Should I walk away from my "underwater" home?

by The Berean 113 Replies latest jw friends

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  sammielee24

  Temporarily could mean decades. Money is business. Banks take risks in loaning and in the case over the past years, they were very willing to not only hand over money to everybody who asked, but they were then more than willing to take those risky loans, splice them all up and sell portions of the loans all over the world as triple A investments. Big financial institutes buy insurance to hedge against losses so their butts are covered no matter what. If insurance doesn't pay out - the government does. Zero risk to the bank. They get the house, the insurance, the bail out - they don't lose or we'd be seeing nil bonuses for any CEO for the next 10 years or until those 15 million empty houses are sold. The person taking the loan, also takes a risk. They expect their investment to profit in a reasonable time, they expect accurate and honest appraisals of those investments and they expect to suffer loss of their investment (including all of their own cash they may have put into the house), a lower credit score and possible bankruptcy if they default.

  There are people who have lost money in their investment portfolio's as well...people who are now in a position of walking away, since the loss in their pensions has depleted future income and they realize they will not be able to afford an underwater mortgage and a comfortable retirement as well. Unexpected loss. Possible job loss. Even if those people could remain paying into a negative value property, they would be financially irresponsible to do so if it meant depleting their retirement accounts to do it. There are many variables into why people are taking that route - I certainly wouldn't call it a moral issue. It's their business and it needs to be addressed as a business. The banks have screwed over a lot of small businesses during the past few years - cutting off credit, reducing lines of credit, and calling in notes - refusing to loan out money when they've been asked to do so and been given funds to accommodate requests. Money is business - a home is an investment - it's your money - make it work for you and not for them because in the end, you are nothing but another transaction and feelings don't factor into it. sammieswife.
• 

  BurnTheShips

  Some of the arguments here seem to imply that one was snookered into a deal. That there was fraud or misrepresentation involved. I've signed more than my share of mortgages in my time, and have been on both ends of the transaction.

  To sign a mortgage without knowing what one is signing makes no damned sense. If the loan was misrepresented by the mortgagee or its agent, that is another story altogether. That's fraud. However, the vast number of mortgages aren't done this way. Even if the bank should have known that you wouldn't be able to pay, you should have known before committing yourself that you could pay under ordinary circumstances, barring unforeseen events like losing your job in a crap economy where you can't find another one, having a serious health issue, or some other catastrophic financial situation along those lines.

  Also, the mortgage documentation itself is tightly regulated by Federal Truth in Lending laws. That's any mortgage, from any bank. Period. There are a number of Federally required disclosures in every set of closing documents, in addition to state specific additional disclosures that plainly state interest rate, annual percentage yield, prepaid interest (points), loan amount, term, and total amount of payments broken down into interest and principle. The settlement statement is a regulated form that itemizes and totals up all closing costs, including prepaid insurance/taxes, document recording taxes, and any other fees charged by the institution you are doing the mortgage with. In my state there is also an amortization table, which shows the portion each for principle and interest in every single installment for the life of the loan. I'm not sure if that is a Federal requirement or not.

  Adjustable mortgages introduce additional complexities, of course, since the payment can change, but I have never succumbed to them. If I can't afford something on a fixed rate note, then I simply can't afford it. I don't roll that dice with adjustables, especially not on my homestead. However, I think you have to be pretty uneducated to get snookered on a mortgage. Pretty much a rube. You have to be pretty stupid to sign a dotted line based on another person's verbal representation alone. You read the document, and if you don't understand it, you get someone like a lawyer to look at it for you and tell you what's up.

  That said, unlike Watson's scenario, the house is collateral to the note. Surrendering the house to the bank is not in and of itself satisfaction of the mortgage. Foreclosure is not necessarily the cure for default. If you are considering your options, get a good lawyer to help you first before you decide what to do if you are contemplating walking away. The stakes are high enough to require it, and a bank will be more circumspect in dealing with you if they know you have legal representation.

  BTS
• 

  slimboyfat

  http://www.nytimes.com/2010/02/03/business/03walk.html?ref=business

  When banks get bailed out from meeting their obligations, and still pay themselves bonuses from the bogus profits, why on earth should ordinary people make good on their word in less favourable circumstances than banksters find themselves in?

  That's "morality" as false consciousness if ever it was!

  What's good for the goose is good for the gander.
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  The Berean

  I am hearing some educated comments here!

  Thanx