'Underwater' loans: Arizona is No. 2 (Tucson: foreclosure, for rent, neighborhood)

[Bummer]

There is absolutely no justification for irresponsibility.

When an individual enters inter a contract for a mortgage the future value of the probably is totally irrelevant. I've never heard of anyone ever offering to "split the profits" with the lender if the property doubles or triples in value.

Rest assured . . . sooner or later, KARMA will bite these greedy losers in the butt.

[robabeatle]

My lender had mortgage insurance for the value of the property so they didn't lose a dime.

Now wait, didn't the banks effectively write off their losses in the bail out?? I guess they felt that they didn't need to pony up either.

Please, people of the middle class, you are the ones being played with this nonsense of moral dilemma. Read your history as this property acquisition by the rich from the masses has happened before and will likely happen again.

I completely understand the issue of entering a contract with an agreed price and that one should pay this price even if the market tanks. BUT, being a contract and not something inscribed on a stone tablet, if the home owner decides not to pay then their are consequences, one being that the bank gets back the property. Business.

Maybe we should have debtors prison?

[jksn75]

Maybe your lender didn't lose a dime, but what about the insurance company? Just seems kind of a crappy thing to do. Why even buy a house? Also, was your lender involved with one of the bail outs? Not all banks went down that path...

[Bummer]

Originally Posted by robabeatle

Maybe we should have debtors prison?

Why "Debtors' Prison?" . . . when we have KARMA.

[Malloric]

Originally Posted by cheesecurd

I guess in all reality these home owners should have known what they were doing when the bought their homes. I know some that even though they could afford to keep their under water mortgage payments up as they promised, they instead chose to just stop paying and dump the home. I don't feel this is the right and moral thing to do!.JMO

Why not?

It's a contractual relationship with defined terms, including terms that define exactly what will happen should one fail to meet one's contractual obligation. Take the mortgage bank that lent the money in exchange for ownership of the property. What do they do when they mortgage goes into default? Do they continue to make the contractual lease payments they are bound to make to the investment bank they sold the note to because that's the ethical thing to do? Or do they default within the terms of the contract and sell the home for what they can to satisfy what debt they can at no expense to themselves and then tell the investment bank to eat the rest?

I know people who went out to out a mortgage on a second house and then turned around and handed the keys to their underwater house back to the bank. Good for them. They took the best legal and ethical way out of the contract available to them. That isn't legal in all states, however, and is more difficult to do now than it was four years ago.

[robabeatle]

Yeah, I understand. My credit is ruined for 7.5 years. I own my car, always buy cars with cash BTW. I don't plan to own a home again anytime soon. Again, my bank didn't get screwed as there was mortgage insurance and so they wrote it off and then sold it.
My job in Tucson was solid and I had great pay compared to others in my field. But, I needed a change and decided that the best thing to do was move on.
I guess the insurance company had to pay out to Chase Banks because of my strategic default. Nothing illegal about this at all though, You might want to attach a moral question to what I see as a business situation. I simply disagree with you and have wiped $156K of debt off my record. Tucson prices will take 25 years to recover IMO. And lets not kid overselves, many, can I say most, people view buying a house as an investment and not just a place to hang the keys.
Are the insurance companies really hurting?? I think many miss the bigger picture in this whole housing debacle. At the end of the day, look who has the money. Who is hurting?

Karma: so remind me again about the "victims" of the holocaust?

[vjsoto]

Originally Posted by robabeatle

Yeah, I understand. My credit is ruined for 7.5 years. I own my car, always buy cars with cash BTW. I don't plan to own a home again anytime soon. Again, my bank didn't get screwed as there was mortgage insurance and so they wrote it off and then sold it.
My job in Tucson was solid and I had great pay compared to others in my field. But, I needed a change and decided that the best thing to do was move on.
I guess the insurance company had to pay out to Chase Banks because of my strategic default. Nothing illegal about this at all though, You might want to attach a moral question to what I see as a business situation. I simply disagree with you and have wiped $156K of debt off my record. Tucson prices will take 25 years to recover IMO. And lets not kid overselves, many, can I say most, people view buying a house as an investment and not just a place to hang the keys.
Are the insurance companies really hurting?? I think many miss the bigger picture in this whole housing debacle. At the end of the day, look who has the money. Who is hurting?

Karma: so remind me again about the "victims" of the holocaust?

I agree. You can't feel bad about something you have no control over. There are a million reasons to move, and loosing a job is very close to #1. The bad "karma" is your bad credit for the next 7+ years. Don't turn it into some horrible demonic sin.

When I think of the money I could save if I bought another house right now and walked away from my current mortgage, it's tempting. We're talking about almost $500 per month of "free" money. What holds me back? I like my good credit and the option to take out a low interest loan if I want to make a major purchase. My mortgage interest rate is fixed at 5.5%, and I have a relatively low mortgage payment.

But even with that in mind, I'd leave the house without thinking twice if I were laid off and had to find work elsewhere. The bank has already made enough money in the form of interest from me. I don't need to feel bad about it too.

[robabeatle]

Yeah, and really real estate is not my expertise. I did buy a home and an investment. The Realtor assured me of the second point. And in the Tucson market at the time, I can't blame him for giving that advice.
There are many people that had been swayed by the moral argument but that is changing esp. with how upsidedown many mortgages are at this point. The reality is that many people figured, going off of the past, that a house could be sold again in a few years for a profit or at worst break even. Now, a house looks more like a money draining ball and chain that will likely never sell for a profit, if bought at around the peak. Of course, the proselytizers will try to convince those in distress that they should hang onto a $200K money sink while the next door neighbors buys at $40K.
I say if you live in a nonrecourse state [BTW the banks of course know the laws and still choose to operate in these states (a risk they take)], and are thinking of walking: do it!

[Bummer]

Isn't BLIND JUSTIFICATION wonderful?

Even Serial Killers and Mass Murderers readily JUSTIFY their actions.

[vjsoto]

Originally Posted by Bummer

Isn't BLIND JUSTIFICATION wonderful?

Even Serial Killers and Mass Murderers readily JUSTIFY their actions.

haha.. comparing a strategic default to serial killers and mass murderers is not exactly an apples to apples comparison.

Besides, it's hardly blind justification. The justification is very real and very measurable.