PDA

View Full Version : Just stop paying your mortgage



Tylerdurden
10-13-2008, 02:01 PM
By Peter Schiff
October 10, 2008 If you are a mortgage holder who is either struggling with crushing payments, bitter for having overpaid for your home during the bubble, or who has extravagantly refinanced when prices were rising, the government's landmark $700 billion bailout package has an important message for you: stop making your mortgage payments . . . immediately. Furthermore, if you believe that with some planning and sacrifice you may be able to meet your mortgage obligations, the government's message is clear: relax, don't bother.
While angry voters have labeled the package as a bailout for Wall Street, it is more akin to a “Get out of Jail Free” card for anyone who acted irresponsibly during the boom. Here's why.
Nobody likes foreclosure, least of all politicians. The new law clearly indicates that the government will make major efforts to reduce foreclosures through “term extensions, rate reductions and principal write-downs” of the troubled mortgages that it buys from the private sector. In other words, your new landlord will bend over backward to keep you in your home. The legislation telegraphs this by including a provision that extends until 2013 the exclusion of loan reductions from taxable income.
When a financial institution holds a mortgage, homeowners must live with the fear of foreclosure. Private institutions only have obligations to shareholders. In the case of a defaulting borrower, they will look to recover as much of their principal as possible. If foreclosure is their best option, they will take it in a heartbeat.
The government has no such obligations. Its only goal is to keep voters happy. After supposedly bailing out the fat cats on Wall Street, no politician wants to be accused of evicting struggling families. Once you understand this, all of your anxiety should melt away. Why pay your mortgage if foreclosure is off the table, and if you know that lower payments, and possibly a reduced loan amount, would result? A tarnished a credit rating is a small price to pay for such a benefit.
Unfortunately, this boon will not extend to those foolish individuals who either made large down payments or resisted the temptation of cashing out equity. The large amount of home equity built up by these suckers, I mean homeowners, means that in the case of default foreclosure remains a financially attractive option. As a result, these loans will be much less likely to be turned over to the government.
If your mortgage does become the property of Uncle Sam, the growingly popular impulse to “just walk away” should be replaced by “just stay and stop paying.” No one will throw you out. After a few months, or years, of living payment free, you will get a call from a motivated government agent eager to adjust your loan into something affordable.
To bolster your bargaining position it will help to be able to claim poverty. As a result, if you have any savings, spend it soon, before they call. Buy a bigger TV, a new wardrobe, or better yet, take a vacation. After the hardship of spending all of your refi cash, you probably deserve it. If you have any guilt just remember, Washington argues that consumer spending is the best way to stimulate the economy. Living beyond your means is a patriotic duty.
If you do get the opportunity to live for a while with no mortgage payment, don't make the tragic mistake of using your extra cash to pay down your credit cards. As the growing level of credit card defaults will soon push credit card companies into bankruptcy, we can expect a similar bailout plan for American Express and Discover Financial. When that happens, expect massive balance reductions for Americans who can demonstrate the inability to pay. The bigger your balance, the greater the benefit.
Taxpayers, however, will not be so lucky. The savvy investment strategists who see the government turning a tidy profit on its mortgage purchases have not factored in the incentives that will discourage nonpayment. The only way the government will be able to profit would be to buy the mortgages at deep discounts to actual loan values. However, if the purchase prices are too low, the plan will bankrupt the institutions it is trying to bail out. On the other hand, if it substantially overpays, which seems far more likely, it will bankrupt the nation.
In any event, as more and more borrowers succumb to the allure and safety of nonpayment, look for the number of troubled assets to swell. This will ensure that the $700 billion merely represents the first installment in what will be a multitrillion-dollar plan. Just as government policies provided the primary impetus in blowing up the housing bubble earlier in the decade, its latest attempt at market manipulation will only result in making a terrible problem far worse.

http://www.signonsandiego.com/uniontrib/20081010/news_lz1e10schiff.html

TimH
10-13-2008, 02:42 PM
My mortgage is still owned by a bank.

Gonzalo
10-13-2008, 02:44 PM
I'm in trouble now. I can't stop paying my mortgage because it's paid off.

TimH
10-13-2008, 02:51 PM
I'm in trouble now. I can't stop paying my mortgage because it's paid off.

now you can help by paying someone elses off.

Milo Christensen
10-13-2008, 02:52 PM
So, Mark, do you have some kind of special Google search string, you know like "the stupidest, most irresponsible, financial fearmongering piece of crap published today"?

And to think how many people are getting rich on you conspiracy nutjobs clicking on their "let's see how many clickthroughs we'll get from the permanently afraid with this piece of idiocy" websites.

This has just got to stop, you need help in the worst way.

Gonzalo
10-13-2008, 03:13 PM
Sorry Tim, instead of a mortgage, I have Carleton College to pay off.

Oh, I guess you mean the taxpayer-funded golden parachutes for the capitalists. Yeah, I guess I'll be paying my share of that for a good long time to come. $700,000,000,000 bailout divided by 300,000,000 Americans = $2,333.33 for my share, triple that for the whole family.

Chris Coose
10-13-2008, 03:16 PM
"When a financial institution holds a mortgage, homeowners must live with the fear of foreclosure."

Must?
Let's compute here. I've been paying on mortgages (3 currently) for near to 12,775 days and I have never experienced a moment of living with the fear of foreclosure. Not a single second.

Banks are not scary. We make contracts. This suggests a person should break their contract and begin to steal.
I've heard you support this kind of theft before.
Do you overtly support the meltdown of the entire system or is it simply your job to report to us regularly?

Keith Wilson
10-13-2008, 03:21 PM
Do you overtly support the meltdown of the entire system . .Of course he does; isn't that obvious? Mark's an armchair revolutionary. He wants things to go to hell completely so that the people will rise up and destroy the current order, even though it means the destruction of the lives and dreams of countless innocent people. He thinks it would be an improvement. And if you don't agree, you're "asleep", one of the ignorant "sheeple".

Tom Montgomery
10-13-2008, 03:44 PM
I am actually sympathetic to the concept of "the sheeple." Anyone who watches The Tonight Show and Jay Leno's man-on-the-street interviews has to acknowledge that the average American is stunningly uninformed.

I like Mark. He strikes me as a nice guy.

As for his C&P posts.... I rarely agree with them. But I think his posts are interesting, regardless. Frankly, I don't think Mark is always 100% in agreement with the links he posts. Mark is a provocateur. He is interested in the reaction. Working through the reasons why I disagree helps me to focus my thought.

YMMV.

Mark does sometimes go over the top with his responses to people who get personal in their disagreement with him. My reaction is: So what?

I can disagree respectfully with someone. But if they get personal and attempt to bully me... look out! I was taught that if someone dares to push me... that I need to push back twice as hard. One ought not tolerate bullies. Quite frankly, I am brutal with Sam F for this very reason.

Chris Coose
10-13-2008, 03:51 PM
One ought not tolerate bullies.

I heard through the bilge water that I got TD to toss his computer in the dumpster one morning after one of my push backs.

(That last question I had for him stunk of cadillac bait.)

Tylerdurden
10-13-2008, 04:24 PM
I think several missed the fact the article is written with the bailouts in mind and asks the question where is the Joe Public bailout?
If we bail out anybody where does it stop?

I think one should notice both Milo and Ling Ling who both steal time and money from their employers don't have an issue with helping out criminals at the top. I guess its a hope of achievement thing.:rolleyes:

Tylerdurden
10-13-2008, 04:26 PM
I heard through the bilge water that I got TD to toss his computer in the dumpster one morning after one of my push backs.

(That last question I had for him stunk of cadillac bait.)

Wishful thinking? And if you only had some Viagra it might have been the one day this year.:rolleyes:

TimH
10-13-2008, 05:03 PM
If I got bailed out the first thing I would do is run off to some weekend retreat and rack up as big a bill as I could.

Rigadog
10-13-2008, 05:42 PM
Sorry Tim, instead of a mortgage, I have Carleton College to pay off.

Oh, I guess you mean the taxpayer-funded golden parachutes for the capitalists. Yeah, I guess I'll be paying my share of that for a good long time to come. $700,000,000,000 bailout divided by 300,000,000 Americans = $2,333.33 for my share, triple that for the whole family.

Bad math. Not all those three hundred million are taxpayers.

The point I take away from the piece is that the little guy should get the same consideration as the megabanks.