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View Full Version : Is it Moral to skip out on your Mortgage



bobbys
05-16-2012, 02:37 PM
few years ago a fellow said he was just walking away from his house in Michigan as he was underwater so bad it was hopeless, He had no work and moved to Texas, At the time i was appalled.

Yesterday the helper at the lumber yard told me he was walking away, He paid 130, , It went up in value to 230 he borrowed against it, Property values fell now its worth 120. The house was built on a swamp and the floor slab is breaking

He was at 10 percent and they refused to lower it.

So he is paying 1900 bucks a month.

Said he could walk away in a certain way and give it back and it will not ding his credit as bad.

I thought about it and pondered what choice does he really have? ..

Course i suppose if he borrowed for boats and jet skies and vacations that would be wrong but if events beyond his control gathered together as in a perfect storm who can say what is right or wrong.

Still im sure he will pay in his credit for years but does he hang on for who knows how long till housing picks up.

Then again if people just walk away does not this hinder everybody trying to get a loan?.

Milo Christensen
05-16-2012, 02:41 PM
I'd rather loan money to someone who has just exited Ch. 7 than just about anyone else I can think of.

Concordia 33
05-16-2012, 02:42 PM
Sometimes a bank will let you make a short sale of your home, but probably not for that much money. If he walks away from the mortgage and lets them foreclose without declaring bankruptcy, they could hold him responsible for the difference between the money owed, and the amount they receive in a foreclosure auction. Given the potential losses the bank faces, and the difficulty of getting all the money back from your friend, he may have some ability to bargain with them on this. He would need to talk to the bank specialist from his lender that works with troubled property.

Given the present projections on real estate, it will be several years (some even say decades) before that mortgage will not be underwater.

B_B
05-16-2012, 02:43 PM
Then again if people just walk away does not this hinder everybody trying to get a loan?.
No, it would make lenders make better decisions about whom to, and for what purposes, they lent money to people.

skipper68
05-16-2012, 02:57 PM
Nothing will ever be the same, in the future economy. I think Iceland was the only smart country that did it right. They are prosecuting bankers, and have taken over the banks, refinancing mortgages on their real value. Too bad our country bailed out the CEO's and left the taxpayers in the wake. My BIL worked 30 years at GM. His pension he paid in to,is now $42.00 a month, down from 4K. Now figure all the retirees that don't have that income to boost the economy.Nuff said.

Concordia 33
05-16-2012, 03:28 PM
Nothing will ever be the same, in the future economy. I think Iceland was the only smart country that did it right. They are prosecuting bankers, and have taken over the banks, refinancing mortgages on their real value. Too bad our country bailed out the CEO's and left the taxpayers in the wake. My BIL worked 30 years at GM. His pension he paid in to,is now $42.00 a month, down from 4K. Now figure all the retirees that don't have that income to boost the economy.Nuff said.

They also let their financial institutions fail - no TARP, no "too big to fail". They let the marketplace take care of itself.

Mrleft8
05-16-2012, 03:29 PM
This is a rather pathetic troll Bobby(s)....

Concordia 33
05-16-2012, 03:30 PM
Nothing will ever be the same, in the future economy. I think Iceland was the only smart country that did it right. They are prosecuting bankers, and have taken over the banks, refinancing mortgages on their real value. Too bad our country bailed out the CEO's and left the taxpayers in the wake. My BIL worked 30 years at GM. His pension he paid in to,is now $42.00 a month, down from 4K. Now figure all the retirees that don't have that income to boost the economy.Nuff said.

They also let their financial institutions fail - no TARP, no "too big to fail". They let the marketplace take care of itself.

SamSam
05-16-2012, 03:35 PM
I thought "they" made it really difficult to walk away from debt and not be hounded for the rest of your life until it's paid. Garnishment of wages, tax refunds paid directly from the govt to "them", bank accounts stripped, etc. ?

skipper68
05-16-2012, 04:08 PM
They will. It's a catch 22, since 2005. You cant pay your mortgage, means you cant pay the bankruptcy lawyer. They will add on every cost they can, then sell your debt to other debt investors. On and on and on... I have a 6K bill I'm disputing with Chase now. They sent me a card with a $400.00 limit. I never even activated it! Try proving that 6 years later. Thieves.http://i1042.photobucket.com/albums/b426/skipper68/skipper68%20lovies/5fe07806.jpg

bobbys
05-16-2012, 04:15 PM
This is a rather pathetic troll Bobby(s).....

I can assure you im not trolling and resent your accusation..

Im not arguing with anyone just would like to hear their opinion whether i like them or not..

However im curious what leads you to believe im trolling in a pathetic fashion and what prompts you to jump on me like this?.

I gave a true story..

PhaseLockedLoop
05-16-2012, 05:50 PM
Yup.

Dan McCosh
05-16-2012, 06:10 PM
Nothing will ever be the same, in the future economy. I think Iceland was the only smart country that did it right. They are prosecuting bankers, and have taken over the banks, refinancing mortgages on their real value. Too bad our country bailed out the CEO's and left the taxpayers in the wake. My BIL worked 30 years at GM. His pension he paid in to,is now $42.00 a month, down from 4K. Now figure all the retirees that don't have that income to boost the economy.Nuff said. This makes no sense at all.

wardd
05-16-2012, 06:17 PM
This makes no sense at all.

try reading it again , this time with your eyes open

Dan McCosh
05-16-2012, 06:28 PM
try reading it again , this time with your eyes open GM's pensioners are being paid. Delphi's pensioners are being paid by the government guarantees.

B_B
05-16-2012, 07:18 PM
...I can assure you im not trolling and resent your accusation...
An alter ego created merely for the enjoyment of the originating ego: definition of troll. Resent away.

bobbys
05-16-2012, 08:22 PM
An alter ego created merely for the enjoyment of the originating ego: definition of troll. Resent away..

I suppose i could just call you a troll when you posted but i have nothing personal again you..

Still what do you think about walking away from a mortgage, Its not a trick Question, Your insight is just as valuable as mine.

Garret
05-16-2012, 08:35 PM
At one time (in the not too distant past) I would've said no way an honorable person should do that. However, many banks have proven to be about as dishonorable as they come.

If you are working with a bank that behaves honorably & will talk about some form of restructuring your debt then I'd say no, you shouldn't. However if it's BOA or some other slimeball outfit that robo-signs foreclosures & won't enter into any form of discussion? Go for it & I hope the bank goes under.

Another reason to switch to local/regional banks that actually have some semblance of ethics.

Hank Rearden
05-16-2012, 08:47 PM
Nothing will ever be the same, in the future economy. I think Iceland was the only smart country that did it right. They are prosecuting bankers, and have taken over the banks, refinancing mortgages on their real value. Too bad our country bailed out the CEO's and left the taxpayers in the wake. My BIL worked 30 years at GM. His pension he paid in to,is now $42.00 a month, down from 4K. Now figure all the retirees that don't have that income to boost the economy.Nuff said.

Sounds like the union probably stole his pension, not GM. I'd be very surprised if GM administered the plan. They probably just forked over the money to the union thieves. That's how unions roll.

bobbys
05-16-2012, 09:15 PM
At one time (in the not too distant past) I would've said no way an honorable person should do that. However, many banks have proven to be about as dishonorable as they come.

If you are working with a bank that behaves honorably & will talk about some form of restructuring your debt then I'd say no, you shouldn't. However if it's BOA or some other slimeball outfit that robo-signs foreclosures & won't enter into any form of discussion? Go for it & I hope the bank goes under.

Another reason to switch to local/regional banks that actually have some semblance of ethics..

I wonder to about Banks selling ones Mortgage.

Dan McCosh
05-16-2012, 09:23 PM
Sounds like the union probably stole his pension, not GM. I'd be very surprised if GM administered the plan. They probably just forked over the money to the union thieves. That's how unions roll. More likely the information is in error. That's how misinformation rolls. I would also think the pension was for a medium-level executive, given the amount, rather than a union member.

B_B
05-16-2012, 09:38 PM
...Still what do you think about walking away from a mortgage, Its not a trick Question, Your insight is just as valuable as mine.
See post 4.

Additional thoughts: people who think like Rinehart and Delecta and others think - i.e. bad risks, bad people who use other peoples money then walk away from their obligations will nilly - are fairly easily sussed out by credit histories and other means. Most people who are in a position to have to walk away from their mortgage are honourable folk who just can't make it financially.

In the first instance - lending money to people who habitually don't pay it back - I have no sympathy for the bank. They should have known better.

In the second instance - honourable people who would do anything to keep their investment (fiscal and emotional) - I feel that banks (and Art Rinehart, Delecta etc.) are very quick to try to lump them in with the first group. Therefore I have no sympathy for the bank; they should try harder to keep things working to both parties' advantage BEFORE the mortgagee has to get lawyers and the courts involved.

George Jung
05-16-2012, 10:55 PM
There are lots of lil' accounting and legal tricks available to all, and bankruptcy is one of them. So yeah - it's okay. Of course, once you file, you're prohibited from re-filing for several years (? 7?), supporting Milos comment.

So.... what's your thoughts on real estate? I just sold my house, and am looking at buying another. Amazing how little $250,000 buys in new construction. The 'sweet' spot seems to be around $350K or so. *sigh*...... who knew? Real estate seems to be 'heating up' in this locale, and they didn't have much of a 'recession' the past 8 years. Some areas do better than others. But housing prices seem to parallel availability of work and the local economy, which makes sense.

skipper68
05-16-2012, 11:13 PM
This makes no sense at all. Because he worked and paid all his life, and the GM bailout stole HIS retirement?? To bail out the company CEO? You see a penny on the dollar a month on your retirement you paid in to. Your RIGHT. It makes no sense..but it is TRUE. Now, YOU count how many from 1 company pension, and do the math multiplied by thousands of retirees. This money would be supporting this economy. How far will you spend $40.00, compared to the $4000.00 each month/PAID by their $. Make sense now? <BIG PICTURE>How any company's did this, while the CEO had a great big$$ pat on the back?? Many more will follow. You watch.

skipper68
05-16-2012, 11:21 PM
I DO NOT believe in property. You rent it from the government, with no choice on what your cost will be, till your bill comes in. DO NOT tell me to vote on it! ROTFL.

fishrswim
05-16-2012, 11:29 PM
Yep, if you bought during the bubble which was generated by the banks who had no intention of servicing the loans they sold.

bobbys
05-16-2012, 11:36 PM
There are lots of lil' accounting and legal tricks available to all, and bankruptcy is one of them. So yeah - it's okay. Of course, once you file, you're prohibited from re-filing for several years (? 7?), supporting Milos comment.

So.... what's your thoughts on real estate? I just sold my house, and am looking at buying another. Amazing how little $250,000 buys in new construction. The 'sweet' spot seems to be around $350K or so. *sigh*...... who knew? Real estate seems to be 'heating up' in this locale, and they didn't have much of a 'recession' the past 8 years. Some areas do better than others. But housing prices seem to parallel availability of work and the local economy, which makes sense..

250 would buy you a 1800sf home on a small lot here, Nothing fancy at all..

A Neighbor hood thats OK but working class .

250 would fit ones needs but 350 is more the "want".
I shudder to think what things will cost if we go into another boom.

Meli
05-16-2012, 11:55 PM
try $450 median for a flat or unit :mad:
the boomers done it

B_B
05-17-2012, 12:03 AM
250 would buy you a
Seven year old 20'wide trailer, average build quality, 1550sq.ft., with a nice single detached garage on a free hold corner lot, here.

Greg Nolan
05-17-2012, 12:09 AM
"He would need to talk to the bank specialist from his lender that works with troubled property."

No - no - no!! What kind of naive crap is that? The bank specialist is working for the BANK, not you, and looking out only --ONLY -- for the bank's interest. The bank specialist has not one bit of interest in helping you, except as helping you might help the bank more.

Someone with an underwater mortgage would need to talk to a lawyer who knows real estate and bankruptcy -- HIS lawyer, whom he pays, and who will look to his interests -- NOT the bank's lawyer or "advisor" or "vice-president." Or alternatively, a skilled, independent financial advisor -- not one provided by a bank -- who will look to his interests.

Why on earth would anyone think to get advice from an adversary -- the bank? The bank wants one thing, and only one thing -- as much of your money as possible. You might negotiate with the bank, but only if you have some skill with negotiation, and only if you realize that the game is the bank's game, and realize that your "friendly" banker, like a "friendly" used car salesman, is not there to help you, but to help himself.

There is virtually no morality in the world of finance -- banks walk away from bad deals any time they get a chance. Brokers collect their commissions on deals they set up even when the deal goes sour. The only people who worry about the morality of a financial transaction are the suckers that the slickers take advantage of. Bankruptcy is a perfectly legal and moral process -- as is walking away from a bad mortgage. Whether bankruptcy, or walking away from a loan, is a prudent course of action for a given individual in a given set of circumstances, is a separate question, and indeed, is the only question. In the do-eat-dog world of finance, the only relevant question -- not a simple question -- is, what is best for me.

I pay my debts and my taxes because it is, in a world where I wish to borrow money and stay out of jail, the prudent thing to do. As it happens, my house is paid for, and I don't face the gut-wrenching problem of owing more on the house than it is worth. But if I did, and the difference between my debt and the house's sale price were great enough, I would not feel like I was committing a sin, or engaging in crime, or sinking into moral turpitude, if I determined that the most rational course of action was to walk on the debt and let the lender suffer from the risk he took in lending me money on a badly valued loan.

Indeed, a large part of the financial crisis of the last few years was caused by lenders who gave mortgages that they understood were not soundly collateralized -- but they minimized their risk by selling the mortgage to another "investor" -- read "gambler" -- who assumed the risk that the risky loan would be paid and who bundled loans together in an effort to minimize the risk (or at least pretend that they were minimizing the risk when they sold the bundled loans to naive investors).

Capitalism is a system in which risk is integral -- caveat emptor is the first, and most ignored rule. But sometimes (probably not often enough) it is the person who "invests" capital who suffers from taking a high risk rather than making a safe investment. That's the essence of the game. Some people have no choice but to take certain risks -- employees whose pensions are invested by others, for example -- and for them you can feel sorry when they suffer the loss of an imprudent risk taken by an incompetent or corrupt manager of funds. But no one should feel sorry for banks and other institutions that are supposed to know what they are doing -- losing money is just as much a part of the game as is hitting a jackpot for them. And if a homeowner walking on an underwater mortgage makes a dent in the bank's balance sheet -- well, that's just business, and the bank should have known better -- and probably did.

Meli
05-17-2012, 12:14 AM
The pommies can put me right on the details here, but..
In the late 80's in the UK there was a boom followed by a huge recession with consiquent runaway unemployment.
At the same time, the gov released thousands on previously government owned homes onto the market.
the value of peoples homes plunged up to 30% and people had to walk away from their mortgages and toss the keys across the bank counter as the home was worth a hell of a lot less than the mortgage and they'd lost their jobs. Just ordinary suburban houses ordinary working people.

Now tell me, were these people irresponsible? they lost their savings, their equity, everything, through bank greed and government stupidity.
Who should pay the banks, the gov? the general tax payer? same thing really.

Meli
05-17-2012, 12:26 AM
"He would need to talk to the bank specialist from his lender that works with troubled property."

No - no - no!! What kind of naive crap is that? The bank specialist is working for the BANK, not you, and looking out only --ONLY -- for the bank's interest. The bank specialist has not one bit of interest in helping you, except as helping you might help the bank more.

Someone with an underwater mortgage would need to talk to a lawyer who knows real estate and bankruptcy -- HIS lawyer, whom he pays, and who will look to his interests -- NOT the bank's lawyer or "advisor" or "vice-president." Or alternatively, a skilled, independent financial advisor -- not one provided by a bank -- who will look to his interests.

Why on earth would anyone think to get advice from an adversary -- the bank? The bank wants one thing, and only one thing -- as much of your money as possible. You might negotiate with the bank, but only if you have some skill with negotiation, and only if you realize that the game is the bank's game, and realize that your "friendly" banker, like a "friendly" used car salesman, is not there to help you, but to help himself.

There is virtually no morality in the world of finance -- banks walk away from bad deals any time they get a chance. Brokers collect their commissions on deals they set up even when the deal goes sour. The only people who worry about the morality of a financial transaction are the suckers that the slickers take advantage of. Bankruptcy is a perfectly legal and moral process -- as is walking away from a bad mortgage. Whether bankruptcy, or walking away from a loan, is a prudent course of action for a given individual in a given set of circumstances, is a separate question, and indeed, is the only question. In the do-eat-dog world of finance, the only relevant question -- not a simple question -- is, what is best for me.

I pay my debts and my taxes because it is, in a world where I wish to borrow money and stay out of jail, the prudent thing to do. As it happens, my house is paid for, and I don't face the gut-wrenching problem of owing more on the house than it is worth. But if I did, and the difference between my debt and the house's sale price were great enough, I would not feel like I was committing a sin, or engaging in crime, or sinking into moral turpitude, if I determined that the most rational course of action was to walk on the debt and let the lender suffer from the risk he took in lending me money on a badly valued loan.

Indeed, a large part of the financial crisis of the last few years was caused by lenders who gave mortgages that they understood were not soundly collateralized -- but they minimized their risk by selling the mortgage to another "investor" -- read "gambler" -- who assumed the risk that the risky loan would be paid and who bundled loans together in an effort to minimize the risk (or at least pretend that they were minimizing the risk when they sold the bundled loans to naive investors).

Capitalism is a system in which risk is integral -- caveat emptor is the first, and most ignored rule. But sometimes (probably not often enough) it is the person who "invests" capital who suffers from taking a high risk rather than making a safe investment. That's the essence of the game. Some people have no choice but to take certain risks -- employees whose pensions are invested by others, for example -- and for them you can feel sorry when they suffer the loss of an imprudent risk taken by an incompetent or corrupt manager of funds. But no one should feel sorry for banks and other institutions that are supposed to know what they are doing -- losing money is just as much a part of the game as is hitting a jackpot for them. And if a homeowner walking on an underwater mortgage makes a dent in the bank's balance sheet -- well, that's just business, and the bank should have known better -- and probably did.

Excellent!
you forgot the bit about the bank and capitalist/religious union playing for centuries on the "shame" of the poor:cool:

johnw
05-17-2012, 12:26 AM
I really don't think he can do this without affecting his credit rating.

Ted Hoppe
05-17-2012, 12:35 AM
Conversely, is it moral to lend money to a entity who is already over extended and has no real means to secure the mortgage note?

If two parties go into a deal knowing they are going to most likely get a default on the deal. it is by a turning a blind eye that negelent and criminal behavior takes place for ideas of flipping the loan or the home... how can one claim a moral position over the other?

Meli
05-17-2012, 12:41 AM
True, I bollocked my bank the other day for inviting me to extend my CC limit, I'm always having to pay late payment fees while slowly reducing the debt.:mad:

johnw
05-17-2012, 12:42 AM
Conversely, is it moral to lend money to a entity who is already over extended and has no real means to secure the mortgage note?

If two parties go into a deal knowing they are going to most liekly get a default on deal. how can one claim a moral position over the other?

Trouble is, the bank probably knew it would sell the note on, rather than hold it. They made their profit and passed the risk on to someone else. Game of hot potato.

On the other hand, this guy borrowed a big chunk of money on this house that he didn't invest. Paid 130, borrowed up to the value of 230. Is it really okay for him to walk off with that $100,000 if he can pay it back? After all, the bank may not have been stuck with the note, but someone was.

I've read that in Spain, if you give the house back to the bank, you still owe the note. That's certainly unfair, and makes deleveraging household debt pretty much impossible. Seems like someone always gets the shaft on these deals when the values drop.

Meli
05-17-2012, 12:42 AM
I really don't think he can do this without affecting his credit rating.

I think he knows that.
better no credit.

Gerarddm
05-17-2012, 01:17 AM
Morality? What has to do with it? A homeowner makes a bargain with a bank: the homeowner pays the mortgage, and if unpaid, the bank takes back possession of the home. Pretty simple.

If a homeowner is under water and in distress and walks, the bank gets the house, fulfilling the terms of the bargain. Sounds moral to me.

You think commercial developers who default on their projects and have the bank(s) take them over are concerned about morality? Hardly.

fishrswim
05-17-2012, 01:32 AM
Morality? What has to do with it? A homeowner makes a bargain with a bank: the homeowner pays the mortgage, and if unpaid, the bank takes back possession of the home. Pretty simple.

If a homeowner is under water and in distress and walks, the bank gets the house, fulfilling the terms of the bargain. Sounds moral to me.

You think commercial developers who default on their projects and have the bank(s) take them over are concerned about morality? Hardly.

Exactly. And you can recover from a bad credit rating. I'm fortunate to work with a savings and loan that never sells its mortgages. My last two mortgages were with a credit union and a S&L. Haven't worked with a bank since I got screwed by one about 30 years back.

bob winter
05-17-2012, 07:09 AM
I've read that in Spain, if you give the house back to the bank, you still owe the note. That's certainly unfair, and makes deleveraging household debt pretty much impossible. Seems like someone always gets the shaft on these deals when the values drop.

In Canada, there are two aspects to a mortgage. The mortgage is obviously secured by the real property but the lender also has recourse against the borrower on a personal level. This means that, if the house does end up being sold by the lender, the borrower is still on the hook for the shortfall, if any. The lender has a duty to get the best price for the property they can with reasonable effort but that is no guarantee that the net proceeds will exceed the mortgage amount. If they do not, the borrower is on the hook for the difference. The only escape would be personal bankruptcy.

Back in the day, you could raise a first mortgage of 75% of the appraised value of a residential property but I think conventional mortgages are now at 80%. This means that a young couple would have to come up with a down payment of 100K on a 500K home. Clearly most young couples simply do not have this sort of money so they go the high-ratio route and take on massive debt This all very fine and good, provided mortgage rates remain low, but when rates go back up, as they will someday, there is going to be a world of pain out there.

Dan McCosh
05-17-2012, 07:23 AM
In Canada, there are two aspects to a mortgage. The mortgage is obviously secured by the real property but the lender also has recourse against the borrower on a personal level. This means that, if the house does end up being sold by the lender, the borrower is still on the hook for the shortfall, if any. The lender has a duty to get the best price for the property they can with reasonable effort but that is no guarantee that the net proceeds will exceed the mortgage amount. If they do not, the borrower is on the hook for the difference. The only escape would be personal bankruptcy.

Back in the day, you could raise a first mortgage of 75% of the appraised value of a residential property but I think conventional mortgages are now at 80%. This means that a young couple would have to come up with a down payment of 100K on a 500K home. Clearly most young couples simply do not have this sort of money so they go the high-ratio route and take on massive debt This all very fine and good, provided mortgage rates remain low, but when rates go back up, as they will someday, there is going to be a world of pain out there. Might note that the problem in the U.S. is due partly to banks issuing mortgages at anywhere from 110% to 300% the actual value of the home. This guaranteed most "homeowners" are upside down in the debt-equity ratio. The banks then sold off the mortgages they issued without noting this detail to the buyers.

bob winter
05-17-2012, 07:28 AM
Dan, I have read all about what went on with the mortgages in the US. Thank God they couldn't get away with that sort of thing here although I am sure they would if they could. I can't help but think that the bailout money spent on saving banks would have been better spent if given directly to other recipients.

No commercial enterprise is "too big to fail".

Dan McCosh
05-17-2012, 07:33 AM
The real problem is that many commercial enterprises are big enough so that failure takes down thousands of people, or even whole cities or states with them. The exception being a few who pocket what remains.

bob winter
05-17-2012, 07:35 AM
True enough, but would letting a few banks fail have been worse in the long run?

Dan McCosh
05-17-2012, 07:47 AM
An actual bank failure is theoretically done along with federal protection to the depositors, which means the damage is more or less limited to the owners. What went down was more akin to a giant counterfeiting scheme that threatened the entire financial system. The bailouts were a desperate attempt to control the damage, and various countries took different approaches. It's still being played out. I confess to having been completely ignorant of what had been going on, despite marveling at the strange boom in house prices despite a shrinking population and large number of abandonments. The simplistic notion of a 20% down payment, which at least protected the lender, seems quaint today. It was also standard when I bought a house. It took lots of MBAs to screw it up.

bob winter
05-17-2012, 08:19 AM
Well, the MBA's did a bang up job. I keep a close eye on the two Harvard MBA's on our staff so I can head off potential disasters.

Ted Hoppe
05-17-2012, 08:50 AM
The moral to the story is those who realized the system was broken, saw there was much to gain made out and it was tacitly legal came out far far ahead. those who were handicapped by ethics or sought a moral high ground lost on capitalizing on a gamed system.

I see a lot of parallels between this and pro sports. Those who bend the rules to win became superstars or got better contracts than those who took the moral ground. those who didn't take enhancements never will make Cooperstown, Canton or win the Tour De France.

George Jung
05-17-2012, 09:10 AM
Interesting conversation; I'm impressed how much several here know about this, and I'm taking notes! I'm looking at homes in Lincoln; it's the 'hotspot' in Nebraska, and seems poised for a boom. RE sales certainly are taking off, and I've never seen a happier bunch than the builders I've been talking to. That said, the homes that I've found most appealing are 5 - 8 years old; they seem built better, better attention to detail, and new construction is trending towards the new open floor plans which I find unappealing. That, and they're trending towards postage stamp sized lots with new construction. As this is likely my last home (barring complications) I'm inclined to buy the house swmbo wants, rather than one that will 'do'.... unfortunately, that kicks us to $360 - $430. The Dutchman in me cringes at that! We've found one house we love, at the top end, of course - and as we've looked at (literally) more than a hundred homes, find that those priced less, wouldn't be after we 'corrected' the things we don't like about them. I can pull this off, I just don't want to! :P I've been searching for some foreclosure deals - they're out there, but rare. A guy I know just bought an $800 property, for $450 - and he anticipates rolling this over in a few years will be lucrative. And... it's a wonderful property. It basically fell into his lap; I'm still waiting.
A few thoughts for those in a situation to do so - it is possible to 'borrow' against your own investments, avoid the bank fees, and pay yourself a decent interest rate while still enjoying a tax writeoff for interest.
Also, it's possible to set up a self-directed IRA, invest it in a variety of atypical investments, including rental real-estate. Income goes directly into your retirement account.
Of course, this can't be lived in by you or your immediate family - but it's interesting the options that are available. And losses are not deductible, so better have your ducks in a row.

John of Phoenix
05-17-2012, 10:52 AM
RE sales certainly are taking off, and I've never seen a happier bunch than the builders I've been talking to.There was a blurb on CNBC yesterday saying that home builders are more optimistic now that they've been in years. Good luck with your relocation.

bobbys
05-17-2012, 11:15 AM
When we left the paradise that is New Jersey and commenced our aimless wanderings we went trough Nebraska, Her college roommate was from Hastings, At first i was indeed startled by the flatness of it and miles upon miles of corn{i wonder if people get lost in corn fields}. There were a million signs for Cornhusker this and Cornhusker that!

Well at any rate we stopped in Lincoln and we thought it was a wonderful place, maybe the nicest town we saw in the Midwest..

Everyone was so friendly we could not believe it.

Seemed a bit odd though after being in a Gritty NJ city with all different sorts of people, It was as if we entered Stepford.

Salt Lake City seemed that way to.

bobbys
05-17-2012, 11:18 AM
The moral to the story is those who realized the system was broken, saw there was much to gain made out and it was tacitly legal came out far far ahead. those who were handicapped by ethics or sought a moral high ground lost on capitalizing on a gamed system.

I see a lot of parallels between this and pro sports. Those who bend the rules to win became superstars or got better contracts than those who took the moral ground. those who didn't take enhancements never will make Cooperstown, Canton or win the Tour De France..

Interesting observation.

For years builders made money, At the end of the boom I was going to but 5 acres and develop it into city lots but lacked the courage to pull the trigger.

If I had i would have gone bust

Dan McCosh
05-17-2012, 02:05 PM
Re: the morality thing. Is it moral to leave your watch in a pawn shop, and not retrieve it?

George Jung
05-17-2012, 02:08 PM
Maybe. What kind of watch?

Ted Hoppe
05-17-2012, 03:25 PM
Re: the morality thing. Is it moral to leave your watch in a pawn shop, and not retrieve it?

many pawn shops are hoping you do just that. A watch worth 500 gets a loan for 125 for 30 days.

My brothers hobby is to buy such watches from local Seattle shops for 225 and sell them for 400 on Craig's list or flea bay.

Garret
05-17-2012, 03:35 PM
.

I wonder too about Banks selling ones Mortgage.

If I were to need a mortgage (be it ever so humble - & it is humble, my house is paid for) - I would only work with a bank that wasn't reselling it - taking one right back to the local/regional bank, credit union, etc.

Ted Hoppe
05-17-2012, 03:52 PM
as long as the tax code benefits those with morgages... Not having a mortgage interest deduction is a questionable.
If a person if fully employed who has less than 1/3 of the mortgage paid off it might not want to pay off the principal if one lived on low lands, earth quake prone areas or even in heavily forested area. there are high probabilities over the next years, one could suffer loses beyond what is recoverable. For example... When the big earth quake comes to my neighborhood my beautiful home will be condemned and will be a loss. my morgage will automatically be under water and the house uninhabitable. I would be wise to walk away. same reasoning goes for coastal towns when hurricanes come.

No one would ever blame or call them immoral from walking away from under those conditions.

SamSam
05-17-2012, 03:57 PM
I think this thread is suffering a moral dilemma.

Shouldn't it be titled "Is it Immoral to skip out on your Mortgage" ?

2MeterTroll
05-17-2012, 03:59 PM
morality is for the po folks. in case that was not clear enough; same with manners. Its interesting to read all this when its very clear from what is going on in the financial sector and business world that middle class views are not the operative rules. What we see is a fleecing of what was left of the middle class; now that we are bringing troops home we will see in the next decade just how much damage these wars did to the working class. IMO this is deliberate those working class where the next middle class and you just cant have surfs if you have uppity folks' who feel the country should pay the whole bill for thee service. Money is a cold mistress and she has no morality that we can recognize.

johnw
05-17-2012, 04:25 PM
An actual bank failure is theoretically done along with federal protection to the depositors, which means the damage is more or less limited to the owners. What went down was more akin to a giant counterfeiting scheme that threatened the entire financial system. The bailouts were a desperate attempt to control the damage, and various countries took different approaches. It's still being played out. I confess to having been completely ignorant of what had been going on, despite marveling at the strange boom in house prices despite a shrinking population and large number of abandonments. The simplistic notion of a 20% down payment, which at least protected the lender, seems quaint today. It was also standard when I bought a house. It took lots of MBAs to screw it up.

Commercial banks aren't FDIC, are they?

Dan McCosh
05-17-2012, 05:29 PM
Commercial banks aren't FDIC, are they? No. I was referring to the old days, when banks took deposits and lent money.

johnw
05-17-2012, 06:35 PM
No. I was referring to the old days, when banks took deposits and lent money.

We still have FDIC banks, and they still get shut down and the shareholders cleaned out and the managers fired and often in legal trouble for the way they got the bank in trouble. Some even get sent up for a few months hard summer camp at a minimum security prison.

TARP worked the way it did because such a mechanism wasn't in place for some of the outfits that were in trouble.

botebum
05-17-2012, 06:53 PM
This is a rather pathetic troll Bobby(s)....I disagree.
I haven't yet read this entire thread, but if you put this thread and mine on my bankruptcy together and weed out the idiots, you might end up with something interesting and informative to read.
It's obvious just from the posts on my thread that many here are ignorant of what bankruptcy (Chap.13 in my case) really is.

If one or two people can learn something then it's not a waste of space.

Doug

Dan McCosh
05-17-2012, 08:12 PM
many pawn shops are hoping you do just that. A watch worth 500 gets a loan for 125 for 30 days.

My brothers hobby is to buy such watches from local Seattle shops for 225 and sell them for 400 on Craig's list or flea bay. Lots of people loaned money on houses with the same idea in mind, or at least they used to.

Boater14
05-17-2012, 08:23 PM
Your original title posed an interesting question. Leave moral out of it. It's business. The rich get rich by just skirting the law. JPMorgans latest caper a case in point. So, if it's legal to walk away from a mortgage you can do it and move on with your life. In the current climate concerns about morality is an encumbrance.

John Smith
05-18-2012, 05:51 AM
Your original title posed an interesting question. Leave moral out of it. It's business. The rich get rich by just skirting the law. JPMorgans latest caper a case in point. So, if it's legal to walk away from a mortgage you can do it and move on with your life. In the current climate concerns about morality is an encumbrance.

"moral" is subjective. It would be my opinion that it was very wrong to bail out financial instututions who were in trouble because of bad mortgages, and not bail out those mortgages in the process. I'm reminded a bit about Katrina and how some people wading through the water to find food for their families were heroes and others were looters.

Is it moral to skip out on a marriage?

Is it moral that the taxpayer insure either?

"Moral" between a man and his conscience. All these things, in my mind, are contracts. It is not legal to breach a contract. It's not legal to drive to fast or spit on the sidewalk or drive and talk on your cell phone.

Most of this legal stuff, IMO, implies normal circumstances. Is it moral for GM to close a plant in Flint and move it to Canada? Under those circumstances, the banks who hold the mortgage and the people who live in the homes ar both victims. If a storm came in and destroyed those factories Flint might have been deemed a disaster area and get help rebuilding.

Unlike most contracts, if you fail to pay your mortgage, or your car, the lender at least takes owner ship of the property.

I think there are times when it is more than perfectly okay to simply say to the lender, "I cannot pay. Here are my keys." At a minimum, the lender will have a tax write off. The only thing about the individual's end of this transaction that I would deem immoral and illegal would be intentional damaging the property before handing the keys over.