rent (maybe a one bedroom apt or a studio, depending if you have kids) that is cheaper than $600/mo.
I know the numbers are just out of a hat, but you know what I mean? Actually, the people who are renting my "retirement" home are doing that. Their house payment was 3,500/mo. They rented it for close to that (it's on the water). They're renting mine for $2,600/mo. So they're saving a lot of money till the market turns around and then they're going to sell it.
Waiting is fine... and in the most part continuing to pay is waiting. But, why did they change the rules? Why can't someone who is underwater use rental income to purchase another place to take advantage of lower prices? Dollar cost averaging.
Of course at some point we can rent an apartment... but what's the point of that if your not also building equity? If you buy and rent out your old place (like what people have always done - and what you are doing), your putting in equity on two properties and equalizing your losses in the long haul (ie diversifying and spreading your risk).
How come the lenders are able to break and make new rules? and rake in all the gains while current home owners (not past ones, cause the ones that owned homes prior to the bust are actually benefitting with lower rates and those who already have rental properties are fine too) take all the loses?
Like I said, it's easy to be sitting on a high moral ground when you have rental properties, or bought in the past with the opportunity to refinance into these great rates. Buyers are also in a great position. Those who are underwater and continue to pay have none of these luxuries and foster most all of the burden.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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BTW, if some one is willing to buy and bail.... they will be willing to walk away anyways.... so what's the point of preventing buy and bail? When buy and bail results in a new sale? while preventing it, will result in a foreclosure anyways. Meanwhile it closes the door on legitimate people who just want to mitigate net outlays. Seems kind of defeats the purpose to me and actually will increase foreclosures.
I disagree. I'm glad buy and bail rules are in place. Otherwise, chuck22b, there'd be a neverending downward spiral in prices because someone will always want the "better deal."
You are forgetting the simple fact, that, people have to live somewhere. Maybe it will prevent those who can afford to stay in their homes from walking and creating more losses in the market. I know it sucks from a personal standpoint, but something had to be done. If it were up to me, those who committed buy and bail practices would be in jail because it is clearly, mortgage fraud.
I disagree. I'm glad buy and bail rules are in place. Otherwise, chuck22b, there'd be a neverending downward spiral in prices because someone will always want the "better deal."
You are forgetting the simple fact, that, people have to live somewhere. Maybe it will prevent those who can afford to stay in their homes from walking and creating more losses in the market. I know it sucks from a personal standpoint, but something had to be done. If it were up to me, those who committed buy and bail practices would be in jail because it is clearly, mortgage fraud.
It's restricting normal market flows. Which as a result of less options. More people will foreclose. A simple quick fix... that, IMO, will actually result in more foreclosures.
Really, if I had the option to buy another place and rent my current place out. I'd more than likely jump on it. Which as a result... would improve market conditions as inventory is eaten up... and overall costs for everybody would be lower. Instead, in the most part I'm stuck. What happens when markets freeze or slow because of regulations or New restrictions? Fewer sales... more losses... more people decide to foreclose.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,590,742 times
Reputation: 677
Quote:
Originally Posted by chuck22b
It's restricting normal market flows. Which as a result of less options. More people will foreclose. A simple quick fix... that, IMO, will actually result in more foreclosures.
For this to be true, you would have to assume that the house the buy and bailer was going to purchase would be a foreclosure. That may be all that's selling in your neck of the woods. It's not, here, however.
And sellers around here are pricing properties to sell without shortselling. My neighbors house just went under contract in less than 30 days (I could not believe it!) but they priced it aggressively.
And ya'll are buying another house?
Is he walking away from his current house then?
He will if he has to. He's trying to work something out with the bank akin to a short sale, but if they won't work with him, than he'll walk away. He hasn't worked since getting into a car accident in January. Since then, he's been borrowing money to pay the mortgage. When the bank said they wouldn't help him out because he's made all his payments on time, he quit borrowing the money and is letting the house payments get behind.
His only regret is not re-fi'ing the house for more money so if/when he walks away he could have had $70,000 in his pocket. Hell, it's like hitting the lotto for those who had the forsight to do so.
He can do whatever he wants with the house. He got it with his ex-wife and kept it after the divorce despite the hefty payments. That house is his problem and I'm not going to give him a dime.
I have PERFECT credit, waited to get married, don't have illigitimate kids, and have 3 college degrees. I've paid my dues and am going to take advantage of the market.
I could care less what happens with his house. I don't clean up after people's messes (like the one he got himself into) but it seems the government will.
I am buying a house that is 1/2 the cost of his current home. I will control the money and pay the bills because, as the responsible person in this relationship, I know how to live within my means. I think that's a theme he's just learning now, years later than the rest of us.
PS: I hope I didn't sound nasty in this post, I wasn't trying to sound it. I'm actually just frustrated with my stupid fiance for not being more responsible - buying a stupid house to begin with, marrying the stupid girl that he did and then to proceed to cap-off his irresponsibility and have a child with her. Nice...
Waiting is fine... and in the most part continuing to pay is waiting. But, why did they change the rules? Why can't someone who is underwater use rental income to purchase another place to take advantage of lower prices? Dollar cost averaging.
Of course at some point we can rent an apartment... but what's the point of that if your not also building equity? If you buy and rent out your old place (like what people have always done - and what you are doing), your putting in equity on two properties and equalizing your losses in the long haul (ie diversifying and spreading your risk).
How come the lenders are able to break and make new rules? and rake in all the gains while current home owners (not past ones, cause the ones that owned homes prior to the bust are actually benefitting with lower rates and those who already have rental properties are fine too) take all the loses?
Like I said, it's easy to be sitting on a high moral ground when you have rental properties, or bought in the past with the opportunity to refinance into these great rates. Buyers are also in a great position. Those who are underwater and continue to pay have none of these luxuries and foster most all of the burden.
-chuck22b
My morals don't change with my financial situation. They're the same ones I was born with, I struggled through being a starving student with, a new wife/mother of small kids and no money with. Just because I'm in a better financial situation than I was before has nothing to do with whether I'd walk. I have never reneged on a debt. Ever. Thank God I haven't lost a job or had a catastrophic illness or something like that. But I've gotten in WAY over my head and had to cut the cable, sell the extra car, give up going out to dinner and use that money to pay down my debt. Could I have walked away from that credit card and kept all those things? Sure. But my integrity and my values and my morals are not for sale. And just b/c someone else does it doesn't make it okay or right or just.
I continue to use that adage with my kids. If Jimmy jumped off a bridge, would you?
Bottom line is YOU MADE THE DEAL.
And as for changing the rules, plenty of banks have been re-writing loans and changing terms to benefit borrowers in trouble. They won't re-write mine b/c I have the means to pay it. So that's the way it is. It doesn't mean that b/c I think it's unfair that it's okay for me to default. I just don't understand that thinking.
For this to be true, you would have to assume that the house the buy and bailer was going to purchase would be a foreclosure. That may be all that's selling in your neck of the woods. It's not, here, however.
And sellers around here are pricing properties to sell without shortselling. My neighbors house just went under contract in less than 30 days (I could not believe it!) but they priced it aggressively.
That's good. I'm glad to hear that that is happening out there.
As for the market here... over 50% of sales are foreclosures. So, what I said about the new regulations restricting market flows and probably causing more foreclosures is most likely true. So, in a twisted sense, the lenders are making My property values go down by increasing foreclosures.
Anyhow, these arguments about morals, immoral, etc., etc. doesn't really matter.
The rules are dictated by the lenders, for the lenders and bankers. If you follow the rules, even by defaulting or walking away, which is part of the rules, then it's all fair game. If they can change the rules and the game to benefit themselves... then you can very well use their own rules to cover yourself.
He will if he has to. He's trying to work something out with the bank akin to a short sale, but if they won't work with him, than he'll walk away. He hasn't worked since getting into a car accident in January. Since then, he's been borrowing money to pay the mortgage. When the bank said they wouldn't help him out because he's made all his payments on time, he quit borrowing the money and is letting the house payments get behind.
His only regret is not re-fi'ing the house for more money so if/when he walks away he could have had $70,000 in his pocket. Hell, it's like hitting the lotto for those who had the forsight to do so.
He can do whatever he wants with the house. He got it with his ex-wife and kept it after the divorce despite the hefty payments. That house is his problem and I'm not going to give him a dime.
I have PERFECT credit, waited to get married, don't have illigitimate kids, and have 3 college degrees. I've paid my dues and am going to take advantage of the market.
I could care less what happens with his house. I don't clean up after people's messes (like the one he got himself into) but it seems the government will.
I am buying a house that is 1/2 the cost of his current home. I will control the money and pay the bills because, as the responsible person in this relationship, I know how to live within my means. I think that's a theme he's just learning now, years later than the rest of us.
PS: I hope I didn't sound nasty in this post, I wasn't trying to sound it. I'm actually just frustrated with my stupid fiance for not being more responsible - buying a stupid house to begin with, marrying the stupid girl that he did and then to proceed to cap-off his irresponsibility and have a child with her. Nice...
A re-fi can be a recourse loan... and the lenders can go after him still. I'd consult a RE attorney to see what repercussions there are. If you get married, then you also become responsible for his debts.
Chuck, I understand your frustration but you have to admit that you're justifying. You CAN pay the mortgage. You don't want to because you feel like your house is no longer worth what you paid for it. The rules for re-negotiating and defaulting are in place for specific criteria - people who CANNOT pay. They've lost a job, they've had an illness., etc. It's people like you who exacerbate and prolong the problem. If you stayed in your house, paid your mortgage and your neighbors who could afford to do so did the same, you'd have fewer foreclosures and they'd be absorbed faster and your neighborhood would stop bleeding.
OOOH! Instant update. The bank is willing to work with him on the price of the house if he agrees to keep making payments. He HAPPILY agrees so now we may be able to sell a $150,000 house for $125,000 and we believe we can easily do so!
*sigh of relief*
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