Walk on Existing Mortgage??

[Seahawk]

Originally Posted by jyl

Yes, some of those people were gamblers, schemers, and speculators. But others were simply ordinary people (who didn't read the "More Bad RE News" thread closely enough) who were trying to do what they thought they had to do. They were wrong, and they will lose a lot of money, but I wouldn't necessarily tar them with the "gambler" brush.

I was referencing the OP...here is what I wrote:

I simply cannot, if he can afford to stay and live where he is, brook any bravo sierra from him, anymore than a Casino in Vegas would if he had lost at cards. Bankruptcy laws never intended to put a safety net under his sorry ass.

I get mistakes, I don't forgive malfeasance and malice aforethought.

Guys, I am a sad sap when it comes to folks in dire straits, but this guy....

[Jim Richards]

ditto

[RANDY P]

Originally Posted by Aurel

How could you buy a second home without selling the first one? If a bank would approve that loan, it means you can afford both mortgages, thus you surely can afford the one you currently have. Option 1 is the right thing to do. Do not make others pay for your bad investment.

the new guidelines state you will need to provide proof of 6 mos. worth of payments in savings on both properties.

Buy and bail they are on the lookout for, big time. In this situation I doubt it will be easy to approve.

rjp

[jyl]

Lots of people never heard of a Case-Schiller chart. I remember a thread on PPOT where too many people had no idea that California had even experienced a RE bust in the 1990s. I mean, people other than snowman. I'm not arguing whether or not those people are "stupid", I guess what I'm saying is they might not have been that far from the average.

Originally Posted by the

If they were in a bubble area, I'd tar them with the "stupid" brush, though.

[turbo6bar]

We wouldn't have suffered the bubble had everyone known it was a bubble. Too bad, so sad.

The ones I truly feel sorry for are the ones who did not put lives on hold and bought a home with a traditional 20% down payment and traditional debt/income ratios (~30%). If anyone should be aided, it should be those. The dumbasses who bought with low down, zero down, Alt-A smack should never have gotten in the game. The banks are guilty for even offering this trash.

The ratings agencies and investment bankers should be executed for their greed. Their models assumed housing prices would NEVER go down. If the CEOs of these organizations were crackheads or survived with partial brain matter, I could understand, but these folks were supposedly the creme of the crop. They were compensated very highly for running the ship aground and fracturing the nation's economy.

I have said it before: How could a dumb redneck from Tennessee see this bubble, while the financial Megatrons of the world be so blind? Well, I think the power of green had a lot to do with it.

[turbo6bar]

Originally Posted by the

In a non-recourse situation (i.e., where the bank can only look to the collateral in the event of a default), the value of the collateral is everything. What else is there? That's their ONLY remedy, they better be darn sure they know what the value of their remedy is, if not, they have no meaningful way to price risk.

But when the homeowner put no money down, and has no skin in the game, it makes it much easier to walk.

I am in agreement 99.44%.

If banks were truly concerned about valuation of collateral, they could order appraisals which are not based solely on comparable sales. The appraisal could instead focus on income production (rents and cap rates) or replacement cost. This would negate the bubble effect and would have severely limited upside bubble effect . Of course, that would have curtailed profits. Oh snap!

Also, there is a strong correlation b/t down payments and default levels. Folks act differently when THEIR hard earned cash is on the line. Wow. You don't say.

[Dottore]

Originally Posted by turbo6bar

The ratings agencies and investment bankers should be executed for their greed.

Agreed. Particularly the rating agencies on whom everyone relied.

Standard and Poor show trials. Daily on CNN. I'm all for it.

[turbo6bar]

Originally Posted by Jim Richards

How does the IRS treat this jingle mail? It seems that a loss eaten by the bank when the homeowner mails in his keys is a gain for the defaulter.

Depends on the state. In some states, you must go to court and obtain a judgment against the borrower for the deficiency. Besides, banks aren't hungry for write-offs these days.

There is some chance the OP may be slapped with a deficiency if the lender finds OP actually has assets.

Originally Posted by Dueller

Paul, while I certainly understand your point (and share your morality sentiments), would you not agree that some of our most "successful" entrepreneurs routinely walk away from sour business deals rather than honoring their original commitment? Many of these folks use bankruptcy and default as nothing more than a business tool. Trump comes to mind.

That being said, more than one of successful business people I personally know have gone broke, lost fortunes but always seem to land on their feet and come back even wealthier.

Concur. When a company, bank, business culls the herd, it's just doing business. A company lays off 3000 to trim expenses, stock goes up. Business goes bankrupt and owners walk away...it's just business.

Originally Posted by jyl

I remember a thread on PPOT where too many people had no idea that California had even experienced a RE bust in the 1990s.

The Nile, river in Egypt. Short memories are sown with greed. I'm not lily white, but I ain't stupid, either. Tech bubble 2000 absolutely kicked my ass. Never again, friend.

[the]

Originally Posted by jyl

I remember a thread on PPOT where too many people had no idea that California had even experienced a RE bust in the 1990s. I mean, people other than snowman.

As someone who lived through that in the '90s, I always shook my head and lol'd a bit at those people.

It's one thing to put your head in the sand about an impending future event (no matter how certain that event is).

It's another level of De Nile to completely deny that a well documented historical event even took place!

[onewhippedpuppy]

Originally Posted by the

Pretty much, although it didn't need to be called to the penny in order to avoid this disaster.

It was called in 2006 that RE in the bubble areas would go down in value at least 50%. Charts were posted, showing almost exactly how much this would fall (it is reverting to the mean, i.e., correcting back to where real estate appreciation tracks the general rate of inflation), and when it would fall. They turned out to be almost exactly correct.

Also, you don't need to know the value for any real estate. Only the bubble areas. The other stuff doesn't matter much. I read yesterday that this whole crisis was caused by the bubble in only 40 counties throughout the US - those bubbly ones we all talked about in 2006-07.

If the banks would have seen that information, and opened their eyes, all of this would have been averted. It really didn't take a genius to figure it out. What the banks did was a massive failure, based mostly on short term greed, which clouds judgment.

I will concede that the banks could have better done their due dilligence in regards to property values and better covered their asses by requiring larger amounts down.

However, I still think that the ultimate burden falls on the individual. We used to be a nation of independent folks that watched out for ourselves. Today we sit back and expect others to watch out for us, to save us from ourselves. Personal responsibility has totally gone out the window, and the reaction to this crisis is a microcosm of a larger issue. The emphasis isn't on the individual that made a stupid or irresponsible choice, it's on the "big bad" banks that "lured in" unsuspecting homeowners. Everyone's a victim. By not punishing these individuals for their mistakes, we are essentially rewarding their bad behavior. This entire bailout is positive reinforcement for stupidity.

By the way, does anyone really expect a bank to look out for their best interests? My policy is to not trust anyone that's making money off of me, and that certainly includes banks.

[turbo6bar]

Originally Posted by onewhippedpuppy

The emphasis isn't on the individual that made a stupid or irresponsible choice, it's on the "big bad" banks that "lured in" unsuspecting homeowners. Everyone's a victim. By not punishing these individuals for their mistakes, we are essentially rewarding their bad behavior. This entire bailout is positive reinforcement for stupidity.

Actually, the blame goes everywhere. There are very few innocent players in this game.

• bankers
• homeowners
• realtors
• appraisers
• investors who failed to analyze securities
• Washington DC bigheads
• ratings agencies
• mom and pop investors looking for riskfree yields far in excess of treasury yields

There was a total breakdown across the board. The "More Bad RE News" thread was proof of the denial, greed, and stupidity.

[onewhippedpuppy]

Originally Posted by turbo6bar

There was a total breakdown across the board. The "More Bad RE News" thread was proof of the denial, greed, and stupidity.

You do know there's a world outside of PPOT, right?

I meant that statement more in terms of national perception, particularly media coverage. Every night there's tear-jerking stories of a family living in a tent because their house was foreclosed on. Nobody ever stops to ask why a family making $50k thought they could afford a $500k house. Sure it's callous, but it needs to be discussed. Those who forget the past are doomed to repeat it. Hopefully we can emerge from this crisis a bit wiser with our money.

[Jim Richards]

Originally Posted by turbo6bar

Actually, the blame goes everywhere. There are very few innocent players in this game.

• bankers
• homeowners
• realtors
• appraisers
• investors who failed to analyze securities
• Washington DC bigheads
• ratings agencies
• mom and pop investors looking for riskfree yields far in excess of treasury yields

There was a total breakdown across the board. The "More Bad RE News" thread was proof of the denial, greed, and stupidity.

You need to revise "homeowners" to "homeowners who were too greedy, stupid, or optimistic to buy the the house they bought."

Then you can follow up with a list of who bails all these "players" out.

[Rick Lee]

Originally Posted by onewhippedpuppy

Nobody ever stops to ask why a family making $50k thought they could afford a $500k house. Sure it's callous, but it needs to be discussed.

Gawd, ain't that the truth! I have not once seen a reporter doing one of these foreclosure stories examine why the homeowner thought they could afford the house they got. They don't do stories on folks who bought within their means, put 20% down, lost their jobs, got sick and burned through their six mos. of cash reserves before falling behind on their mortgage. No, those folks are the ones who actually might deserve some sympathy. Instead, they talk like foreclosure is some kind of communicable disease, afflicting unwitting and innocent people, that only the gov't. can stop. Why doesn't any reporter every question a politician who says the gov't. needs to put a moratorium on foreclosures or tell judges they can rewrite private party contracts? Doesn't anyone wonder how the gov't. has this power?

[rnln]

"The ones I truly feel sorry for are the ones who did not put lives on hold and bought a home with a traditional 20% down payment and traditional debt/income ratios (~30%). If anyone should be aided, it should be those. The dumbasses who bought with low down, zero down, Alt-A smack should never have gotten in the game. The banks are guilty for even offering this trash"
"Nobody ever stops to ask why a family making $50k thought they could afford a $500k house"
"lost their jobs, got sick and burned through their six mos. of cash reserves before falling behind on their mortgage. No, those folks are the ones who actually might deserve some sympathy"
A+++

Anyone watch the "show the note" thing on TV? I was laught so bad when they interview a decent looking lady who is not going to work and search on how to do the "show the note" so she can "steal" the property from the bank. Did I got it right? The last questions asked were:

question: how much your house worth?
answer: $39k
question: how much do you owe now?
answer: $140k... smile.

How the hell do you owe $140k while the house worth $39k? Don't you hate those who are living off the house purposely? ... and now we are paying (the tax payers, the daily workers) for them to live in their nice home so they don't have to pay?