Just because you are "underwater" in your mortgage doesn't mean you can't afford it

[RB TexLa]

Should the banks be able to get larger payments per month if you are "overwater"?

[tridim]

1. Most people are underwater because of the banks.

I tell that to the spammers from Chase (India division) that call me every day.

[dkf]

5. Nope. They paid too much.

Or they used their equity to get a second mortgage.

I've been holding off buying for years. Its still too overvalued to me.

[tridim]

8. I bought the cheapest, most modest home I could find in 2000..

and was underwater within 5 years.

No second mortgage, nothing. So, you might be right for a handful of folks, but you're wrong for people like me.

[stray cat]

11. The house lost its value because the entire market had been inflated

alot of people made alot of money but it depending entirely on location and timing. No matter what you bought in some locations - if it was recent right before the housing prices corrected you were screwed.

[tridim]

13. Inflated, at least in part because the banks got greedy with sub-prime mortgages.

All I know is that it's not my fault.

It also wasn't my fault that my former boss laid me off and stole $34,000 from me last March.

[sandnsea]

23. Read about Merit Financial

This shit was intentional and in many cases, pure fraud. I am so sick of these self-righteous idiots who refuse to understand that a crime took place, many crimes in fact.

http://seattletimes.nwsource.com/html/businesstechnology/2003459108_merit03.html

[dkf]

33. The fraud was perpetrated by the rating agencies.

1It all starts there. The rating agencies got little towns in Europe to buy these mortgages! They are the real victims. People can walk away from their contractual obligations and get it wiped off their records. Most put minimal amounts down on their house. But all those people around the world who bought our debt are SOL.

If a person did put a large down, they are also screwed.

[sandnsea]

39. You didn't even read the article

Little towns in Europe?? You're nuts.

[FreakinDJ]

44. Bush needed to finance Iraq War - that is what caused it

and selling China our debt in the form of securitized financial products was the only way he could do it

Bush left Fed Reserve Seats unfilled so he didn't have to deal with too many voices

[dkf]

48. Saw it on 60 minutes. The mayor of a little European town invested a huge chunk of their funds in

American Mortgages. And now their budget is a mess because their funds are gone. And I don't have to read about fly by night mortgage operations. I saw that CNBC special on the Pizza Delivery guy turned mortgage brokerage owner. And I saw the Lehman exec who admitted that they lowered standards to fill a need. The need was for securities rated AAA, and the easiest way to get the product was mortgages.

Investors wanted highly rated securities. These guys simply found a way to get them.

[sandnsea]

52. And they ALL colluded, ALL of them

There isn't one sector that is guiltier than the rest.

Just like there isn't one group of people who are the sole victims, we all are.

[dkf]

17. The secret is DON'T BUY

That is what I did because I thought prices were too ridiculous. I still do. Of course a one bedroom is still $300k here so our prices are simply crazy

[tridim]

27. Everyone knows that NOW.

Most people that are affected by this bought their homes 10 years ago, back when Bush was hyping his "ownership society" crap. My house was reasonably priced at the time and certainly not unaffordable.

[dkf]

51. I was looking about 5 years ago.

I said forget it when I did the math.

[DeschutesRiver]

90. We were looking for a change in 1999

and even then, the math already was getting dicey in the boom area we were considering, for both new construction and existing homes.

So we found the least expensive land out of a group of pieces that was being sold, and we built our home ourselves, doing much of the work ourselves and hiring a few subs here and there. We'd built barns and outbuildings but never a home. We paid as we went, and it took quite a few years to finish, but when I was growing up, this is the same route my dad took (except with a mortgage due to having us kids to support, but his loan was minimal as he did much of the work himself on a piece of land he searched for and picked up inexpensively). The house was 1/3 the cost of what similar homes were going for in this already booming area. It is nothing short of amazing what it actually costs to build a home vs. what they sell for, and more so when prices are inflating daily.

If we couldn't have done this, we'd have stayed with the home we'd had for the last 20 years, because no way would we have extended ourselves at such a time, even though banks were practically throwing loan offers at us. Many of our neighbors grabbed the loans - as one said just the other day "well, why not? They were making it so easy...".

I know what we did isn't for everyone. But I have no regrets, esp. given how things have turned out. All it took was saying no when we knew that what was being offered to us wasn't sustainable if anything even slightly adverse happened.

[MNDemNY]

95. House values fluctuate. Thems the chances you take.

[stray cat]

9. Right - Homes losing value is because their value was inflated

It was clearly coming because wages and profits in general have no where near kept up with housing prices

[notadmblnd]

25. I've been there. I stopped answering the phone.

[tridim]

29. I've pretty much mastered the timing of the Chase "delay" queue.

If nobody answeres within about 2 seconds, it's them. Click.

But usually I just turn the ringer off and turn on the answering machine.

[notadmblnd]

53. I just look at the caller ID

if it's restricted, unknown or 1-800, I know it's them. I plan on making one call to them and that might just happen on Christmas Eve- where do I mail the keys, that is all I want from them. I tried working with them for months. I just kept getting the we're sorry we can't help you, but how much money can you send us this month? I stopped sending what I could too, it was just delaying the inevitable (because they aren't going work with me).

So, they'll get their house back, they can leave it empty with no heat or electricity and let the mold take over. By the time the bank sells it to an investor, they won't get 1/3 of what I owe and the house will need to be gutted and rehabbed before it's livable again.

Screw em. I'm tired of crying about it. I'm sick of the stress of dealing with them. I'm walking.

[tridim]

62. Ironically I stopped stressing because of the calls.

They are so laughably stupid that it's pointless to stress about any more. It's also fun to trash their company and the CEO's that WE bailed out.

I've long since applied for a loan modification, sent in all the documents as they requested. I've heard this process doesn't work, but I really don't care.. It's just buying time until the inevitable. My cousin has been in this process for almost two years now and they still live in their house. I'm only on month 4.

[notadmblnd]

72. my issues started in April

I had a foreclosure prevention counselor on it before I got behind. We sent the paperwork in not once, not twice, but three times. It was I'm sorry, we can't help you, you have to be behind. then it went to well we didn't get all of your documentation send it again. They never once told me what the needed from me to be able to proceed. Finally one day, a person with an American accent called. She told me that the bank wouldn't work with me because they felt that even if they did rework the loan, I still wouldn't be able to afford the mortgage. She suggested I list the home as a short sale. I stopped paying what money I could and began looking for other arrangements. They can sell their own house.

[dkf]

2. You are "underwater" with practically everything you buy.

[Yupster]

15. That was my first thought too

Buy a car and you're underwater from the first day to almost the day you pay it off. Everyone understands this. It's still a way to get to work and they can still make the payments.

Same thing with a house. It's a place to live. Whether you're above water or undfer water you still pay each month and you still get a place to live and just like the car, you eventually will not be underwater.

[sandnsea]

3. Mortgage firms and appraisers colluded

to push home prices higher and higher. That's why people are demanding banks modify loan amounts.

[dkf]

6. Nobody needs to buy a home.

Outrageous prices need to be rejected as simply ridiculous.

[tridim]

10. Hindsight is a funny thing huh?

[SteelPenguin]

83. So is Foresight

I stayed out of the bubble. I felt it could pop anytime over the past decade, and didn't want to get caught on the bad side of a deal. I rented and then relocated to a non-bubble part of the country and bought a house half the cost of one I could afford to insulate myself from the bursting bubble which came a year after I bought. Now I'm secure in a house that has actually gained value in the past 5 years and I can easily afford.

[BREMPRO]

19. good point- they were not a good investment in 05-07 because you could

rent the same house for significantly less- and the prices coupled with no money down/interest only loans and the believe that houses could never lose value was crazy. I would never have bought a home then as they were clearly way overvalued (this is not just hindsight- i was telling everyone i know this starting in 05). The bubble was obvious to those paying attention and with some financial education. Home values have begun to level off at pre-bubble prices now. The banks and wall street deserve major responsibility for pushing these loans out at any cost to fuel their mortgage backed security casino. Many were duped by unscrupulous realtors,mortgage brokers and appraisers- and there was an interesting theory proposed recently that made sense- that much of the sub-prime buying/borrowing was fueled by prosperity gospel and collusion of brokers and Christian churches that preached this kind of "god want you to be rich-just believe it and will come true" gospel. http://www.theatlantic.com/doc/200912/rosin-prosperity-gospel

[sandnsea]

21. Buying a home sets your monthly housing cost

It's the smartest thing a person can do, particularly when they're young and hopefully not in the middle of a real estate swindle concocted by global finance.

[dkf]

26. Well if you can afford it then no problem right?

But if you are fixing your price at something you can't afford that is even crazier.

[sandnsea]

28. People could afford it

Explain to me how people stayed in houses for 2,3,4 years, if they couldn't afford their mortgage?

[dkf]

40. Teaser rates. Option ARMS.

Or thinking they could flip the place, or get another loan, or get a raise. Or maybe they didn't do a budget and underestimated their living expenses.

Or they were cutting it too close and couldn't pay higher energy costs.

Who knows?

[sandnsea]

65. So if the financiers' scam wasn't to jack interest rates up

and make a fortune - then these people would still be able to afford their monthly payments, especially if they hadn't jacked up the housing prices at the same time.

[dkf]

74. The teaser rates were below market.

They were unrealistic as long term rates.

[sandnsea]

85. Nonsense, lots of people with excellent credit

got those rates for the long term. Besides, they didn't tell customers those rates were well below what a permanent rate would be, so as I said, people were humming along making their mortgage payments. It's not their fault they were being sucked into a global financial scam.

[dsc]

42. many of them were paying only interest with the full knowledge that

payments would increase significantly if they didn't refinance or sell.

[sandnsea]

66. 10%-15% interest rates??

No, they did not know their rates could possibly go that high in a market where most rates were around 6& and lower for those with perfect credit.

People were scammed.

[RB TexLa]

78. ceilings, floors and margins are all in the contract, yes they did know where the rate could go.

[sandnsea]

84. No, they aren't

And they still aren't. Just gobbledybook about the prime and the window at closing in 3 years or 5 years unless the sun sets on a windy Saturday, and then it's anybody's guess.

[Gormy Cuss]

105. True, but most people need a place to live.

If rentals are escalating at an even faster pace then the better choice for staying in the same geography may be to buy at an inflated price. Or perhaps the better choice is moving to a smaller space or doubling up with friends or family. There is no one-size-fits-all solution.

I will say that I adhered to one absolute rule: never base the decision on advice from someone who stands to make money from your action. Mortgage brokers, realtors and RE brokers, builders -- none of those people are acting in your interest.

[AllentownJake]

4. Most Banks should have been reorganized and their executives should be in jail

Not concerned about them.

[dkf]

14. The real culprits are the rating agencies.

They mislabeled these packaged products as AAA making all the banks want to provide these loans to sell to investors.

[AllentownJake]

30. The people at Moodys should be in jail right now too

I'm unemployed, and I'm still happy I didn't take their offer in 2006.

[dkf]

56. I lay this entire debacle at their feet.

I'll be curious to see how the lawsuits against the rating agencies go.

[AllentownJake]

57. I hold the entire upper tier of the industry responsible

I hold KPMG, E&Y, PriceWaterhouseCoopers, and Delloite responsible for their audits. I hold the banks responsible for their lending, I hold the Goldmans of the world responsible for their packaging of the loans and I hold the government responsible for turning a blind eye.

With that many people in the upper crust responsible for a fraud, you can see why not one party is being targeted right now.

[dkf]

60. If those securites were rated below investment grade

do you think this would have happened?

Personally I think it is all about the rating. Everyone else was an enabler, but the root of the problem was the rating.

[AllentownJake]

63. Everyone was involved in the fraud

Bush's people turned a blind eye hoping it would blow up after they left office. The ratings agencies took the fees for their ratings, the federal reserve turned a blind eye because they didn't have a Volker there who was immune to political pressure, the auditors turned a blind eye because they have been turning a blind eye to everything for 20 years. The banks were collecting fees and unloading bad debt, and Goldman was collecting fees packaging it and selling it.

Any party in the chain could have stopped it, none did. All equally culpable.

[dkf]

69. No single party could have stopped it except the Government

You would have had to cut out all participants in the entire layer, all the banks, all the rating companies, all the accountants, etc.

Our Hawaii banks didn't do all that stuff. They are still pretty healthy, except the one bank that expanded into California.

[laughingliberal]

7. True. Some people are underwater and still able to pay the mortgage but many are caught in the

double whammy. The bust in the housing market in a lot of areas has impacted the economy of those areas. Nevada is #1 in negative equity and #2 in unemployment. So, there are a lot of people experiencing this double whammy. The loss of jobs in the building sector has left them unemployed and they have house that, even if it could sell, will not sell for what they still owe.

[Statistical]

36. This. Actually it is a triple whammy,

They are in an adjustable rate mortgage and the payment is going (or has) adjust upwards 30%-50%. They are barely making ends meet right now so now way they can afford a 50% increase.

So refinance right? Oops can't because they are underwater = whammy #1.
Sell the house? Oops can't do that either unless they do a short sale = whammy #2.
Then then one of two workers in family loses their job = 50% reduction in gross income = whammy #3.

Essentially they are trapped. Can't sell, can't refinance, and can't afford the reset that is coming in 1,2 6, 12 months.

[laughingliberal]

46. Very good explanation. Although we financed with conventional loan at a good rate,

the bust of the housing market destroyed my husband's business. Then, I lost my job. We're underwater, can't sell the house, can't afford the mortgage, can't refinance. We've hung on to it for 2 years under these circumstances but so we're back to 6 weeks before we go 90 days again and no work lined up. Pretty sure this is it for us. But, we've reached this point a few times and had a job come through just in time.

We are living in the absolutely worse state for the circumstances. And, no way to move anywhere else at this point.

[Goldstein1984]

12. This is hard to argue with

Along with liberty should come responsibility for how that liberty is used.

Yes, the banks and a neoliberal government encouraged the bubble, but it was individuals who bought into the "American Dream."

I have sympathy for those losing their homes because of unemployment, but those who bought homes hoping to cash in should just deal with it.

I have a personal investment in this philosophy. Our mortgage payment is, by design, less than 10% of our after-tax income. It's hard to have a lot of sympathy for the grasshoppers pounding on the door.

[Oregone]

20. Fuck the slave notion of "responsibility". A loan is a contract agreed upon by both parties

The bank agrees that the home is valuable enough collateral to leverage the risk of the mortgage against. The bank makes that decision. If the investment was too risky for the bank to have made, they still get the home they bet on.

Look, we don't need people to feel guilty about irresponsible investments the bank made when speculating on people.

[Goldstein1984]

34. It's a two-way street

Personal responsibility is responsibility to oneself, not to a master.

The bank was speculating on the buyer, the buyer was speculating on the real estate.

That said, the economy is a game, and there's nothing wrong with playing the game. I have no problem if a homeowner decides to just walk away from an upside-down investment and deal with the fallout. It's within the rules.

[sandnsea]

22. And exactly how much is your before & after tax income?

Most people wouldn't be living in a tent if they only used 10% of their after tax income for rent or mortgage payment. You do know the median wage is $15 hr, right? Where can someone live for $200 a month?

[Goldstein1984]

54. I said I was fortunate. But I've also been

frugal.

That has allowed me to ride out the financial meltdown relatively unhurt, aside from having to change jobs and relocate a week before my previous employer filed for bankruptcy. And it has also allowed me to help family members who have been hit very hard by the meltdown.

A consumer culture can't exist without willing consumers. Yes, they were taken for a ride. I'm more worried about people who just wanted to own a decent home, or who couldn't even qualify for "sub-prime" mortgages, than I am about people who were speculating in real estate and now want to play victim because their McMansion isn't worth what they owe.

There are plenty of people who don't even make $15/hr. Yet they are buying giant flat screen televisions, iPods, video games, and having Pizza Hut delivered. Part of our problem is that consumers are willing to buy all the crap they are told the need.

When we bought, our realtor was trying to sell us five-bedroom homes because they were good investments. We "just said no." Now that we are back in Alaska following my job change, we're just renting because I don't think the worst has hit yet. A relative is living in the home we own.

This is too complicated to cover in a few paragraphs. I know the American people have been victimized. But they also have an addiction to consumption and an unjustified faith in the "American Dream." They have to look within to change that.

[notadmblnd]

38. well you either live in a hovel or you make a lot of money.

either way, lucky you.

[quaker bill]

64. It is not luck

when you plan it. My home payment would be in that percentage range if both of us were working. Only I am currenty working, and we are doing just fine with a payment in the 17 percent range. But then we bought roughly half the house pricewise that my credit union would have happily financed. We did so on the assumption that one of us would likely be out of work at some point and wanted to be sure that the payment would be low enough for one of us to handle alone.

I do indeed earn more than the median wage, but I am hardly wealthy. Thankfully, although local average home values have plummeted, we are still right side up and doing just fine.

[Goldstein1984]

71. That is my point

You have made some wise decisions. Others have not.

You could have mortgaged yourself to the limit, gambling that you were going to make a fortune when you sold your home.

The same thing happened to people during the dotcom bubble.

There is not American Dream without American dreamers.

[Goldstein1984]

68. I have been both lucky and careful. And...

I've been an atheist since I was seven years old.

I've been liberal since I was twelve.

I've been skeptical as long as I can remember.

I've never bought into the American Dream.

I'm just a working stiff, trading services for a paycheck every two weeks.

Too many Americans believed the bullshit they were fed. We have the government we deserve because collectively we have the government we tolerate.

The economic and political elite have been deceitful. We have been gullible. Some more than other.

[notadmblnd]

73. tolerate? How does one compete with corporate America when it comes to electing/buying politicians

to work for our interests?

[Goldstein1984]

75. That's why I said "collectively"

I don't tolerate. I do everything possible to opt out of the "system." I'm guessing that most people on DU do that to some degree.

(Don't tell my boss (writer looks behind his chair and under his desk, then peaks out the window before continuing to write), but I've even scheduled my work travel to reduce my contribution to the airline industry by about half. He thinks I'm efficient, not a socialist attacking capitalism. I do my best to be an insurgent rather than an employee.)

But collectively, the electorate are responsible for who "we" elect. "We" don't have to believe the bullshit campaign ads. If "we" had the collective will, "we" could target specific industries for boycotts to get the attention of the elites. "We" could flood Congress the and the Whitehouse with calls and letters. "We" could have shut down the G20 Summit in Philadelphia the way "we" shut down the WTO Conference in Seattle.

Collective "we" doesn't have it in us.

When it gets bad enough, maybe "we" will.

[notadmblnd]

79. We put Obama in office collectively

And so far the corporations are still winning.

[Goldstein1984]

86. No argument from me...

I really think it's going to get worse before it gets better--everywhere.

The path we're on isn't stable--it's a house of cards.

[Ikonoklast]

47. So, the collapse in mortgage-backed derivative trading has no bearing on this at all.

Gotcha.

Beware of that Randian philosophy as it will be used against you one day.

The smug will get knocked out of your system by an unforeseen event that will eventually happen to you.

A grasshopper you will become.

[Goldstein1984]

59. Grasshoppers we will all become if

the economic and political elite get their way. They want us all to be peasants.

I have been fortunate, but I am not rich. I grew up poor, so I have been frugal.

I also have a 30-year career behind me, so I may be in a different point in my life than many DUers.

And I expect that I will never be able to retire, because my children and grandchildren are facing a different world than I did, and they are going to need my help.

My only argument was that a lot of people bought into the American Dream, signing mortgages they couldn't afford. I'm more concerned about people who are doing their best and barely getting by, or not getting by, than I am about people who were speculating in real estate when they should have just been buying a home they could afford.

[Oregone]

16. No. But you owe the bank in interest alone 150% or so more than what you borrow

So, not only are you paying back MORE in principal than the home is worth (now), you are paying additional interest on the inflatd value. Its a bad deal

Thats the botton line. Its the right business decision to let the bank have the home.

If the home cannot appreciate enough to cover the interest and the amount you are under water by the time the term is over, you are losing money. Fuck it.

[RB TexLa]

35. So by your thought no one should ever sign a contract to rent housing? Housing itself has value.

[Oregone]

49. Im talking about the financial agreement in purchasing a home, an asset

Which involves investment, speculation, and assumed risk by both parties. The bank assumes risk and is suppossed to ensure it will never have a loss, default or not. People don't have to feel personally guilty about the bank's shitty speculative activity.


A person has every right to calculate where they will have more wealth...defaulting and renting or staying in the contract. At the end of the day, the only "right" business decision is that which helps the person advance their social mobility and personal wealth.

[RB TexLa]

50. So you included "investment, speculation, and assumed risk" but not housing. OK

[yodoobo]

18. No. Why would they and why would it be relevant?

Defaulting on a mortgage and letting the bank keep your house when you are underwater is something that the bank arranged for in advance in the mortgage contract.

There are two methods to end a mortgage contract (a contract written by the bank btw)

1) You pay the amount due over 30 years, or earlier and the lien on the house is released

2) You don't pay the full amount, and the bank takes ownership of the house.



Most people choose option #1 because it makes the most business sense. But sometimes option #2 makes more business sense.

Because option #2 is becoming more and more attractive, banks have an incentive to renegotiate the contract and lower payments.

[notadmblnd]

24. Do you not understand that the banks were paying appraisers

to inflate the value of properties? Most people have no idea what their homes are worth until the appraiser walks through and tells them. Yes, Realtors can give a client a fair estimate, but the banks determine how much they'll loan on what the appraiser says. So, in reality your house was never actually worth what the bank gave you as a mortgage (that's if you bought it in the last few years).

Now, you may be able to afford to pay it, but is it really fair that you were talked into taking on bigger debt than you really needed? Yeah, I guess you should pay the money back if you can afford it and you feel the home you live in is worth it, however, I don't see how anyone can't be angry about the screwing we've all taken from the banks.

[RB TexLa]

32. Talked into. LOL

Really

Glad someone didn't try to sell me a hot dog for $500 today, they might have "talked me into it. :rofl:

I have a couple MLOs calling me every week pedling investment properties, I'm hoping for a bigger decline before thinking about buying some, their talking has no bearing on my decision.

[notadmblnd]

43. but you're investing, not looking for a place to live?

most people buy homes to live in. The get rich quick flippers? I have trouble feeling for them, they exacerbated the problem with their greed too.

[RB TexLa]

45. Same principle when buying a primary residence, their talking means nothing.

[notadmblnd]

55. certainly it does. If you want that loan

and if every mtg corp in the country is engaging in the same practices, they kind of have you over a barrel.

[RB TexLa]

58. You said people were talked into loans their talking has no bearing on my accepting a loan from them

[notadmblnd]

67. I know many people that were bombarded with mtg companies

offers of refinancing over the last 10 years. They came in the mail like clockwork, sometimes several a day. Everyone that needs/wants a home of their own may not necessarily be as business savvy as others may be.

One lady I worked with; she and her husband refinanced several times to get their kids through college. Others, refinanced to maintain/upgrade their homes. I wonder how many of them would have refinanced at all if the adverts weren't shoved in their faces constantly. Others bought what they thought they could afford and payed, who are now losing their homes dues to decline in income.

There are times that I tend to paint with a broad brush and I'm really working on not doing that because it's important to remember that the issue is not black and white why some people's lives are being destroyed by this crisis and others are sailing through it.

[sandnsea]

37. And the small local banks went right along with it

I talked to my landlady about buying the home around 2004. I was getting nervous because as housing prices went up, so did rent. I was afraid of being priced out. Well the local loan officer from the locally owned bank told her the house was worth $240,000. After she died, and the housing collapse happened, they put it on the market for $190,000. Got one looker. We offered $160,000 and they wouldn't take it. Houses in that neighborhood are selling for $140,000, and not very quickly at that. Lots of people in trouble, no question. And most of it was driven by a few companies, like Countrywide, that pushed the entire market. It is just ignorant to say this is the consumers fault.

[Blue-Jay]

31. I bet you thought your post was insightful.

You thought so, didn't ya? :rofl:

[jonathan_seer]

41. Walking away from a house underwater is no different than a business reorganization

The question is why you feel the individual should have less rights to corporations.

The "threat to walk away" is what large businesses do every do in order to get their loan rates adjusted downward.

Occasionally they carry out their threat - Circuit City.

Because they are able to fight back, large businesses often are granted their sought after re-org due to bankruptcy

The EXACT same thing individuals with underwater loans seek, but are routinely denied, because they don't have the financial heft to hurt the lender unlike Donald Trump

The notion that "walking away" from debt is "unAmerican" is laughable.

Why the USA practically invented this practice in large businesses.

If the individual had the same rights as a corporation, then the loans would be adjusted to reflect reality, and few would walk.

[dkf]

70. Businesses only do that when they are out of money.

If they still have money, they don't.

The problems is that people with the ability to pay are also walking away. They can pay, they simply choose not to.

[Deja Q]

76. Well said. I'd K&R your response.

[Hassin Bin Sober]

61. Just because one pretends to be all knowing and insightful on the internet doesn't mean they aren't

..... a pablum puking douche-bag.

[Deja Q]

77. . . .

:rofl:

[coyote]

80. Just because the banks are insolvent (underwater), does not mean they are too big to fail.

NT

[RB TexLa]

81. I agree, we have to remove the thought of too big to fail. If we had let a top 4 bank and GM fail

you would see less risk being taken. The government can oversee the failure of them, but we have to allow them to fail. Others will replace them.

[1]

82. almost without fail you are "underwater" in your new car loan as soon as you drive off the lot...

you make your car payments, don't you?

[laylah]

87. I am not underwater...

and I still cannot afford my mortgage. Any help for THAT? Doubt it:cry:

[RB TexLa]

88. Sell the house and pay off the loan.

[NYC_SKP]

89. No, banks should NOT be able to get larger payments per month if you are "overwater"!

That's fucking crazy.

Why should I, with a fixed rate loan and good history over the years be called to pay more because banks and brokers sold impossible loans and because people were caught unawares, or were greedy.

And congress let this happen.

Let fucking congress and the bankers and the brokers pay up and leave me and other responsible homeowners out of it!

:nuke:

[RB TexLa]

91. They are both crazy. It's one thing if there is financial hardship and the property the loan is on

is in a market where the housing market is hard hit and needs help. But there are people who seem to think loans should be modified based solely on the fact that the property is worth less than is owed. They should no more pay less than someone who's home has risen above the amount owed should have to pay more.

[NYC_SKP]

93. Oh, I agree fully. The banks are in a bind, yay, when they'd rather amend the mortgage...

...than have it default, so they may lower the principal to keep the owner in and paying.

It's a windfall for the buyer.

But no, it shouldn't be modified just because it's upside down.

That would be an unfair bonus to newer buyers and discriminatory to people like me, who have 15 years into their 30 year loan.

My property went from $450,000 to $225,000 (in hard hit Stockton, CA), but I'm still rightside-up.

:donut:

[sendero]

92. Just because you can afford..

... to flush a stack of benjamins down your toilet every month is no reason to actually do so.

[Romulox]

94. This "Let the market decide!" crap is nonsense when the gov't is doling out TRILLIONS

to the same banks to which you refer. I've noticed that "free marketeers" have been uniformly unable to synthesize the context of massive government handouts to the banking sector with their "free market" ideology.

The OP is certainly no exception!

[RB TexLa]

96. Not at all, I think the idea that something too big to fail is idiotic. We should have let a huge

bank and GM fail. If we had done that, you'd see risk pulled back. Failed companies will be replaced and the government can oversee the failure but we have to let them fail. There is nothing wrong with a company gaining size knowing that there is no one to bail them out if they overextend.

[Romulox]

97. "Should have" is irrelevant. We did not. And that is the context we are operating in...

You say "should have" like they are magic words which enable you to segue back into your previous rant while simultaneously causing everyone to forget that the so-called "free market" to which you refer is imaginary.

That the same banks for whose sake you pine received and continue receive trillions of dollars in taxpayer handouts pushes the whole thing over a cliff into self-parody.

[RB TexLa]

98. All but one of the bigger banks have paid their TARP funds back. We should let the next huge bank

or company that dangles over the cliff fail. Should have is all I can say, no one gave me the option to make that decision. Hopefully when whoever comes asking the next time Obama remembers his own words, "people have to own their failure."

[Romulox]

99. LOL. "They only lean on the taxpayers when they're unprofitable!" is a fairly weak argument

in defense of the banks, wouldn't you say?

"Should have is all I can say, no one gave me the option to make that decision"

No, "should have" is not all you can say. A person who clings to his ideology without any attempt to integrate current events into the context of his beliefs is a mere ideologue. And ignoring reality for the comfort of one's ideology may be be comforting, but it's ridiculous (not to say pathetic) for such a steely-eyed advocate for the "free markets" to complain that cronyism isn't a part of that self-same "free market" when it demonstrably is. :hi:

[RB TexLa]

100. I'm from Louisiana I have no problem with cronyism, that's how we fund politics. It's how you

obtain, hold, and use political power.

[Romulox]

101. Live by the sword... nt

[Robb]

102. Perhaps.

Assuming your notion swings both ways, it would be an interesting idea. The bank gets an increasing share in the "profits" as the equity increases, and a declining share as it decreases.

Once underwater, the bank should pay the homeowner. It's called being responsible for your investments. :evilgrin:

[dionysus]

103. i don't drink with you.

[LanternWaste]

104. No.

No. n/t