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Short sale assumes the so called owner is borderline destitute.
That's different than an unwillingness to continue owning something worth less than you paid.
With all assets, unwillingness to continue owning something less than you paid is an option (ie, cars, stocks, buildings, etc., etc.). A house is a thing. You can sell that thing or forebear it. It's not a moral hazard like selling your kid.
The risks were taken on by both the owner and the banks. The banks get covered in an event of a default by the CDOs they wagered on and the PMI. The owner gets a major credit hit and loses their down payment and home.
Stocks you pay for up front. So when you sell for less, only you lose money. Cars that get repossessed b/c you simply don't want to pay for a car anymore that you signed on the dotted line and agreed to pay X for and you still owe money on it and now you're reneging is most certainly a "moral hazard." As is a building or a home or a credit card or anything else you owe people money for. You signed your name and said, I will pay for this. When you just decide, Oh, it's not worth what I paid for it so let it be someone else's burden, b/c SOMEONE does indeed pay for it in the end, then that is morally wrong in my world. If it's not in yours, then that explains a lot about your world (and ours b/c apparently a lot of people are doing it).
I am excluding anyone who has extenuating circumstances, like an illness, death of a spouse, loss of a job and they're trying to find work, et cetera. I'm talking about people who bought a home, it lost value, they still owe the lender and have decided to let the lender eat the loss b/c well, it's better that they do it than me. That's morally reprehensible to me.
Stocks you pay for up front. So when you sell for less, only you lose money. Cars that get repossessed b/c you simply don't want to pay for a car anymore that you signed on the dotted line and agreed to pay X for and you still owe money on it and now you're reneging is most certainly a "moral hazard." As is a building or a home or a credit card or anything else you owe people money for. You signed your name and said, I will pay for this. When you just decide, Oh, it's not worth what I paid for it so let it be someone else's burden, b/c SOMEONE does indeed pay for it in the end, then that is morally wrong in my world. If it's not in yours, then that explains a lot about your world (and ours b/c apparently a lot of people are doing it).
I am excluding anyone who has extenuating circumstances, like an illness, death of a spouse, loss of a job and they're trying to find work, et cetera. I'm talking about people who bought a home, it lost value, they still owe the lender and have decided to let the lender eat the loss b/c well, it's better that they do it than me. That's morally reprehensible to me.
Perhaps they shouldn't have given so many idiots loans in the area in the first place?
I'm fine with loses, but they seem to get all the benefits at the expense of the borrower. In a sense, they made record profits off the expense of those who are staying in their homes now. Anyhow, they are "insured". So the default is "supposively" accounted for. Too bad they didn't count on AIG, and other insurers "unable" to pay up.
At some point. It doesn't make sense to be the sole sucker standing on a moral ground. What are the benefits?
When I read the OP, I thought it was a question for buyers. Guess that shows where my head and local housing market is.
That said, I thought 10% was a bit steep to lose as a buyer. If I liked the house enough, I'd be willing to cover a 5-6% loss in my price range. Of course, I'd prefer to lose nothing. Like most sellers.
When I read the OP, I thought it was a question for buyers. Guess that shows where my head and local housing market is.
That said, I thought 10% was a bit steep to lose as a buyer. If I liked the house enough, I'd be willing to cover a 5-6% loss in my price range. Of course, I'd prefer to lose nothing. Like most sellers.
Yea, in a sense it can be a question to buyers as well. When we bought, we already knew something was up with the market and we were willing to lose 20% or all of our down payment and wait it out. We negotiated heavily to get a 15% off list price so we figured, 35% is more than RE has Ever fallen. Case in point, RE has fallen over 40% in our area. It feels great being the sucker.
But, at some point... Really? it comes to a point where it ain't worth it. The lenders were "immoral" for conduting the kinds of lending they did. Why should responsible buyers that stay take ALL the hit? RE is most likely never going to go up to what it once was anytime soon. If the lenders have Any moral grounding, they would negotiate hard with buyers that put in a down payment and have been current. But of course that's not going to happen.
My fiance owes $150,000 on a house that due to the market is now only worth $150,000. For our neighborhood, that is pricing for the upper-middle class. There is so much to pick from with that sort of budget that no one will buy his house any time soon. So while he'd be happy to walk away with zero profit, he would never take a loss and continue to have to pay on a home he doesn't own anymore. The government has made it so acceptable and so easy to just walk away from a house, that he would do just that and be just fine. Sick, but true.
Perhaps they shouldn't have given so many idiots loans in the area in the first place?
I'm fine with loses, but they seem to get all the benefits at the expense of the borrower. In a sense, they made record profits off the expense of those who are staying in their homes now. Anyhow, they are "insured". So the default is "supposively" accounted for. Too bad they didn't count on AIG, and other insurers "unable" to pay up.
At some point. It doesn't make sense to be the sole sucker standing on a moral ground. What are the benefits?
See, therein lies our difference. We have different morals. Not to say mine are better than yours. They're just different.
I don't consider myself a sucker b/c I'm paying a debt that I agreed to pay. It is how I was raised and it's how I raised my children. To me, it doesn't make sense to walk away from a debt simply b/c it's inconvenient. That, makes someone a sucker in my world. And they have a lack of integrity. I won't sell my soul or my morals or my values. It's just something I won't do.
My fiance owes $150,000 on a house that due to the market is now only worth $150,000. For our neighborhood, that is pricing for the upper-middle class. There is so much to pick from with that sort of budget that no one will buy his house any time soon. So while he'd be happy to walk away with zero profit, he would never take a loss and continue to have to pay on a home he doesn't own anymore. The government has made it so acceptable and so easy to just walk away from a house, that he would do just that and be just fine. Sick, but true.
True,
It's also the bankers and regulations. If there is less risk/consequences in an event of a default... then more homes can be sold and thus more "profit".
I just don't like the fact that the bankers and regulators can have it both ways. Gains and profit taking during the boom, and bailouts and tax payer "insurance" during the bust. It really puts those who continue to pay at a complete disadvantage.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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Quote:
Originally Posted by jsimon521
My fiance owes $150,000 on a house that due to the market is now only worth $150,000. For our neighborhood, that is pricing for the upper-middle class. There is so much to pick from with that sort of budget that no one will buy his house any time soon. So while he'd be happy to walk away with zero profit, he would never take a loss and continue to have to pay on a home he doesn't own anymore. The government has made it so acceptable and so easy to just walk away from a house, that he would do just that and be just fine. Sick, but true.
And ya'll are buying another house?
Is he walking away from his current house then?
See, therein lies our difference. We have different morals. Not to say mine are better than yours. They're just different.
I don't consider myself a sucker b/c I'm paying a debt that I agreed to pay. It is how I was raised and it's how I raised my children. To me, it doesn't make sense to walk away from a debt simply b/c it's inconvenient. That, makes someone a sucker in my world. And they have a lack of integrity. I won't sell my soul or my morals or my values. It's just something I won't do.
Then can we reverse that? Can we have the corporations have more morals and integrity? How can those with integrity survive in a world where there isn't any? The lenders and banks need to have accountability as well.
Are you underwater? Are you 40+% down on your home? If you aren't... then you have no clue what people out here are feeling.
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