In 6 years, I've paid $70,000 to my mortgage companies ...

[phrigndumass]

And today I walked away from it all. I've moved out, left the keys and appliance manuals, turned off the power, and called the mortgage companies to tell them they better hurry up and insure the property and change the locks, because I've abandoned it. Oh, and I'm declaring bankruptcy for protection (partially due to the mounting medical bills, but mostly due to the mortgages).

Of the $70,000 paid to my mortgage companies in the last 6 years, only $2,000 went toward principal. The other $68,000 went toward interest. I don't feel one ounce of guilt.

There's no need to feel guilt ... I'm the victim. If guilt is holding you back from leaving an unfair mortgage situation, I urge you to look at how much you've already paid your mortgage company, toss the guilt aside and free yourself.

A huge weight has been lifted off my shoulders today.

Peace.

Sven :)

[Logical]

1. So they forced you to sign the contract? Or you didn't understand it? Serious question.

[phrigndumass]

4. The fact is I didn't understand what I was getting myself into

But it was a predatory lending situation, interest-only on the first mortgage and a higher interest rate on the second mortgage, 100% financed, no money down.

[Logical]

8. Hmmmm.....I can see the first mistake but you then got another mortgage?

[phrigndumass]

16. Both mortgages were signed at the same time, in the beginning

The first mortgage was 80% of the value, while the second mortgage was for the remaining 20% of the value.

[slackmaster]

27. The term they used for that kind of second back in the '80s was "purchase money second"

They were being pushed back then, when rates were MUCH higher than they are now.

[phrigndumass]

41. Interesting!

:hi:

[Occulus]

208. Let me guess: so you could furnish the house.

I think I remember seeing ads for those, but I don't recall that particular term. I was only a kid, anyway.

[slackmaster]

238. That, or if you simply didn't have enough for a down payment on the first.

There were a lot of changes starting in the late '70s. Deregulation, the CRA, some other acronyms, Reagan in power, etc. created conditions that allowed lenders to do some things they shouldn't do, with plausible deniability.

[JDPriestly]

256. Probably already had furniture from living in another house.

Our house is furnished with used stuff we bought cheap. Many people furnish their houses that way.

[Atypical Liberal]

219. 80/20 or 80/15/5 loans.

I've had them myself (80/15/5). As I recall, it was a way to dodge PMI.

They wouldn't give you a loan for 95% of the house, so instead you got one for 80%, then a second mortgage for the balance.

[hang a left]

329. what they call them now

is you are sucking hind tit

[BrentWil]

111. So what were the terms of each?

Interest rate, fixed or adjustable, etc.

[hang a left]

341. Geez what a friggin racket they had going on

Real estate is not in a bubble, lenders are loaning out money left and right, Liar's loans, no income proof. Come one, come all. Real estate will always appreciate. Buy with no money down, in a few months you'll be able to refinance with 30% equity. Don't trip. It's all good. They don't give a friggin frig because they are backed by the full faith and credit of the ole US of A. A homeless man living on skid row in downtown San Diego could have bought a home during those times. Come on now, don't start going after the borrowers. Everyone was juicin it up about all their equity, taking out loans, because now their property had appreciated so much. We all got caught up. Well not ALL of us, but alot of us.


Here is what is really trippy for those that are close to paying or are able to pay your home off. NOONE HAS THE FUCKING TITLE. See it's not just the foreclosures that are all twisted up..

Let's say 5 years down the road you want to sell your house. Someone want to tell me how you are going to transfer title. Worse yet, you pay off your house, how you gonna get a re conveyance and from whom??

This shit is friggin scandalous

[NotThisTime]

362. This was so common, the results of it have been obvious. The banks knew exactly

what they were doing to people when they arranged this train wreck. I'm sorry you've found yourself where you have. Hopefully it will have been a learning experience.

[Bluebear]

17. Thats how the banks wrote these loans. the second was Part of the initial Package

[CreekDog]

293. Mortgage brokers were pushing this as a way to buy homes

I was encouraged to do this multiple times.

And both times I bought houses, I had been having a lot of difficulty getting a rental. Buying was actually easier --sort of.

Let's face it, for most of us, we're just renting the houses we live in. Some of us have a mortgage and some of us have a landlord, but the basic deal is the same --someone else is in control because few of us are wealthy enough to be anything but supplicants.

[Dreamer Tatum]

10. To clarify: you seek sympathy?

Maybe you should have called the police to report the gun put to your head?

[Name removed]

22. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Dreamer Tatum]

28. I get what you're saying, but you put nothing down.

Can you not see why that would call for a higher interest rate, as they feared exactly the thing you
just did?

[phrigndumass]

34. That makes sense

I understand why the second mortgage was advanced to me at a higher interest rate

[BrentWil]

115. But I bet his loan was rated at AAA...

and sold.

[JDPriestly]

260. These nothing down loans were a scam.

The mortgage brokers were dishonest about them in that they often promised people that they would be able to refinance any time.

It's called sales. The salesman tries to get the buyer to be excited about the product, whether a used car or a house, whatever, and then pushes to get the signature right away.

It does not take much to push a homebuyer over the top. They fall in love with the house, with the idea of owning their own house and there is no sane voice to caution their excitement.

I saw this same scam over and over.

And on the weekend I spoke to a lawyer who works for a non-profit that advises and assists cheated veterans.

The fraud was of epidemic proportions. Very few prosecutions -- thus far.

The first time I heard a story like this, I was skeptical as you are, but then . . . . story after story -- and some of my best friends. Friends who ran successful businesses for years. One friend who was a top executive in a major American corporation for several years. Same story.

The reason that you haven't heard about this much is that people are ashamed to talk about having gotten into these mortgages.

But the stories are starting to become public. I wonder where the real estate agents and mortgage brokers who sold thses mortgages are hiding.

[chervilant]

391. They are

among the common folk on the street...

[RaleighNCDUer]

288. They feared collecting 70,000 dollars AND getting the property besides?

That must have been terrifying.

[Flatulo]

320. I appreciate the humor of your post, but in fairness, the leinholder

will now have to pay property taxes, utilities and what not until they can sell or auction the property. The last thing banks and mortgage companies want is your property. They want your money.

[xiamiam]

347. and they will sell it for half the original value rather than work with the homeowner..nt

[Flatulo]

415. Do we know that? I don't think the OP stated whether or not the

bank offered to work with him. Wouldn't you think they'd rather keep him in the house than sell it for half-price?

[xiamiam]

434. that is basically what has been going on around the country since this fiasco began

there is no incentive for the banks to be anything other than punitive with the homeowner...its sadistic imo..

[Flatulo]

446. That's what I don't understand. If banks are indeed kicking out

the majority of homeowners who need relief, what the heck are they then doing with the property? There don't seem to be any buyers, even at auction prices.

On a related note, did you see the economist who was suggesting that all this excess housing be bulldozed to re-start demand? Wierd. I can't imagine bulldozing perfectly good properties. Let the prices fall to their real market value (ie; what someone is willing to pay).

I guess times have changed. My first (and only) mortgage was in 1986 for $110K, and the rate was 12%. When the rates dropped to 7% I wrote a nice letter to the mortgage company (GMAC) asking for a lower rate. They dropped me down to 7.75% with no fuss.

[RaleighNCDUer]

437. That's true - and in doing so they will STILL make a profit. nt

[1monster]

382. And that's why they are foreclosing on people who own their homes outright and never had a mortgage?

And on people who were never late and never missed a payment on their morgage? And why they accept pay off payments, but don't apply them to the mortgage?

Spin me another one. Maybe you've got a bridge for sale somewhere?

[Flatulo]

412. Is it your contention that these are common and legal practices?

Or is it your contention that because these practices have been documented that everyone should simply stop paying their mortgages?

Because none of your scenarios are what the OP is describing.

The OP bought a home and stopped paying for it. This is not a situation that lenders want.

[1monster]

418. It was your contention that

"The last thing banks and mortgage companies want is your property. They want your money," that I was answering. They don't just want our money. They want both. And, no, I'm not contending that the banks' practices are legal. They are not. But, they are wide spread and common enough, with no law enfocement actions against the banks for breaking those laws, that it has become quasi-legal.

Predatory lending really isn't legal, either. I recall some really nasty penalties against banks that got taking advantage of customers twenty or so years ago, but, alas, big money now owns our country and things that used to get "bankers" called loan sharks and five to ten in the pen.

Just because bought and paid for legislators suddenly decided to reverse their policies on what is legal doesn't make it right.

Out of $70,000 only $2,000 applied to principal? If you can't see anything wrong with that, then I can only shake my head sadly. This country is doomed if that is a liberal or progressive attitude.

[Flatulo]

428. Oh, I think these nothing-down, interest only loans should be

illegal. On the other hand, I find it hard to believe that people could be so uneducated as sign up for such a lousy deal. I do know people who did just that, paying interest-only for 10 years, and they were told 'If you can't make the payment, don't worry, you can just flip the house and put $50K in your pocket.' They knew damn well what they were signing, and they naively believed the sales BS.

I personally would have run away as fast as I could from such a deal, but I'm older and I remember several real-estate crashes in my liftime. Plus, I am particularly risk-averse and have managed to avoid debt for most of my life, in general by going without stuff that I couldn't afford. I live in a shitty little house and drive an 11 year old car.

What I find troubling is the increasing number of people who walk away from their mortgages just because their investment is under water. They can still pay, but they just prefer not to. Do you think this hurts the banks, or do you think they just pass the loss onto their other customers, ie; your neighbors in the forms of bailouts to the banks?

[plumbob]

381. A higher interest rate is likely to make default more likely.

Higher payments = higher risk of default.

Now I know the ass-backward way that banks look at things; I worked in loan operations until 1978, when I saw that they are a leech and a drag on the economy.

So I left that job, and we left banking of any kind altogether. Never have looked back, never missed anything about them.

And I've saved a fortune in charges for using my own money.

[midnight]

32. Thank you.... These folks apparently did not listen to Elizabeth Warren...

They still have that Saturday night skit in their head that told them the buyer's were greedy....

[Fumesucker]

23. I saw something about medical issues..

Perhaps the OP's situation changed drastically, it's certainly happened to me before.

[phrigndumass]

30. Thanks, my situation did change drastically

due to medical issues

[liberal N proud]

51. This is what people fail to realize

You hear about 96% of the poor having refrigerators and unemployed driving Cadillacs.

Just because you become poor or lose your job doesn't mean you have to give up your refrigerator or car.

It just pisses me off when I hear that crap.

[chervilant]

392. No duh...

All that blaming and shaming is both condescending and mean-spirited.

[JDPriestly]

79. It may feel good to look down on someone else's misery, but

this happened all too often and to smart people including professionals to think that the banks are innocent in this.

The true story of the fraud that led to the foreclosure crisis has not been told.

Banks are supposed to know what they are doing.

Banks are supposed to ask questions and reduce their risks.

They didn't. And everybody except the banks are paying the price.

The fraud in the mortgage industry did not just artificially inflate the price of house, cause people to get into mortgages they could not afford, cause people to pay thousands on mortgages and then be foreclosed, but it also caused many divorces, no doubt a few suicides and crimes of anger and desperation.

The banks walked away scott free, and no amount of fines can put the broken families, the distressed children and our society back together.

This was the work of a series of presidents -- Reagan (tested the scheme in the S&L crisis, Clinton (the Glass-Steagall disaster) and Bush (covering up his bad economy by overheating the housing market).

So politically a lot of people are to blame. But morally, the banks and the mortgage companies are entirely responsible.

I just know too many people who got caught in these schemes, and I have seen documents that support my point that mortgage companies were extremely irresponsible. Why? To get the commissions for the signing of the mortgages.

[Tuesday Afternoon]

141. yes, thanks. excellent post. n/t

[tsuki]

175. Thank you. I was getting a little tired of the smug Republicon superiority

up line.

[peace frog]

216. You got that right

Imagine! the unmitigated gall to become overwhelmed with medical bills while owing on a mortgage! Why, there oughta be a law.
And under Prez Perry, you damn well betcha there will be. That will teach you lazy Democrat dock monkeys to get sick!

[xiamiam]

349. well no one has helped homeowners under this admin either..nt

[peace frog]

355. Just wait until Prez Perry takes office

His administration will *help* overwhelmed homeowners right into debtors prison.

[girl gone mad]

451. Maybe Democrats will actually fight back when it's Perry doing it.

They just roll over for Obama.

[plumbob]

383. Hear! Hear!

What, did the illness hold a gun to your head?





Anyone who does not recognize this as sarcasm needs to get their IQ checked immediately and any diplomas or certifications revoked.

[Surya Gayatri]

241. Well said, JDP.....

+ 1,000,000

This reply could easily be an OP on its own, JDP!

[karynnj]

258. Great summary

For the banks, in addition to the loosening of regulations, there was the fact that they could sell the mortgage immediately - meaning they not only got the commission, but bore NONE of the risk for giving a risky loan. (The derivatives that made this possible were passed in an amendment that Senator Gramm pushed that was hidden in a huge budget bill)

In the 2000s, the Democrats, led by Sarbane (with Kerry, Durbin, and Schumer as original cosponsors) tried in 3 consecutive Congresses to pass a bill that would have regulated against these type of predatory loans. In the next Congress, Dubin tried to get it added as an amendment, but it failed on a party line vote. Not a single Republican ever signed on. Incidentally, from all I could find on the 2000, 2001,2003 bills and Durbin's attempt, the motivation was to prevent the harm to people that you describe rather than an inkling of the impending financial disaster. (Odd to think that passing this could have meant there was less "fuel" to light the fire that led to the 2008 crash.)

[Jim_Shorts]

265. But the rabbit hole goes much much deeper .... Wall street instigated this whole mess

Wall street firms found a glitch in the system and were BEGGING Banks and mortgage houses to sell them tranches of "bad" CDO's.

Hedge funds such as Magnetar Capital walked away with 100's of billions of dollars when the CDO's went belly up.

http://www.propublica.org/article/all-the-magnetar-trade-how-one-hedge-fund-helped-keep-the-housing-bubble/single

[Jim_Shorts]

285. On edit, Magnetar probably only made 10"s of billions betting against their own CDO's

Doesn't seem like real crime these days unless it's in the 100 billion - 1 trillion area.

[Blue_Tires]

311. well said...

[mistertrickster]

316. You got it. Banks were preying on people who trusted them. nt

[xiamiam]

348. it is loathsome that this thread started by questioning her..millions of people didnt lose their

homes because the banks are innocent

[marions ghost]

350. exactly

it's the biggest swindle in US history, and "everybody except the banks is paying the price."

But of course the blame-the-victim, "buyer beware" moralists will be out in full force....

[timtom]

148. Actually, it appears that the OP

is merely sharing an important experience with his fellow DU community members. Sharing. That's the key word. And, here's where the healing begins, my bonny wee lad/lass.

[Generic Other]

252. "Some may rob you with a six-gun some with a fountain pen"

Woody Guthrie said that. A man with more sympathy in his pinky finger than you apparently have in your whole body! Is it necessary to rub a man's nose in his misfortune? Does it make you feel better about yourself? About the state of our country?

I would feel bad for days if I sad that to the OP. I guess I don't draw any pleasure in kicking a man when he's down.

[county worker]

281. I hope you never make a serious mistake but if you do I want to know about it

so I can gloat like you are doing.

[mistertrickster]

315. I love it when "liberals" think that ave Joes should know more than professional

real estate bankers.

It's part of the bank's job to determine what the home buyer can afford . . . not to hang them out to dry.

[xiamiam]

346. and you have none to give?..sad for you..nt

[slackmaster]

21. That happens to a lot of people. I think basic home finance should be taught in public high schools.

You've learned several expensive lessons here. Your health is more important than any of the money issues.

[phrigndumass]

25. Thanks, I agree :)

Expensive lessons, yes.

[PassingFair]

158. Sounds like you walk away ahead of the game, or at least even.

That $975 a month would have gone out as rent to someone.

When the banks first started the no-money down, low doc
loans, I remember thinking that if your credit was shot,
why NOT take the loans. You'll walk away in the same state
as when you went in.

My pea-sized brain did NOT calculate that so many people
would STOP paying on the bogus mortgages, save the money
they should have been paying, and buy another house with it...

those people came out WAY AHEAD.

Me, I just made all my house payments and watched my house
lose almost half of its value in the market.

I'm lucky I'm not underwater on it, but I'm just one
job loss or illness away from losing everything -- just like
everybody else I know.

[Logical]

31. But not sure it is the lenders fault in many of these cases. People tend....

to see dollar signs because the assume the house will increase in value. So greed is part of the equation.

[JDPriestly]

80. People tend to trust professionals.

Real estate agents in California have a duty of loyalty to their customers, but a lot of the real estate agents did not understand the obvious reality. Had they understood, they would have been out of a job.

My neighbor and I stood in her front yard and asked each other how in the world people were paying $700,000 plus for houses in our neighborhood considering wages were not rising and we had bought our houses for a fraction of that amount some years earlier.

But -- if you didn't know the history of the prices in our neighborhood, you were vulnerable to the fraud.

The real estate agents often actually believed that the prices would rise forever. Their wages were increasing so they did not realize that other people's wages were stagnant.

[Honeycombe8]

257. You don't have to be a pro to know what you can afford. Most people in their gut...

know what they can and cannot afford.

I'm a single woman who has bought a condo and a house on her own. I got in a fix on the condo, and let it go to foreclosure. (However, I didn't just abandon it; I cleaned it thoroughly, made sure it looked pristine, called the mtge company and maintained contact with them, as they went through teh formal foreclosure process they legally have to do...sending letters & so forth). They got it back, sold it at a profit, and I never heard from them again.

People should know this: WHEN A CO. TAKES YOUR HOUSE THRU FORECLOSURE AND THEN SELLS IT, THEY CAN STILL COME AFTER YOU AND TAKE YOUR $$$ OUT OF YOUR BANK ACCOUNT FOR THE DIFFERENCE BETWEEN WHAT YOU OWED, AND WHAT THEY SOLD IT FOR. In my case, I was lucky. Part of that equation, I'm sure, was that I communicated honestly with teh mtge company, and I left the premises in sell-ready condition. Nothing broken or missing, spotless.

In got in trouble with the condo because I needed a year to sell it (condos are hard to sell), and I had tenants for a year, but they up and left on me, and I couldn't afford the mtge & homeowner's assn fees after that (I was already in my new house & paying a new mortgage).

When you get yourself in trouble, like I did, sometimes the best thing to do is admit, and do what you have to do honorably to extricate yourself from the situation, or it'll get worse. Sounds like the OP has done what he had to do. Now he can go forward and not make the same mistake in teh future....make SURE you have an emergency fund that will not be used for house purchase or anything other than true emergencies like medical costs, make sure you put $$$ down on a house, make sure the total payment (incl ins. & taxes) is less than 30% of your net income (or that all your finance payments total less than 36% of your gross income).

It's always the case in a mortgage that most of your payments for the 1st 5 to 10 years go toward interest. That's the way it works. Then it picks up dramatically...going more toward principal. Time is the key.

Finally...buy less house than you think you can afford. My houses have always cost more than I anticipated...ins. and taxes go up every year.

[Pithlet]

269. People should know what they're talking about when they dispense advice

People should know this: WHEN A CO. TAKES YOUR HOUSE THRU FORECLOSURE AND THEN SELLS IT, THEY CAN STILL COME AFTER YOU AND TAKE YOUR $$$ OUT OF YOUR BANK ACCOUNT FOR THE DIFFERENCE BETWEEN WHAT YOU OWED, AND WHAT THEY SOLD IT FOR.

That's not true everywhere. It depends on the state. It varies.

And enough with the bullshit about honor. It's contract law. Nothing more.

[MedicalAdmin]

279. I agree.

The honorable thing for many banks to do is to allow for adjustments in the ability to pay due to medical bills etc. But if you think honor rules contract law then I suggest you skip a payment or two and ask the bank to do the "honorable" thing and see how far that gets you.

It's a contract, nothing more.

And the best legal advice I can give is to hire a real estate lawyer to review your contract and make suggestions for improvements (and to supply you with the improvements they would suggest as concrete language). That single act saved me several thousand dollars and only cost me 5 hours billable time at $300 per hour. As my momma used to say "free legal advice is worth every penny you pay for it."

[Honeycombe8]

436. In TX and LA, the mtge co. can come after you for difference tween what you owe...

and what they sell it for.

I used to do foreclosures. What NOT to do: trash the house, remove the fixtures, leave it dirty, etc., etc. Because of that, the mtge company has to pay to have it fixed up, in order to sell it. The mtge company will then be more likely to go after the dishonorable former homeowner, just for causing them that headache.

When a homeowner gets in trouble and calls the mtge company, tells them what's what, and leaves the house in pristine condition...there is someone in charge of your property at that mtge company. It will make a difference to the mtge company that YOUR house is different from the other foreclosures they handle; yours was left in excellent condition and ready to sell. They don't have to spend time and money preparing the house to sell.

Even in contract law, the actions of people count. How many posts have you seen in this forum talking about how badly a bank's personnel has ACTED, even though they are acting "within the law"? It matters. At least, it mattered in my case.

Yes, unless you've had a foreclosure yourself, and unless you've actually done foreclosures of properties, you're right, YOU shouldn't be dispensing any advice.

[ms.smiler]

438. Honeycombe8, is your experience in the mortgage industry recent

enough to include MERS and securitized mortgages?

The banks use MERS as their own privatized land records system without the benefit of any state or Federal legislation permitting such a system. Since MERS has no employees, I'm wondering if you can explain to me the 20,000 or so supposed MERS Vice Presidents and Assistant Secretaries who sign Satisfactions of Mortgage, Assignments of Mortgage and Affidavits.

[JDPriestly]

413. Whether you can walk away with no debt depends on your state

and the terms of your loans.

As I understand it, and I may be wrong on this, with a traditional loan, we pay the full amount of interest on the amount of the principal still owed beginning in the first year. So, since the amount of principal owed at the beginning is very high, the amount that must be paid in interest during the first year is higher than in subsequent years. Eventually, you pay more toward the principal and less toward interest, and that is when you make progress on paying your loan. The total amount you pay each time you pay may remain the same, but the proportion that is owed on the principal is greater in the earlier years, so the interest portion of each payment is correspondingly greater.

I think that is how it works, and I want people to understand that. It isn't some sort of trick by the banks.

[Celebration]

239. I agree with that; but maybe Jamie Dimon needed the course, too

Not to mention Mr. Mozilla........

[slackmaster]

249. I take it you are referring to former Countrywide CEO Angelo Mozilo

He's just a greedy asshole.

[Chan790]

447. and Jamie Dimon is a monster.

An honest to goodness evil motherfucker.

[Auntie Bush]

268. Yes, I've always said that a course in finance should be taught to every high school student.

[MadHound]

29. Why didn't you educate yourself on this before getting into it?

Seriously, a house is the largest investment most people make, and as such you really need to do your homework, educate yourself and not rely on others, especially the bankers, to fill you in. ARM's and 100 percent financing are, as you found out, a sucker's move.

I hope your former neighbors really like you, because you just dropped their home values as well. Nice that you have a clean conscience because while you're walking away guilt free, they're stuck with your mess.

[phrigndumass]

43. I take responsibility for not educating myself better beforehand

It is an expensive lesson learned. I have a clean conscience, yes, even though my neighbors are stuck with "my mess" as you put it ... but it is really the mess of the banking industry and predatory lending that my neighbors will now have to deal with.

I have no guilt. I'd do it again in an instant.

[JDPriestly]

81. Did you have a real estate agent?

In California the real estate agent owes you a duty of honesty and loyalty.

The real estate agent should have warned you about the realities of markets. They go up but they also go down.

[Yupster]

136. Are there people who don't know that

house prices go up and they go down too?

Are there really people walking around who are that dumb?

[JDPriestly]

138. There were. Whether there are now is another question.

A lot of buyers were assured that they could refinance any time they wanted to. When they wanted to refinance, of course they were rejected.

People do not buy very many houses in their lives. And most people don't watch the real estate market.

Look at all the people on DU who actually think that the home-buyers were just fools. Little do they know that a lot of the homebuyers were just naive and therefore easily fooled.

People do not understand money matters. Just accept that reality.

[Alcibiades]

224. Yes

But they mainly worked carving up loans and securitizing them.

[The Green Manalishi]

259. I don't know about "dumb"

But for a lot of folks, housing prices had been going up the entirety of their adult lives. Combined with allegedly reputable talking heads saying that the old paradigms were dead and seeing people getting rich quick in real estate- I don't think the guilt lays in any one place.
People believed the "mainstream media", the "authorities" that we were in a new type of economy.

*AND* their experience told them that for a big chunk of their lives property had been going up in value.

*AND* banks and other lending organizations were not doing anything resembling proper underwriting. - and the grain of truth that gives some credence to one charge of our opponents is that there were attempts to redress previous "redlining" that in retrospect allowed some people to get mortgages who shouldn't have been allowed to proceed (any more than I should be allowed to fly a jumbo jet; it doesn't mean anyone was evil or stupid, but in some cases not qualified, either by amount of stable income of knowing how to budget). So people were getting mortgages who wouldn't have qualified a couple of decades before. As a previous poster said, blame the banks *and* the politicians for creating the environment where such irresponsibility was not only possible but almost required in order to compete in some cases.

AND a bit of "greed", actually a completely rational and normal desire to partake of a larger piece of an apparently expanding pie for the most part with the usual percentage of fools who think only of "get rich quick" and the vastly smaller subset of those who actually do, through sheer blind luck. Odd, though, it's "entrepreneurial spirit", and "innovation" when the fat cats do it, "greed" when the middle and lower classes do it, IMHO.

On a similar note, having just been through a lay off; the wife and I saw this coming, and had been living really cheaply for the last 5-6 years; our co workers in their early to mid 20's had pretty much never seen a bum economy. Co workers going out and buying new cars and trucks and timeshares and clothes on credit and thinking us 50 somethings to be hopeless fuddy duddies because we saw a recession/depression coming.

So, that's my take; enough misfortune, miscalculation and bad luck to go around without the need to create any villians.

[JNelson6563]

296. Good post.

Well said. All of it.

Julie

[JDPriestly]

290. Are there people who don't know that house prices go up and they

go down too?

Yes, there are lots of people, especially first and second generation Americans who haven't heard the stories of previous economic depressions from their grandparents or parents.

There are a surprising number of people in business -- successful people who took the very early stages of this recession as just a set-back and borrowed against their houses to keep what had been successful enterprises going.

The internet has put many, many traditional businesses out of house and home, quite literally.

Shoe shops even. Things you would think people would buy in stores.

[trud]

365. maybe I'm just lucky

My grandparents and parents lived through the (first) Depression, and I'm cynical, so I always watch financial stuff like a hawk.

I remember as a teenager reading about two famous women entertainers who should have financially been set for life, only to discover after their husbands died that the latter had wasted their earnings. I think one or both of them also turned out to owe bundles to the IRS. They were in their forties when they found this out, with limited earning power left. Maybe one was Doris Day. Anyway, that made a huge impression on me, and I never let anyone manage my finances but me.

[JDPriestly]

411. Yes, but if you were, let's say an immigrant from South America

or worse yet, Eastern Europe, you might not realize that the US has severe recessions -- pretty regularly.

Here in Southern California, we had a huge decline in housing prices following the slow-down in the defense industry after the fall of the Berlin Wall in 1988.

[1monster]

423. Debbie Reynolds. She ended up homeless for a while after her big earning

days were over.

[plumbob]

384. Considering the thousands of savings and loans who went broke in Texas

in the 80s, and the thousands of housing units which were bulldozed to raise prices in north Texas, I'd say there were plenty just in Texas.

[Chan790]

448. Yup, institutionalized stupidity too.

One of my best friends, Chuck, is a RE agent...when he was getting his license, his instructor told him that "real estate is a great investment, sure the market moves a bit...but in the long-run it only goes up. Buy today...hold for 10 years and you're guaranteed to make a profit. You're making people's financial dreams to put them in the best house they can afford."

Chuck knew better. He's got an MBA and an economics BA. He's never run his business that way.

[MadHound]

101. You have no guilt?

Really now, it is because you didn't educate yourself. That is your responsibility in this, after all, buying a house isn't the same as buying a candybar. It is your action, or rather lack of action, that put you in this mess to begin with. It is your responsibility.

Yes, there are predatory lenders out there, always have been. That is why you need to take responsibility and educate yourself. There are circumstances beyond peoples' control that cause them to have to give up their house, but educating themselves is not one of them.

[Atypical Liberal]

220. HE SHOULD HAVE NO GUILT.

The contract was simple. Pay the mortgage or give back the house.

He is simply upholding the contract and giving back the house.

I don't understand all the attitude towards homeowners like this.

It's just business.

Any other business would look at the numbers and say, "Yup. This is costing us money. Time to cut our losses." and not even blink an eye.

But when a homeowners does this, suddenly it's terrible.

I think more and more homeowners are going to strategically foreclose. I have seriously considered it. We bought our house for $100 a square foot 4 years ago. Now they are building the same houses in our neighborhood for $50/square foot. My house is worth HALF of what I paid for it.

I can pay on this for DECADES and not break even.

The smart move would be to bail.

[Stuckinthebush]

251. Bingo!

For some reason we believe that individuals should have guilt over situations such as these. However, if a business decided to do the same thing we would say that it was a wise business decision. They would use some businessy language like:

"In 2005, income projections led the Board of Directors to acquire capital in which the projected risk reward ratio indicated sustained investment growth. A combination of previously unprojected economic and portfolio factors have led the Board to reconsider the retention of property which has become an inhibitor to growth. The risk reward calculations now clearly point to the relinquishing of this liability in order to stabilize the value of the company. We believe that in the long term, the removal of this liability from the balance sheet will benefit the shareholders more so than its retention."

Then the company would have its legions of lawyers and accountants go full-court press on the bank to make sure that the hit was not too bad on the company's credit rating.

[Capitalocracy]

309. And then the government would give them a big pile of free money. nt

[JDPriestly]

292. Actually, if a large corporation faced default on its mortgage,

it would hire an expensive attorney and do what is called a work-out.

Mutual agreement by borrower and lender to reschedule loan payments, modify payment terms by extending the original maturity, and so on. This normally is done in lieu of Foreclosure action, in which the lender attempts to sell at auction any loan collateral pledged by the borrower. Loans in this stage of negotiations already are covered fully by loan loss reserves and have been written off as Bad Debt. By negotiating new terms with the borrower, the lender expects to collect more from recoveries than from legal remedies, such as foreclosure, liquidation, and bankruptcy. See also Creditors' Committee; Debt for Equity Swap; Stand-Still Agreement; Troubled Debt Restructuring.

http://www.answers.com/topic/workout-agreement

Happens all the time.

I remember when the Japanese were buying buildings in downtown LA. People with clout can do that sort of thing. It's only the little guys who can't get a deal -- and of course a lot of people in this depression.

[MadHound]

317. So you have no compunction about hanging your neighbors out to dry,

With lowered property values and a new, blighted piece of property next door to them?

Sorry, but that's his responsibility, hanging his neighbors out to dry.

As far as your situation, again, it is one that could have been avoided with a modicum of education and research. If you had done your research you would have found that you buying in at the peak of a bubble market, always a sucker's move.

You are responsible for educating yourself on these matters, but instead you would rather walk and leave your neighbors with your mess sitting next door to them.

Stay classy.

[Gormy Cuss]

351. The neighbors aren't the OP's responsibility.

You're making an assumption that the property will be the new blight on the block without having any idea whether that's true. First off, there may already be houses on the block that are considered blighted, either because of the long term economics of the community or other recent foreclosures. Secondly, the OP's house could be sold to someone who keeps it up in the same manner it is now.

You can harp on the need for education and research before buying a house but neither one is required. Lenders qualified the OP for the deal -- take it out on them. They're the corporate entitities with responsibilities to avoid loans that are too risky.

[MadHound]

359. "But neither one is required."

Thanks for pointing out the stupidity factor that drove this whole mortgage mess to begin with. Far too many people treating the purchase of a house like the purchase of a candybar.

If a deal seems too good to be true, hey, it usually is.

[Gormy Cuss]

366. No, I just understand that people have differing abilities to acquire that knowledge.

The thing of it is, the deals didn't sound too good to be true to some borrowers.
Many, many people who signed for house loans have little idea how the process really works. All they know is that owning a home of one's own is considered a good thing, that the lender is offering the money so the lender must think there's a good chance that the borrower will repay the loan, and that the amount of money due each month for PITI fits within the borrower's budget.

[MadHound]

371. IT DOESN"T MATTER HOW THE DEAL "SOUNDS" TO THE BORROWER!

As the person who is about to take out a six figure loan, wait, in the OP's case two of them, it falls upon you to educate yourself about just what the hell you're getting into. You are, after all, signing on the dotted line for 200,000 plus. Don't you think that requires a bit more thought than purchasing a computer?

[Gormy Cuss]

410. It does require a lot of time and effort to get through the process.

To suggest that people buy a house with less thought than buying a computer is ridiculous.

And for the record, I was replying to your comment about the deal sounding too good to be true. You introduced the conceit and now you're stating it isn't relevant. So which is it?

[barb162]

459. Both parties to a contract are responsible for taking on risky loans.

Plus the OP's credit is going to be screwed for yeard if the OP declares bankruptcy.

[xiamiam]

352. i dont know what to say to you..except you are wrong, judgmental and rude

to someone who is going thru an incredibly difficult time

[MadHound]

363. What am I wrong about?

The OP made a foolish move. They took out an ARM and a 100% financed second mortgage, before their medical problems.

Nothing about such a deal screams "foolish" to you? Hope you're not buying a house soon.

[plumbob]

388. You're mostly wrong about dealing with banks. They are thieves and a blight.

I've bought several dozen houses and several apartment complexes without ever using a bank. I don't have so much as a checking account after working in loan operations for a large holding company until 1978, when I realized that all bankers should be taken out and shot.

Short of that, I have never used a bank, credit union, or savings and loan since.

Your assumption that banks are in any way positive is where you are totally wrong.

[MadHound]

419. I'm not saying that banks are some sort of positive

In fact if you read my posts, you will find that I'm advising people to educate themselves so that they don't get screwed over by banks.

[plumbob]

444. I just advise them to stay away.

Maybe someday the bankers will take a hint.

[1monster]

424. God forbid YOU ever make a bad financial decision! I can't imagine what

course you would have to take, given the Javert attitude you have posted here.

I remember the almost constant bombardment we used to get for equity loans that were 110% of the value of the home, despite equity owned or not owned on the home.

When we refinanced our home, we had the money to pay off the mortgage (retirement fund with no restrictions) if the need ever came. Unfortunately, the bank administering that fund some how managed to take at least $150,000 of that fund, and the illness of a family member meant that someone had to quit working outside the home to take care of the ill person, which resulted in having to use most of the rest of the retirement fund... We haven't defaulted, but it is a struggle to pay all the bills every month.

Circumstances change and the banks are not willing to work with the people who would willingly work to pay off the mortgages with a little leeway.

How many people have been encouraged by the banks to default on their mortgages in order to qualify for modifications to the mortgage offered by the same banks, only to have that default used to foreclose on them? It's happened to many times to be a "glitch" or an "oversight" or a "communications problem" or any of the other excuses the banks and mortgage companies use when/if the news media highlights a case.

Good faith has to be shown by both sides, and I haven't seen evidence of "good faith" on the part of the banks yet.

[plumbob]

386. Medical expenses should have been planned ahead?

My spouse's triple bypass surgery last year was more than $250,000 including 23 days in the hospital - our part was $20,000+.

In our case, we had it, but we are a much older couple, established and not too many years from natural death.

If you haven't had a nice dose of unexpected medical, I hope you get it really soon; then check back in with what you owe the neighbors.

[MadHound]

421. I recognize that medical expenses can wipe out a person,

But setting yourself up for disaster with a double mortgage, one an ARM, the other 100% financed, is foolish.

Nice to see that you're wishing bodily harm upon me, just because we have a difference in opinion. Stay classy there.

[plumbob]

443. No, I'm wishing you would get a grip on what can be planned for and what

cannot. As a teacher, I suggested a lesson plan that seems to be the only way some folks will learn that.

[Atypical Liberal]

430. It's just business.

Hey, the neighbors should have done research before buying property that could end up next door to blighted property.

[coalition_unwilling]

338. Don't forget to factor in that the cost of credit to you may rise if and

when you strategically default, b/c your credit rating will take a 200+-point hit. That said, it can still be a smart move to strategically default and, like you say, no one puts the scarlet "D" (for 'Default') on corporations that strategically default.

[Atypical Liberal]

431. Yup.

Yes, there is definitely a big hit to defaulting on a mortgage.

[plumbob]

385. Very well said. When business bails, it is just considered smart.

When their fellow contractees bail, it's some kind of 10 commandments violation.

Thank gawd I haven't had any dealings with banks of any kind since 1978.

[anarch]

414. you're missing the point

this is a perfect opportunity for some people to look down their noses and "tut tut" at those less shrewd, savvy, and self-righteous than they are. I sure hope the OP doesn't have credit card debt too, b/c oh, boy.

[MedicalAdmin]

282. Guilt is for suckers, the religious, and fools.

If I had to walk away from my mortgage I would read the contract and comply with the section that governs returning it to the bank. It's contract law, not a soap opera.

Angst should be stuffed somewhere dark and damp.

[JNelson6563]

302. Very well said!

:toast:

[MedicalAdmin]

332. Danke. n/t

[chervilant]

395. Exactly...

right where that individual's head seems to be...classic case of cranial-rectal inversion disorder.

[JDPriestly]

291. And you have no shame, Madhound.

Just wait, you could find yourself in a similar position.

Pride cometh before the fall.

[MadHound]

314. A similar situation,

What, signing on the dotted line for two mortgages, one of which is an ARM, the other at 100% financing? Sorry, I'm not foolish enough to do such a thing.

As far as a similar position, I've been in far, far worse positions, namely completely homeless. No pride in that, but I survived it relatively unscathed. I've never had much, which is why I have gone out and educated myself before making a big decision, such as buying a house and taking out a mortgage.

[xiamiam]

354. however, you sound like you believe the multi million $ pr meme that it is the homeowners fault

they spent a lot of money pushing that...if it happened to a handful that's one thing..we're talking multi millions with no end in sight behind the greed of the banksters..yet you have no empathy..truly amazing

[MadHound]

357. Actually I consider the whole mortgage deal to be where greed met stupidity

Greed on the part of the banks, stupidity on the part of a lot of borrowers.

Too many people jumped after a deal that was too good to be true, and of course, it wasn't.

[Atypical Liberal]

433. Education is great.

I've never had much, which is why I have gone out and educated myself before making a big decision, such as buying a house and taking out a mortgage.

And that's great. Education is great. No one is saying you shouldn't get educated before getting a loan.

But no matter how much you have educated yourself before hand, no one should feel bad about walking away from a bad business deal.

Business is business. Corporations will fuck you over just as fast as they can make a dollar. Individuals should be just as ruthless in protecting their financial interests.

I don't care how educated you are. If you discover you now owe $270K on a house that is only worth $170, you are probably better off walking, and you should not feel any guilt or shame in doing so. Abide by the contract - give the house back to the bank.

[metalbot]

186. You certainly shouldn't feel guilty for walking away from a mortgage

A mortgage is a contract in which the bank gives you money, you in return pay interest, which the bank charges because there is a chance you won't pay. Your walking away is already factored into the equation. If the banks calculated the risk of your walking away incorrectly, that's their problem. They own a house now.

I hope that's what you are saying when you say you'd do it again in an instant, because I certainly wouldn't recommend "buying another house that is 100% financed on interest only mortgage payments" again.

[SOS]

127. The OP's education is on par with Morgan Stanley

(Bloomberg) -- Morgan Stanley, the securities firm that spent more than $8 billion on commercial property in 2007, plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.

The bank has been negotiating an “orderly transfer” of the towers since earlier this year, Alyson Barnes, a Morgan Stanley spokeswoman, said yesterday.

“We are going to give them the properties to get out of the loan obligation” Barnes said.

The last line says it all: “We are going to give them the properties to get out of the loan obligation”

Morgan Stanley is an excellent teacher.
No guilty conscience for the Wall Street boys. They just dump it and walk away.

[MadHound]

152. Ah, so if corporations do it, individuals should do it as well

Let me know how that works out.

Instead of emulating corporations we should be holding them responsible as well. Unfortunately our politicians are too beholden to corporations to actually do something like take them to court or hold them responsible.

[MedicalAdmin]

200. You don't seem to understand the difference between personal and ...

... professional responsibility.

Every licensed professional involved dropped the ball at the least and committed malfeasance likely.

But yah - the person with the medical bills is to blame. Sheesh.

[MadHound]

319. First of all, if you read the OP's posts in this thread carefully,

He/she didn't get medical bills until after buying the house. The OP treated the purchase of a house the same way as they would treat purchasing a computer, worse, since if they were buying a computer they would at least put forth a modicum of effort to find out the one that fit their needs.

No, this person simply signed for two mortgages at the same time, one and ARM, one at 100% financing, and by their own admission bought it at an inflated price. No sympathy for such stupidity.

[MedicalAdmin]

331. It's not about sympathy. It's about contract law.

They learned a lesson and they lost a house. They've moved on.

Why does this make you so upset?

[MedicalAdmin]

399. I'm not saying you are wrong. In fact you make several good points.

But I do believe that with a license and the greater opportunity that goes with it, should also go enhanced responsibility. Frankly the fact that the bankers, brokers and others who played (and continue to play) fast and loose with the law and fucked up a lot of lives world wide, that they continue to walk around free and get to keep all their stolen wealth is a sad commentary on a once great country.

Justice is just for the rich these days. In what way is that different than a banana republic?

[Atypical Liberal]

221. AB-SO-FUCKING-LUTELY.

Ah, so if corporations do it, individuals should do it as well

AB-SO-FUCKING-LUTELY.

A corporation would look at this and say, "Welp, we are losing money on this business deal. Time to cut our losses."

Turn about is fair fucking play.

[JDPriestly]

295. Precisely.

Otherwise you don't end up with morality, you end up with moral hazard and a wrecked economy.

[JDPriestly]

294. Madhound, this is not a moral transaction.

This is a business transaction. To the extent morality is involved, it is on both sides.

[coalition_unwilling]

343. Could you please explain what you mean when you say that

we shoudl be holding 'them' (corporations) responsible? Corporations are governed by contract law - when a corporation takes on debt, that debt is either secured by collateral or unsecured (like a line of credit issued by a bank).

I don't know how one could hold a corporation responsible, other than ensuring it abides by the terms of any contracts into which it entered.

[ThomCat]

150. Where are you going to go to get educated about all this stuff?

It's not like there are cheap courses in community colleges about bank products and how all of their financing models and tricks work.

It's not like there are magazines sitting out there on every news stand with monthly articles and discussions to keep people up to date.

Yes, you can go to Amazon and browse books, but even a quick look at the available books makes it obvious that you need to read and study at least at least several of those books to really understand mortgages and the mortgage industry.

So people have to be smart enough to study the equivalent of a college course on mortgages on their own without any guidance or help from any college professor before they should be allowed to get a mortgage, or else it's their own fault if they taken for a ride?

Is that the point we are reaching? It's that complicated, and we're going to judge people that harshly for not being smart enough and educated enough to understand all those complications?

Do you think it is an accident that so few people understand mortgages, despite so many people having them? This can't happen unless it is deliberate.

Please also keep in mind, when you get that urge to judge the people who took out these mortgages, that high-pressure sales tactics work. A hell of a lot of work has gone into finessing and fine tuning the high-pressure sales system to make sure that people's defenses will be as low as possible, and people will feel a psychological need to

1. trust what sales rep tells them
   
2. keep the pace moving
   
3. think that what they are being sold is going to be the answer to their problems
   
4. only look at the glitter (the promotion, the discount, or special offer) instead of the real cost over time, or change in cost over time
   
5. sign something quickly before this deal disappears, because for some reason those bankers might decide they don't want another customer if they don't sign something Right Now
   

What kind of pressures are customers able to exert back upon sales people and bankers in return to try to even that field? None.

Customers are under fire psychologically when they go in to buy any big ticket time from professional sales people, but to continue with the military metaphor, they go in with no body armor, and no way to return to return fire. Is it any wonder that the sales reps get what they want without much of a fight from most of the people who come through the door?

People ask them questions and expect that the answers will be honest. If the answers are dishonest, because the only "experts" they get to talk to are those sales people, then people will get suckered into fraudulent loans.

Where is the expert who represents the customer at every sale, who will answer questions they should have asked, or could have asked but didn't know enough to ask? There isn't one. There won't ever be one either. Unless you are wealthy enough to hire one to come with you when you go to the bank.

[MadHound]

151. Actually there are courses out there,

Most communities have them. Not to mention that you can find out a lot simply by perusing various sources on the internet. You can ask questions at the library, of real estate agents, and if you really want to be thorough, a lawyer.

But basic common sense should tell you that if you're getting two mortgages simultaneously, one that is an ARM, one that is 100% financing, then you're getting in over your head.

This is not as complicated as you make it out to be. Millions of people have taken out mortgages, bought houses, and never had any problem. That is because they took the simple step of doing some research before they signed on the dotted line.

I've bought two houses in my life, and both times I did my homework. You can't depend on the lenders or bankers, you've got to depend on yourself. The OP failed to educate himself, and thus bears responsibility. Anything else is rationalization and excuses.

[ThomCat]

156. It sounds like "I haven't had any problems, so those people

who do have problems must have caused their problems by not being as smart as me."

You're just blaming the victims, and entirely discounting the orchestrated efforts put into deceiving people, coercing people, and in some case outright defrauding people by changing the paperwork from what they thought they were getting to something else.

I've attended two major universities, been an adviser at three others because of volunteer work I used to do for years, and traveled periodically to over 20 other colleges and universities in a dozen states where volunteer organizations were based. At all of them I've taken the time to browse course catalogs pretty much every time I've seen one. (who doesn't?) I have often seen evening courses for getting real estate licenses, courses for appraising, courses for adjustors and insurance people, or but never courses about mortgages. So where are these courses that you say every community has? How are people supposed to know who runs them and where to find them?

Local paper? Nope. Not here.
Local library? Not that I've ever seen posted.
If it's really true that classes are common in your area then I think your area is not representative.

I commented about hiring a lawyer. How many people do you really think can afford to hire lawyers to negotiate their mortgage for them? How would people find a lawyer skilled in this, and how much more would that cost them? Do you really see a lot of lawyers advertising their services for this? Do you really think people are going to hire one of these lawyers to teach them a private class about mortgages? How much would a lawyer charge for these private lessons you are proposing that anyone with "common sense" would go and get?

I love it that you are saying that common sense says that people should know that something is wrong with a two-mortgage package, when these were fairly routinely sold, and a hell of a lot of professional marketing and public relations went into convincing people that they were perfectly safe, normal and okay. No attorney general would have said that there was anything risky about them if you asked before the crash.

In fact, if you claimed that any of these mortgages were risky before the crash, based on "common sense," without some kind of documentation, or some kind of analysis demonstrating that risk, nobody would have taken you seriously. Were were the financial experts trumpeting the problems with these mortgages? A huge part of the problem is that they were out there (a few of them) but they were not being heard. The media ignored them. Nobody was successfully taking their warnings to the Attorneys General, or warning consumers, or raising a stink in the media.


I know I was predicting the mortgage crash 10 years ago, but even I didn't know how bad the fraud was, or how it was happening. I simply saw, like many others, that housing prices were inflated in a bubble and the bubble appeared to be ready to burst. But does that mean that I blame everyone who wasn't as clear-sighted as I was? No. Of course not.


Yet you're focusing on the role of the customer? Really? Do you really think that all the Public Relations and Marketing power of the entire financial industry has no influence at all? And no responsibility? Despite all of their efforts, people were still simply supposed to rely on "common sense," and if that failed them it's their own dumb fault?

You don't think that's going overboard blaming the victim?

[Surya Gayatri]

250. You go get that MadHound, ThomCat !

Both this reply and #150 àre brilliant. SG

[ThomCat]

253. Thank you very much.

:)

[JDPriestly]

301. How to find a lawyer in this specialty? Call your state or local bar association.

Yes, "bar" association. Lawyers belong to the bar association -- that's what the professional organization for lawyers is called.

Here in California, local bar associations may have a list of lawyers. They don't recommend lawyers, but if you start calling you will eventually either find a lawyer you like or get a referral to several you can call.

Lawyers' fees vary, so ask about the fees up front. It will usually be an hourly fee. If you call around and ask each lawyer about their fee, you will begin to get an idea about market rates.

[xiamiam]

356. first the meme was the subprime note holders did it..when i hear the same thing over and over i know

its pr...unfortunately, once it gets stuck.people believe it..there are still people who believe that there were wmd in iraq just as there are still people who believe this was the fault of the homeowners who have been moved out..neither are true but they spent a lot of money managing this message

[MadHound]

369. No, not at all,

I bought not one, but two houses before I ever had a college degree. I did some basic reading on mortgages both at the local library and some research on the internet. I talked with a consumer credit counselor whose services were easily available and affordable(and this is in the state of Missouri, if they are common here, they are common in all those wonderful blues states as well). I put in about thirty hours all told into making sure I understood what I was getting into.

And if you are saying that taking out one mortgage that is an ARM, and simultaneously another that is 100% financing is not something that should raise some alarm bells in your head, then tell you what, you and I are never going to go into business together because apparently your common sense quota was given out to somebody else. I mean really now.

The fact of the matter is that a house is the biggest purchase of your life. You need to treat it with a little more respect and gravitas than buying a candybar. The bank is not out to protect your interests, you have to. And if you don't, you're going to get burned.

Yes, there is lots of guilt to put on the banksters for this mess, but there is also a lot of blame and guilt that lies with the borrowers as well. Namely for not doing some basic self education about what they were getting into.

[chervilant]

396. That's it!

Go to ignore, go directly to ignore. Do not pass GO; do not collect $200...

[Fla Dem]

222. Actually the best lessons I got were from my parents.

First,from the day I started working (even PT while I was in school) I paid rent to live in my parents home. A small amount, probably 20% of my paycheck. My mother then told me to save another 20%. That left me with 60% of my take home to use as I wanted. What that did was get me in the habit of saving and managing my income. When I was ready to get my 1st apartment, they told me the monthly rent should not be any more than 1 week's salary. Finally, when I was thinking of buying my first house, they strongly advised me to have at least 20% of the purchase price for a down payment and have 6 months of mortgage payments in savings. They set me on the right track.

[ThomCat]

228. That was good advise.

Of course, I don't think I know anyone who only pays 25% of their income in rent. 1/3 to 1/2 is more normal.

The change in mortgages to ones that didn't require so much collateral, or any at all, was so attractive to so many people because so few people were able to save any money at all with wages stagnating for so many years.

The equity in a house was supposed to BE their savings account. Unfortunately, that only works if they were able to keep up the payments.

This is also the kind of advise you are only likely to hear if your family has been fortunate enough to have enough money to buy and own a home in the past. How many poor families would know much about mortgages if nobody in the family had ever had one?

[Fla Dem]

240. Well, times were a little different "back in the day", lol

My dad worked 2 jobs, had 4 kids in 3 bed, 1 bath house. Not well off by any means.

But I think the lessons I learned more than anything was to be responsible and look ahead, not just at where you are today.

[JDPriestly]

303. There used to be a formula.

You could afford monthly payments of about 1/3 of the amount of money remaining after you paid any mandatory debts and maybe taxes. 1/3 of your discretionary income could go toward housing.

I don't think that average families can get that ratio in Los Angeles.

Rents in my area often run to $2000 per month. That is 1/3 of $6000, and most people owe student loans or car payments, or some fairly good-sized debts.

I don't know how young people start a family and buy a house any more.

[trud]

368. ThomCat

Can the potential buyer read and do arithmetic? That's all that's necessary. Oh, yeah, and my father's rule: never sign anything unless you've read it and understand it.

[fasttense]

154. Let's see, the bank offers you a crappy loan deal, maybe told you

you could easily afford it. Told you that you could turn around and sell it in 3 months because home values were going to continue to go up. Told you to trust them. Basically conned you into taking a huge risk.

Did they tell you home prices could fall and then you would be stuck with 2 huge mortgages that would be very difficult to pay off? Did they tell you the economy would likely crash and, while they the banks would be protected by the federal government, you as an individual would be strung out to dry? Did they tell you that if you defaulted or not they would make money either way but you would likely get screwed even if you paid off the debt? I somehow doubt they told you all of this. If they did, you probably wouldn't have signed. See that's how CONS are done. They tell you part of the truth. They tell you what you want to hear but they never, ever tell you the downside.

Right before the banks were cut lose to pillage and plunder, there were laws in place that required your bank to tell you the truth. All those laws were stripped away by RepubliCON legislation. But very few people knew it. It left most people still believing that they were protected by truth in lending laws. So, many people still trusted the banks when they said they could afford huge loans. And that is the second part of the CON. They get you to trust them. And in this con the federal government participated. They did not announce to the world that banks were no longer constrained by law. They thought you would figure it out, or hoped you wouldn't.

Now, go out and educate yourself on that. Go out and find how federal legislation has given the green light to banks to sell crap and con you. Good luck with it.

A Cons a con. If the banks were offering a fair deal, so many people would NOT have lost their homes. It was a con you had to educate yourself about. A con created with the help of the federal government. So, good luck with that education.

[JDPriestly]

308. Thanks, fasttense. You are so right.

See that's how CONS are done. They tell you part of the truth. They tell you what you want to hear but they never, ever tell you the downside.

The problem is that consumers do not know when the fast-talker who is "helping" them buy their house and their mortgage has a duty to tell them all of the truth or not.

Consumers need to get every statement in writing even if it is not in the contract. You can write thing into you contract and initial them.

You can also write a letter of confirmation before you sign the agreement.

But, above all else MAKE SURE YOU GET EVERY PROMISE THAT YOU MIGHT NEED TO RELY ON IN WRITING -- always, no exceptions, ever.

If somebody says you can move in on the 5th of March and you will be homeless if that date is not solid but you don't have it in writing, write a letter to your future landlord stating simply, I am writing to confirm that on xyz date you stated to me that I can move into the apartment (or house) and ABC address. Thank you.

Put a stamp on the letter and get a proof of mailing receipt or send it through some means that will insure you have a record of having sent the letter.

Be careful out there. A lot of scam-artists are desperate right now.

Oh, and ALWAYS READ EVERY WORD, FINE PRINT TOO. And if you don't understand something, get your explanation in writing.

Yes, be annoying. After all the other person is getting paid.

[MadHound]

374. And maybe somebody comes along and offers you some magic beans. . .

The fact of the matter is that if you don't have enough to sense to educate yourself when you're borrowing six figures worth of cash, then really now, what do you expect to happen?

When you are dealing with such large sums, with your ass on the line, you need to educate yourself. There are plenty of ways to do so, and yet the OP didn't take advantage of them. Sorry, but no sympathy here.

[barb162]

461. Do you expect a car dealer to tell you all the recalls on a vehicle?

Do you do your own homework before buying a car or expect the dealer to educate you about every good and bad thing about the vehicle?

[BrentWil]

112. Interest only?

For how long? And what were the rates, etc?

In the future, I would suggest that you don't sign interest only loans. Never a good idea.

[snooper2]

182. And this right here should have been the last post in the thread...

[Honeycombe8]

254. What state are you in, do you mind me asking? 'Cause here in TX, I think it's illegal

to finance a house 100%. You have to put something down, and it's illegal to finance the downpayment.

[MedicalAdmin]

283. Canada never had a housing crisis.

One of the reasons is that they required skin in the game and also kept regulation on the banking industry. The regulations for ARMS in Canada are HUGE compared to the USA, where for all intents and purposes, there were NONE.

My brother lives up in Canada and owns about 4 houses worth over 1 million and he put over 20% down on all the homes. Oh - did I mention that unemployment where he lives is below 4%?

[trud]

353. how could you do this?

I am sorry you got into a mess, and lost all that money, but how could you borrow on those terms? This is a serious question, what were you expecting to happen?

[midnight]

26. The way the wording is bundled in thousands of documents it was

most likely to conceal the crime and not inform the buyer... The devil in these mortgage details..were lies... This is what Elizabeth Warren was going to bat for. Also keep in mind how many savvy bankers were wiped out by these criminals too... So while this hardship has clearly not passed your door step, it should be clear that even the smartest bankers were hoodwinked... These bankers lied....

[MadHound]

35. That's why, as the borrower, you do your homework, educate yourself

Most reputable lenders will allow you to take those documents home, examine them, get counsel from knowledgeable people before you sign on the dotted line. If they don't, then you need to find some other lender.

[xiamiam]

358. reputable lender is an oxymoron..nt

[midnight]

372. Ha Ha.. Most reputable.... Last I read those banks once considered reputable were being sued....

U.S. govt suing banks for $196billion for bad mortgages.
September 4, 2011 —

http://canadamortgagenews.ca/2011/09/04/u-s-govt-suing-banks-for-196billion-for-bad-mortgages/

[Medium Baby Jesus]

376. You're a fucking broken record. nt

[Xithras]

61. Or maybe he just changed his mind. It doesn't matter.

The buyers contract says: I want to borrow $X, and if I fail to pay it back, I agree to give you my house as compensation.
The banks contract says: I agree to lend you $X, and if you fail to pay it back, we agree to take your house as compensation.

Whatever the reason, the buyer has decided to exercise his legal right to walk away from it. The bank may not be happy about it, but it now gets to exercise its legal right to claim ownership of the house as compensation.

If the banks didn't want to deal with this, they shouldn't have made the loans. The REASON for the buyer walking away, and the OPINION of the buyer toward the contract, is ultimately irrelevant. It's a contractual business relationship in which the buyer has the right to terminate the contract at any point. The bank agreed to it. That's all that matters.

Nobody should be ashamed to exercise their legal and contractual rights.

[JDPriestly]

82. Whether the buyer can walk away free and clear depends

on the state.

Also, that is probably why the poster of the OP was given two mortgages -- a first and a second-- right from the get-go.

The second mortgage may not be a walk-away, probably isn't.


In some states, you can't even walk away from the first mortgage unless you declare bankruptcy or are lucky enough to find a buyer.

[Xithras]

126. Again, though, these are previously understood terms of the contract.

If the buyer knows about the negative repercussions and chooses to accept them, it's their choice.

People don't have to be happy about it, but this "moral demonization" that commonly pops up whenever someone walks away from their home is stupid. There are contractual and legal repercussions that go along with terminating your mortgage contract. If the buyer chooses to go that route, so be it. There is nothing "wrong", "immoral", or "cowardly" about exercising your contractual escape rights. It's a financial transaction, not rape or murder.

[RegieRocker]

272. What a bunch of crap. Why does it matter? Sometimes a person has no

Other choice to own a home. Same unscrupulous offer by a different name. So they take the best route for them. It still is a crap loan. Most are. So put that on your ego pipe and coke on it.

[CreekDog]

299. Look, the OP doesn't get flogged because they're walking away from a mortgaged property

they're within their rights to do so.

you buy a house and get a mortgage, there's a lot of fine print, but nowhere does it say you should:

1) feel guilty for walking away
2) pay what you can't afford no matter what
3) not do what's in your best interest

the people holding the mortgage have every ounce of leverage they need to protect themselves. the idea that a regular person, not of means, should feel bad under the circumstances is just ridiculous.

in case you were thinking otherwise.

[chervilant]

389. OMG!

I spent almost six years as a mortgage lender, and I can *assure* you that the vast majority of people who close on a home do NOT read the ginormous stack of papers they must sign in order to 'purchase' their home. Since a significant percentage of adults in the US are functionally illiterate, this is not at all surprising. However, there were many clients with whom I worked who 'trusted' me to put together a fair and affordable mortgage. Just as doctors and lawyers are viewed by the hoi polloi as authorities in their fields, so mortgage lenders have been perceived--at least until recently.

Before you gear up to post a condescending rebuttal to my post, know that I refused to sell a single solitary sub-prime loan during the entire time I worked for the largest lender in the nation, which is a big reason I am no longer in that business. Know, too, that my 'successful' colleagues--and every other hedonistic mortgage lender or mortgage broker in the business--perfected "Bernaysian" strategies for marketing the sub-primes (for which the Big Five were paying hefty commissions), and for mendaciously encouraging borrowers to believe that they too could live in a $650,000 home on a $40,000 annual income.

(Serious question, my shiny white hiney...)

[Earth_First]

Good luck!

:patriot:

[phrigndumass]

44. Thanks, Earth_First

:hi:

[murray hill farm]

75. Good for you!

I totally agree with what you have done!! Walk away and enjoy your life! Don't give a second thought to people who try to paint you as the problem, etc. It is your life and enjoy that this weight is lifted from your shoulders!

[MedicalAdmin]

284. I'll second that.

Good luck.

[OneGrassRoot]

2. ...

:hug:

:applause:

K&R

[phrigndumass]

6. ...

:hug: :loveya:

[Dreamer Tatum]

3. self delete

[Shagbark Hickory]

12. $944 a month? That doesn't sound like a mansion.

[Dreamer Tatum]

My mistake, thought the OP said 2 years. My bad. nt

[phrigndumass]

13. It was more house than I could really afford ...

But not huge. I had great credit; it was predatory lending. I will take responsibility for my credit rating getting worse, and it's a choice I felt I had to make.

:hi:

[Dreamer Tatum]

19. my error nt

[AtheistCrusader]

217. I'm pretty annoyed with people that do this

as a homeowner that got a 'normal' loan, only to have so many of my new neighbors default that my house is dragged down by the local comp value, to the point it is severely underwater.

But, you gotta do what you gotta do. At least you have the reason of medical issues, and it wasn't just a 'fuck you got mine' house flip/shelter thing like some of my neighbors did.

So, I bear you no ill will for doing what was right for your situation.

[xiamiam]

361. if the lenders would work with the homeowners the foreclosure mess would have been stemmed

please dont blame the person who has to walk away with nothing..its going to get worse if people dont realize the banks have got to work with homeowners..as it is..they take the property and list it for half ..yet they will not work out any deal with the homeowner..1% effective hamp..thats it..99% bs

[barb162]

460. This is the part I don't understand. You couldn't "really" afford it and went ahead

with the deal, probably putting yourself on the edge. What does your great credit have to do if you likely couldn't easily make the monthly payments?

[DaveJ]

40. Not necessarily worse

If the bankruptcy erases a lot of other debts then keeping those debts would be worse. I know of people who bought a home 2 years after declaring chapter 7.

And yeah I must side with Sven because the banks are making out great. $68k in 6 years for, say, a $250k house is a pretty good RTA. Maybe not as much as banks are used to getting, since they are our overlords, but better than any of us peasants could dream of getting. I'm glad the government allows people to declare bankruptcy. It has saved the well-being of many good people.

[Shagbark Hickory]

5. The first 10 years or so of a 30 yr mortgage are mostly interest.

They do that to enslave everyone and keep them from ever paying off their home.

So what's next for you?

[Dreamer Tatum]

7. No, they do that to keep the payment the same every month at a constant APR.

That's how it works.

[Shagbark Hickory]

36. I have a better idea.

Fannie & freddy to loan up to 150k (or so depending on location) at 0% for 15 years plus reasonable paperwork fee.
That way people actually have a chance of home ownership.

[Dreamer Tatum]

37. I have a similar idea involving unicorns and leprechauns.

Oh, we're not in fantasy world?

[Shagbark Hickory]

46. If the fed can do very low interest student loans then why not? It would stimulate the economy.

[Zywiec]

60. What do you consider very low interest student loans?

Mortgage rates are lower than federal student loans.

[Selatius]

145. The problem is jobs. A low interest loan is still out of the question without a job.

The US has been bleeding union jobs for decades and other high paying jobs. If that isn't corrected, then the housing market won't recover too much if few can actually afford a large mortgage.

[MedicalAdmin]

286. My house is underwater.

My wife and I are starting the paperwork to emigrate to Canada - the plan is to be moving sometime in the next 5 years (yah - we move slowly but we gots shit to do).

So come time for the move we will have to decide if we: take the loss, shortsell, keep it and rent it out, or just walk away. No matter how we decide it will be a matter of what is best for us given the contract law. Owning a home is a business decision, no matter what right wing talking point parrots with guilt issues tell you.

[Blue_Tires]

323. let me know if you could use a roommate when you get up there

:hide:

[MedicalAdmin]

335. Tell ya what....

... when you notice that I am posting from Canada (it'll be obvious because my posts will be filled with adult comments like "nanna nanna boo boo") then get ahold of me.

I'll do what I can but I must tell you that all good functioning democracies with intact economies all have somewhat stringent entrance requirements. I'll help but you'll have to qualify on your own because it's not like I could claim you are family (unless you are a long lost cousin or my offspring from my rock and roll period).

[JDPriestly]

85. If the fed can bail-out the banks, the sophisticated

banks with their many, many computers and super-smart mathematicians, they could definitely help homeowners more than they do.

[david_vincent]

277. I bought a new Toyota with zero percent financing

Sure, it's only a car, but I had never bought one before. My credit score was very high, so Toyota gave me a great deal -- why wouldn't they? They want to sell cars. House sellers want to sell houses. In both cases, the article in question usually depreciates in value over time, unless the market is being driven by people (aka realtors) who are hellbent on getting rich in their gamed system.
Owning a home is presented to us as a national value. Economists, the governments, everybody WANTS people to own their own homes for a variety of well-documented reasons including social stability. So why shouldn't there be zero-percent mortgages? After all, there's no national value at stake in owning a car, but you can get zero-percent car loans.

I don't think it's as much of an apples-and-oranges thing as a lot of people think. You live in a house, sure, you keep it up (or not), but WHY should it be assumed that it only increases in value? It's older, new homes are being built all the time, and things. wear. out.

[angstlessk]

67. I worked in the mortgage departemt of a bank in the old days..and saw how an OLD mortgage worked

Each month as the mortgage was paid down, the next month the payment was less than the last, till the final payment might have been $2.75...keeping the mortgage the same every month does NOT benefit the homeowner!

[Tesha]

78. That's fine -- If you like variable payments, overpay those early payments by even a little and...

...you can cut five or ten years off the term of the
mortgage *VERY EASILY*.

Tesha

[angstlessk]

104. The point is...interest was not front loaded in the early days of mortgages

it was spread out over the entire loan, so, as the principal went down so did the interest and therefor the amount of the payment on the mortgage

[Tesha]

179. And my point is that you can run *ANY* mortgage like that;

just overpay the principal during the early years.

Look at your monthly statement and find the amount
your paid in the last month for Interest. Now send
that along in the current month as an extra Principal
payment et Voila! You've now got a loan where
you're paying a (nearly) fixed amount of Principal every
month and a declining amount of Interest, just like in the
good old days. And (I haven't worked the numbers but)
your 30-year mortgage will probably be paid-off in
ten years!

Tesha

[joeglow3]

255. Interest was not calculated any different.

As pointed out above, you are talking about a payment schedule that was specifically geared towards reducing payments. That can be done with elections to pay more than your monthly payment early on. It is not like they charged zero interest in year one and just decided to charge interest later on in the loan's life. It really is simple math.

[Yo_Mama]

360. You're a bit confused, aren't you?

Every non-negative-amortization mortgage in which a borrower is paying down principal starts out with high interest, because each month the principal goes down and so does the interest charged (on a fixed-rate mortgage or home equity loan).

So every month every borrower pays all the interest on the principal outstanding for that month, plus some of the principal. I think you may be talking about a P&I loan, in which the principal payment is fixed and you pay the principal payment plus accrued interest.

Standard fixed-rate amortizing:
$100,000 borrowed, 6% interest, 30/360 basis:
Interest for the month is 1/2 of 1%, or .005 in decimal terms. Every month is figured to have 30 days and the year is figured as having 360 days, so the periodic interest rate is one-twelfth of the annual rate.

So the first month the interest is .005 * $100,000 = $500. On an amortizing 30 year standard your payment every month would be about $599.50. The first month you pay close to $100 in principal. Every month the interest accrued gets a little less as the the principal balance shrinks, so by the beginning of the fourth year you are paying down close to $114 in principal each month. After five years, you'd be paying down monthly principal of about $134 each month. After 10 years, you'd be paying down about $181 in principal each month.

On a P&I (principal plus interest) say you arranged to pay monthly principal of $125 plus accrued interest. The first month's interest is still $500, so the borrower's first monthly payment would be $500 + $125 for $625. The difference is that by the beginning of the eleventh year, you'd still be paying $125 in principal each month, but since the interest portion of the payment had dropped each month, your mortgage payment would be dropping. Specifically, since you had paid 10 X 12 X $125 in principal, the outstanding principal balance would be $85,500. Monthly interest would be $425, so the total payment at the beginning of the eleventh year would be $425 + $125 or $550.

The standard fixed would still have the almost $600 payment, but would have a slightly lower outstanding principal balance (about $83,500) and would only be paying $418 approximately in interest.

Interest only loans are bad because you are paying more interest than you really have to - there is not that much difference in the initial payment between a fixed and an I-O, but if you keep the loan interest only, in later years you are really beating yourself up.

The only real difference comes with the higher payment - not how the interest is calculated. If you wanted to pay $25 bucks a month extra in the first few years of the 30 year amortized, you'd end up paying even less interest net.

The very last payment made on the standard 30 year fixed would carry less than $3.00 in interest. I think that's what you may be remembering.

[OneTenthofOnePercent]

114. Personally, I think you should live there untl eviction. Save up paychecks and hide some money.

Pay off cars or save up for a new apartment - just keep the money hidden or spent so they don't come after it. With all the forlosures going on you could probably live without rent/mortgage for 6-18 months before actually having to find a new place to live.

[MedicalAdmin]

287. Ding, ding, ding.

My brother owns 4 houses in Canada and his mortgage on ALL of them decreases a little each month. But in the USA and other 3rd world modeled countries things are different. Assholes can justify anything.

By asshole I mean corporate MBA's of course and not right wing talking point parrots. Seriously.

[DrunkenBoat]

128. The same thing could be achieved while simultaneously giving the buyer more equity.

They do it this way for the reasons the poster stated.

[Dreamer Tatum]

189. Good god, learn some financial arithmetic before you post. nt

[DrunkenBoat]

416. Contentless post.

[Yupster]

137. Yes - it's more a matter of

mathematics than it is of slavery.

[plumbob]

390. No, as my old boss at the bank used to say, "A 30 year mortgage is

a 20 year mortgage with 10 more years of interest."

Compare the difference between a 20 and 30 with same APR - not much there, just ten more years to pay bandits and thieves.

[phrigndumass]

38. Apartment living and concentrating on becoming healthy

My health is my first priority now, and I will be able to afford the medical bills now that I have declared bankruptcy over the house.

:hi:

[Shagbark Hickory]

56. ...

Best of luck to you. If I were you, I'd build a yurt somewhere.
You can charge it on your credit card before you file for bankruptcy.

[JNelson6563]

304. Good for you!

A house isn't worth your health. You get one shot at this dance we call "life", without your health one can hardly live. Go forth, be happy and prosper friend.

Julie

[dkf]

407. You found an apartment at less than $972/mo?

Wow. I wish our rents were like that.

[BrentWil]

116. No they don't...

The 30 year mortgage isn't in of itself a bad thing. One the interest is deductible. Two, on most you can pay a little more and it will go to principle to bring down amortization tables.

[trud]

373. Re: The first 10 years or so of a 30 yr mortgage are mostly interest.

That's why I prepaid my mortgage ever change I got, with the proviso that I was also saving and building an emergency fund. And being frugal. Middle class people aren't likely to be able to do this if they're buying everything that catches their eye, like a new car every few years.

Compound interest is your friend in both directions. I paid my thirty year mortgage off in about 15 years.

[nineteen50]

9. I wonder

what interest they paid for the money they loaned you?

[phrigndumass]

160. Good question, but I'm sure they got quite a deal

As I understand it, the "investors" were able to pocket much of the $68,000

[Warpy]

11. It sucks losing your home.

You do pay mostly interest and little principal for the first 10 years. That's how the lenders are supposed to make their money and how the process was designed to make a 30 year mortgage attractive to lenders. For many years, it worked, until somebody decided a housing bubble helped along by mortgage scamming and financial shenanigans was a good idea.

Before the 30 year mortgage, all mortgages were 5 year balloon mortgages. You paid a set amount of interest to the bank every month and after 5 years, the payments would balloon up to include a quick payoff of principal. Since people generally didn't get rich quick and never were able to pay those balloon payments, they renegotiated the deal every 5 years, never owning anything and never being able to pay the sucker off.

I'm sorry you lost your home, but I would suggest the medical bills had a lot more to do with it than the standard 30 year mortgage amortization. I hope you recover your health and recover from bankruptcy. I hope we all recover from this mess.

[phrigndumass]

161. Thanks Warpy, good info :) nt

[MedicalAdmin]

289. I have never heard that....

Hmmmm. Gotta link? I would love to be better informed about this.

Every older person I know had either a 20 year fixed or something similar. Balloon payments are, as I understand it, a recent development.

[Warpy]

393. Try Wiki

As I recall, they had a pretty good article on how the 30 year mortgage came into being, along with all the financing scams that had made home ownership an elusive dream up to and during the 1920s. The 1920s saw a lot of people unable to renegotiate their leases and a 10 year slump in housing prices before the market crash and Great Depression.

It's a place to start.

[MedicalAdmin]

398. Thanks.

:-)

[frazzled]

325. Thirty-year mortgages became the standard after the Great Depression

For more than 80 years this has been the case.

[slackmaster]

14. Sorry to hear about that. You've done absolutely nothing wrong.

Amortizing loans are very frustrating for the first several years. Once you get past about the halfway point, the amount of payments to principal increase quickly, but there is a downside as well: The hefty tax deduction for mortgage interest that you have become accustomed to evaporates.

Of the $70,000 paid to my mortgage companies in the last 6 years, only $2,000 went toward principal.

That's how it works. People who were fortunate to time their purchases at a low point in the market cycle experience equity gains due to increasing market value. You hit it about as wrong as anyone could. That's not your fault, but it is how things work out sometimes.

I hope you are able to restructure your finances, and more important take care of your medical issues.

[phrigndumass]

162. Good info, thanks for your well wishes, slackmaster :)

[TwilightGardener]

15. I like my house. I'll stay here as long as we can swing the payments, it's my home.

Good luck to you, though. Have a happy future.

[phrigndumass]

163. Thanks, TG :)

[ThomWV]

18. In the last 6 years my son has spent that much in rent.

but unlike you, he's got nothing to show for it. At least you have your name on the deed.

[Shagbark Hickory]

39. And that's a huge liability. OP is on the hook for the loan amount.

Your son can walk at practically any time.

[uncle ray]

417. lots of former homeowners now have nothing as well.

many are even worse off than having nothing.

there is nothing wrong with renting in many cases. had your son saved for two years and then bought, he'd probably have less than nothing now.

[FedUp_Queer]

20. What's the big deal?

Corporations walk away all the time when it becomes financially unviable. You did nothing any corporation would not have done.

[phrigndumass]

52. Makes sense

:hi:

[Kaleko]

24. Hey phrig!!! Long time no post from you...

I missed your input here on DU, and I sincerely hope you have a good place to stay and a new beginning of the refreshing kind.

All the best to you, always. :loveya:

[nineteen50]

45. Are bankruptcy laws the same for people/people and corporation/people?

[Fuddnik]

87. Nope.

Real people get royally screwed. Especially after the Bankruptcy Reform Act of 2005. There's that reform word again.

[phrigndumass]

54. (((hugs))) Kaleko!

I've missed you as well, friend. My new beginning starts today :) :hug:

[WinkyDink]

33. {{phrigndumass }} Best of luck to you.

[Not Me]

47. I feel for you. You were taken.

But look at it from a slightly different perspective. $70k/6 years = 972 a month. Consider it rent.
Your house was probably worth that each month. It gave you a place to live for those 6 years.

I wish you well, and most of all wish you good health.

[DesertFlower]

370. good point. nt

[Shagbark Hickory]

42. Just out of curiosity...

Did you not want to stay in the house? Did you try to work out more favorable terms or loan modification?

You could have stayed there even after no making payments. Thats usually when they start taking you seriously.

There was a lawyer in florida that asked the mortgage company to produce the deed. And they couldn't! He was awarded the house.

[phrigndumass]

57. It became impossible to stay in the house, even with refinancing

Nowadays, nobody will finance more than 80% except in special situations. I still owed about 98% of the original loans, plus my home had dropped in value so I was upside down.

I asked for the original deeds, and they were able to produce them ... this was advice from a family member who did the same thing and her mortgage company couldn't produce the document ... she hasn't made a payment since.

:hi:

[girl gone mad]

48. Good for you. You absolutely did the right thing.

Ignore the propaganda.

The bank understood the terms when it signed your loan.

I bet your neighbors weren't complaining when buyers like you were driving their home values up.

[phrigndumass]

164. Exactly! I did help the property values in the neighborhood at first

Plus, a brand new subdivision was built in the cornfield across the street from my house with homes starting at $350,000 ... my neighbors aren't hurting that bad from my chosen action.

[JVS]

49. While I see no reason for you to feel guilty, I also don't think you were a victim.

You had a place to live while paying that money. There are plenty of people who rent a place at that much over 6 years and pay just as much money.

[phrigndumass]

62. Perhaps "victim" is an incorrect term to use

But I was definitely easy prey. You're right, it was nice living there for 6 years.

:hi:

[nadinbrzezinski]

50. Good luck

At this point people will do this more. In your case good luck with those medical issues.

Oh and the puritans have come too...

[phrigndumass]

165. Thanks, nadinbrzezinski :)

[blueamy66]

53. Good luck to you.

Sorry about the house.....

[phrigndumass]

166. Thanks, blueamy66 :)

[Yo_Mama]

55. I hope your health improves

Best of luck.

And as you have now learned, if you have to take an interest-only loan to purchase a home, you aren't buying it. You're either renting it with an option to buy, or you're speculating on the value increasing. You aren't the only person to have made this mistake, and there was a time when nearly everyone would probably have told you it was a good idea, so you aren't going to get any criticism from me.

I hope your life settles down and that you can deal with your health, which is more important by far.

PS: Try for a Deed-In-Lieu, which will leave you in a better spot if you want to buy a home later. Also write a letter documenting your health problems and medical problems as a reason, send it, and keep copies.

[phrigndumass]

58. Good advice, lesson learned

I am currently working on the Deed in Lieu of Foreclosure with my bankruptcy attorney, that's very good advice. Sending a letter regarding my medical issues is also a good idea!

:hi:

[Liberal_in_LA]

59. You got the interest deduction on your taxes. Early years of mortgage, huge interest payment

is offset by the huge deduction it gives you on your taxes. Not to criticize what you did, just reminding people of one of the benefits of home ownership.

[Fuddnik]

90. With the standard deduction, I can't even write mine off any more.

The house is way underwater. but, it's still cheaper than renting the same thing.

But, I'd never buy another house again. Especially in Florida. You get absolutely raped by Homeowners Insurance. People won't even buy anymore, when they find out what insurance will cost them.

[Liberal_in_LA]

211. how much is homeowner's insurance in Florida. And why is it high?

[FlaGranny]

246. I pay $1500 a year

for a $25,000 policy on a mobile home. It is high because of hurricanes. It's almost not worth having insurance. I should probably just put the money in the bank.

[Liberal_in_LA]

298. WOW! $120 month for insurance on a mobile home. That's high

[roody]

94. That deduction is vastly overrated.

[phrigndumass]

168. But there's also the property taxes and insurance

Which far outweigh the tax advantages :hi:

[madinmaryland]

63. So you paid just under a $1,000 to what works out to renting a place??

And you have the nerve to complain???????

:wtf:

AND you got a nice tax deduction for all of the interest and property taxes.

I'm sorry about your medical situation, but I assume you "did" take advantage of all the tax breaks.

[phrigndumass]

64. Yes ...

I have the nerve to complain. Question answered.

[Ruby the Liberal]

86. I read $68,000 in 'rent' and $2,000 to offset the loan balance

:shrug:

[madinmaryland]

100. Sorry, Rudy. That was about $1,000 a month for rent.

My fingers can be a bit slow when it comes to typing. I've paid that amount of real rent in the last six years without any of the deductions that the OP would have gotten. At least he/she is treating it like he is renting the property.

[Ruby the Liberal]

102. Ah - gotcha!

:hi:

[phrigndumass]

159. Plus, there are the property taxes, quite high in the neighborhood

$2,500 a year in property taxes over 6 years comes to $15,000, probably equal to condo association fees but still an expense greater than the benefit I received from tax deductions :)

[kctim]

183. He took advantage of more than that

and is now playing dumb so as to be seen as some sort of "victim."

Best thing is that he will do it all again when given the chance.

[taught_me_patience]

65. It's people like you who are making refinancing for people like me impossible

I had to come up with over 100k for 20% down on my first home because 80/20 loans are abused like people like you. Now, its nearly impossible to refi because so many people like you are walking away. You gamed the system. If your house went up in value and you sold, you keep the equity, but when things go bad you walk scott free? You want me to feel sympathy? It makes me disgusted

[phrigndumass]

66. It is all about you, after all, isn't it?

Do you feel compassion for those on the other side of the coin?

I am likewise disgusted by your words.

[taught_me_patience]

69. I don't have compassion for those who complain

and claim they are "victims".

[phrigndumass]

71. Obviously. Nail in your own coffin.

[chervilant]

401. Yet another candidate

for my ever-lengthening ignore list.

I am saddened by the numerous condescending and mean-spirited snarks about your decision. I am dismayed that so many DUers have no compunction about blaming and shaming. Have they no empathy?!

Thank you for sharing your experience, Sven. I hope you have a rapid and complete recovery.

[phrigndumass]

427. Thank you, chervilant

:) :hi:

[yardwork]

83. Your first home cost $500,000? The OP's home probably cost a lot less than that.

[Fuddnik]

93. Buy a cheaper house.

But I guess you'd feel deprived of what is owed to you then

Want sympathy because you can't buy a $500,000 house?

:nopity: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :nopity:

[Hissyspit]

143. Hmmm, who else can we think of games the system?

Walk scot-free? Didn't OP say they were declaring bankruptcy?

[Selatius]

147. You should have bought a cheaper house instead of extending yourself so far financially.

Nobody made you buy such an expensive house. That was your own choice. If you didn't like dropping a hundred big up front, you could have easily just walked away for a better more affordable deal.

[taught_me_patience]

190. Saving 20% down for any young family is difficult

whether it is 100k, 50k, or 20k.

[Selatius]

247. When I and my folks grew up, it was common to drop 30 or 40% or 50% down.

But that's decades ago before house flippers and corruption in the banking industry became rampant. Now, people complain about 10% or 20% down. It used to be you didn't buy something unless you could afford it beforehand, but my opinion is credit, cheap credit, spoiled everybody, and credit cards were rather rare then. Now, everybody is a slave to debt.

[snooper2]

184. I feel horrible for anybody in a $500K house

[taught_me_patience]

191. Thanks for ignoring the message

and, instead, focusing on distain for the price of the house.

[snooper2]

192. 80/20 loans 95% of the time are a stupid fucking idea...and if your credit is over 640

and you have 10-20% equity, and you aren't late on payments..

You should be able to re-fi no problem

[taught_me_patience]

198. Good luck getting an appraisal

and the banks are demanding 20% equity. The banks are so conservative because people like this are walking so frequently it's driving up their loan loss reserves. There are direct consequences for people walking from their homes... the main one is banks are afraid to lend money.

[Puglover]

223. Edit

Ugh, not worth it.

[Mosby]

248. Hey Puglover, you might get a kick from this

http://bullfroggerblog.net/00%20BLOGFILES/004%20Misc%20Graphics/screenclean.swf

[Puglover]

375. Thanks Mosby.

That really made me smile. :hi:

[Mosby]

229. What are you trying to say?

Why do you think "it's nearly impossible to refi"?

[taught_me_patience]

244. Ultra conservative appraisals

If you have 80% ltv, then your appraisal is suddenly 50k below what you're expecting... guess what... you no longer have 80% ltv. For example, if you have a 500k home and a 400k mortgage, you think you can refinance. Your appraisal comes in at 450k and suddenly you are 88% LTV... Now, to get back to 80% LTV, your mortgage has to be 360k... so to refinance you need to come up with 40k out of pocket.

Why are appraisals so conservative? Because the banks are getting burned by assholes walking from their mortgages.

[jeff47]

333. You're blaming the wrong person.

When a mortgage is negotiated there are two parties in the room.

One has a degree in finance and lots of experience with loans and calculating risks. He or she has probably made thousands of loans to a wide variety of people.

The other person is some shmuck off the street who's probably never had a mortgage.

If the deal goes south, you don't blame the shmuck. You blame the expert that failed at their job.


The reason so many loans went bad is the banks stopped holding the loans. Back in the old days, that loan officer wouldn't make the loan unless they had a reasonable belief it would be paid back. Because the bank would lose money in a default.

During the 'boom', this system broke down. The loan was sold after 6 months, and the originating bank got its money back. So the loan officer doesn't care that the loan will default in 5 years - they already got paid.

The banks and their rush to quick profits is what's causing your problems refinancing. They gave out loans they knew were going to default because they didn't give a damn about the long term consequences.

[Critters2]

340. You had 100K available for a down payment?

Yeah, you're suffering. :eyes:

[Starry Messenger]

68. Ugh to the born-again feudal lords dropping in to judge you.

Thank the gods you have your health. Here's to you and your new start. :toast:

[phrigndumass]

70. Thanks, Starry Messenger

My health is improving, perhaps more now that the stress of mortgage payments is behind me. Cheers.

[madinmaryland]

108. Sigh. For such a good reply, you have such a childish pic in you sig line.

Ugh.

[ritata1027]

122. it sounds good

it sounds good

[madinmaryland]

123. Welcome to DU.

:hi:

[Starry Messenger]

124. Coming from you that's a compliment.

If only any of your posts ever achieved the sophistication of a child, it would indeed be news!

[tgal]

225. Snap!

GREAT post Starry Messinger.

LOVE the pic of that loser Duncan.

And your post here is spot on.

[Lorien]

130. No kidding! nt

[badtoworse]

72. Sorry you're sick, but no sympathy beyond that

Unfair? You put no money down, paid less than $1,000 a month to live in the house and got a tax deduction. You really have balls complaining about that.

[phrigndumass]

73. Thanks, and ...

Yes I do have balls. :hi:

[Ruby the Liberal]

88. And now ruined credit.

Yeah - it was a free ride.

:eyes:

[badtoworse]

109. This is not a case of foreclosure; he's walking away from the deal.

That's a choice he made.

[in_cog_ni_to]

113. Because of mounting MEDICAL BILLS. Have a little compassion here!

Sheesh. It's a fucking bank! They screwed millions of people around this country with bad loans. They deserve everything they get in return.

[badtoworse]

153. The people who got screwed were the ones who bought the mortgage backed securities.

How exactly did he get screwedby the banks? It's not the bank's fault he had medical bills and there is no evidence he made any effort to work out better terms or restructure his debt. In fact, there is no evidence the banks even knew he was sick.

I'm sorry he got sick (I said that), but to me, that doesn't absolve you from at least trying to work something out. Sorry, but I don't respect him for him decision to default on the deal in the way he apparently did. As for ruined credit, I think that would go a lot better, if he at least tried to work with the banks.

[IndyPragmatist]

157. Don't forget about his neighbors

The value of their homes will drop while the house is in foreclosure. The bank will take a few hundred thousand dollar loss on this one, which means they will have to make that loss up with their other customers by being harder on them.

There are unintended consequences to almost everything. In this case, you walking away from your mortgage will immediately hurt your neighbors and others who use your bank, while adding to the problem that is holding much of our economic growth back.

[badtoworse]

167. 100 percent correct.

But despite that, many here are applauding this guy. Go figure.

[jeff47]

337. Because that's not his fault.

Bank gives out loan knowing it will go into default in 5 years.

Bank sells loan in 6 months while it is not in default.

Predictable result happens, loan goes bad.


Who's to blame? The bank giving out loans they never would have 20 years ago. Because 20 years ago the bank would eat the loss. Thanks to the miracle of modern banking, the entire country eats the loss, and the bank got fully repaid 5 1/2 years ago.

[chervilant]

403. AND,

the bankers get hefty bonuses, and ginormous salaries, and incredible benefits.

[Honeycombe8]

262. The credit issue will pass. Everything passes. I think it'll be on his credit 7 yrs?

Not a lifetime. Seven years will eventually pass.

[jeff47]

336. 10 years for the bankruptcy to go away. (nt)

[chillspike]

74. You're free

Now don't ever let anyone get you in that position ever again. Stay free, brother.

[phrigndumass]

169. Yes, thanks chillspike :)

[glowing]

76. You should have just stayed through the entire foreclosure process.

The banks are taking like 2 yrs to process these things.. You could have lived there for "free" and bankrupted it towards the end. Never leave the property until you are getting final closings... You never know, they may have tried to work with you... The bankruptcy judge may have tried to force a negotiation with your loans... Never just abandon the property. Wait... Shoot a year or two of savings while living "rent" free would allow you more savings to move beyond the home... and I'm thinking it would take a while to sort out the mess seeing as there were 2 loans on the property.

[JDPriestly]

77. California has what are called the "depression laws."

They provide that you can walk away from a first mortgage pretty much without debt. That is an oversimplification because of course, it depends on the facts but . . . . .

In terms of the number of bankruptcies per capita, California is No. 48. (very low considering the other problems in our state)

http://www.statemaster.com/graph/eco_ban_fil_percap-economy-bankruptcy-filings-per-capita

Only D. C., Maine, Alaska, Guam, Hawaii, and Virgin Islands have fewer bankruptcies per capita than California.

Mind you, we are fourth from the top in terms of foreclosures -- so it is not a lack of foreclosures.

http://realestate.msn.com/article.aspx?cp-documentid=13107814

If this law existed everywhere, banks would be more careful about who they lend to.

[yardwork]

84. I'm sorry for your troubles. If this country had decent health coverage, this wouldn't have happened

[phrigndumass]

170. You're right ... and I was also on disability for three months ...

which ate into my savings and made it difficult to keep up with mortgage payments :hi:

[Ruby the Liberal]

89. Best of luck to you.

You must feel like a weight is lifted. Concentrate on your health now and let your attorney deal with the sharks.

[phrigndumass]

171. Thanks, Ruby :)

[roody]

91. Good for you.

Life is for living---enjoy!!

[phrigndumass]

172. Thanks, roody :)

[hfojvt]

92. I generally don't like the idea of people walking away

but I would say you paid plenty yourself and you have nothing to show for it. You got in to a bad situation without a good way out for you. A person cannot be expected to keep paying $840 a month without creating some equity (although I would also guess that you were paying $4,000 a year in taxes and home owners insurance, which is almost 1/3 of your total payments.

The bank may have had you paying mortgage insurance as well. I know my brother did, when he didn't have much equity and that was over $1,000 a year.

But that covers the bank if you default.

But even in this town too, you cannot rent a decent house in a decent neighborhood for $800 a month.

[phrigndumass]

173. Your opinion means a lot to me, hfojvt

... as I follow your journal quite a bit.

Taxes and insurance came to $5,500 a year on a $150,000 home, much more than the tax benefit I received.

Rent in my new apartment is $550 ... I'm in a low-cost area (Springfield, IL)

:hi:

[hfojvt]

237. okay, now I can do more calculations

In a normal 30 year mortgage, even at a low 4% interest rate, you would pay a total of $246,600 for a $150,000 house. You'd also pay at least $165,000 in property taxes and insurance, assuming no increases in those costs (which is not a good assumption).

But at the end of the 30 years you would have a $150,000 asset, or even a $300,000 asset (assuming an approximately 2% growth in the value of the asset).

In a normal 30 year mortgage though, at the end of 6 years you should have over $12,000 in equity. However, building more equity requires higher payments, which you seemingly could not afford at the time of purchase, and still cannot afford 6 years later.

Most of the buildings I have bought, I paid off faster than was required. Over the long term, even paying an extra $20 a month builds up equity much faster than making minimum payments. Low payments are kind of a trap that make you pay much more in the long run.

You are saving now $400 a month in monthly housing costs, but you have the disadvantages of an apartment (and also the advantages (like no frigging yard work, or shovelling, no household maintenance expenses, etc.)) and also no equity building up. After six years of renting you will have paid almost $40,000 with nothing to show for it.

But if you'd done that for the last six years and saved the $30,000, then you'd be in much better shape to buy a house, but a $100,000 house with lower payments.

The tragedy kinda is that the bank will now auction your house for less than $100,000, perhaps much less. In the final analysis, they'd have been better served by making a deal with you. Even reducing your payments by $300 a month over the next two years would be much less of a loss than they are gonna take now. So you lost $30,000 (less the puny amounts you save with tax deductions (hmm, could be as much as $9,000, but more likely about $6,500)) and the bank will probably lose $30,000 on a sale. The only winners seem to be 1) the person who sold the house to you (and the realtor), and 2) the person who will get a deal on the foreclosed house. Kind of a screwy system.

[phrigndumass]

326. Thank you for your insight, hfojvt :)

Your post is extremely helpful to me! :)

[Odin2005]

95. Good luck, Don't mind the haters in this thread, they have just been brainwashed by...

...the propaganda of the Banksters.

[Dreamer Tatum]

96. Oh BULLSHIT.

The OP rented a house and took a tax deduction in the process.

That's called a SCHEME.

[sammytko]

99. Yes, he received something in return for that monthly payment

It's a struggle, but you have to live somewhere. My house will be mine in 2 years, but after that, there is still maintenance, utilities, taxes. Never really live for free.

[Ruby the Liberal]

103. And walked away with a medical bankruptcy and ruined credit.

Party on! :party:

:eyes:

[Dreamer Tatum]

105. The OP said it was mostly bc of the mortgage. So fail. nt

[Ruby the Liberal]

106. And I hope that you never find yourself in the position

where your medical bills challenge your ability to continue to pay for your shelter.'

Truly.

[Dreamer Tatum]

107. The OP can rent an apartment. Only now he/she can't scam the mortgage deduction. nt

[Medium Baby Jesus]

378. Fail!

Anyone who uses that tired phrase is either under 15 or dimwitted.

[Hissyspit]

144. Yes, it's terrible the way OP stole this house and got away with it.

Oh, wait.

[girl gone mad]

146. A scheme to get the mortgage deduction?

I've got some news for you. The deduction on a $1K payment won't amount to much of anything. There's a good chance the OP was better off taking the standard deduction.

[jeff47]

339. Math is hard!!

Standard deduction > Mortgage interest deduction on a loan this size.

So unless the OP happened to have an awful lot of other deductions to itemize, he didn't get any bonus for mortgage interest. He also got to pay property taxes and insurance.

[Logical]

117. You have been brainwashed by the DU.

[Broderick]

97. Compassion is hard to find sometimes

A lot of folks in the world savor others misery and love to pat themselves on the back by how much smarter they are. You made a tough decision and losing a home can be devastating. I hope your medical issues get resolved or get better. Good luck.

[phrigndumass]

174. Thanks, Broderick :)

[Broderick]

188. Hang in there

Even here the haves like to deride the have nots. Many of those haves in this country created the have nots and used them. Their day is coming as the have nots grow in number. They will have earned what is coming to them.

[Hassin Bin Sober]

98. Sell the appliances for some seed money.

the appliances are personal property.


eta: and stay in the house till the sheriff comes. Live rent free for a while.

[BrentWil]

110. What were the terms of your mortgage?

Serious question. That seems highly insane under any normal mortgage.

[tammywammy]

120. See #4 for more detail

Interest only on 80% loan and a "higher" interest rate on the other 20%. No money down.

If you sign up for an interest only loan of course you're not paying much in principal.

[BOHICA12]

118. Is this on a micro level like the abandonment of Social Security?

a promise was made, a contract entered into, one party decides (rightly or wrongly) that the deal isn't working and makes changes. Were there negotiations? Did bargaining take place?

Is it morally equivalent to those looking to change the SS deal in the future?

[Yo_Mama]

202. No

It's nothing like SS. NOTHING LIKE IT.

I work in banking. An interest-only loan is always a temp loan designed to be refinanced or paid by sale of the house. Exactly why everyone feels that the least knowledgeable party (the borrower) bears all the responsibility to make this work is frankly beyond my comprehension. In fact, I can't even to begin to approach the mental methodology that allows people to assign the blame to the borrower here. My mouth is hanging open in shock over many of the responses to the OP.

Let me assure you that the lender who made the original I-O first mortgage was depending on appreciation or stable pricing of the house to get their money back, and the lender who made the second piggyback mortgage was profoundly dependent on appreciation of the house to get their money back. If they didn't know this, they were horribly incompetent. Okay? It was a spec loan. All such loans are spec loans.

Now the first-time buyer is hardly the party to the transaction who has the best ability to assess risk. Said borrower now is ill. Said borrower can't get a payable loan because
A) Borrower is ill and has medical bills borrower really cannot pay and thus poor credit, and
B) Said house did not appreciate and probably depreciated, so now Loan-to-Value ratio is awful, so this loan is a much worse default risk than when borrower initially bought the house, and
C) If borrower runs this out another few years, borrower is still going to default and creditors are going to get back a house that hasn't been maintained and has depreciated even further.

The borrower here is giving up the house in the least expensive way to the creditors, thus limiting the creditors' losses. There are clear mitigating circumstances.

Hopefully the original poster will regain health, and I've got to tell you that if the OP does, and in four to seven years walks in with some money saved and a job, this is one of those histories where the borrower should be considered to be a pretty decent risk and should be qualified for an amortizing mortgage at a reasonable debt/income ratio and at a reasonable rate if payment history in the interim is good. The only thing I care about is that the situation is adequately documented so that it can happen.

Yeah, the borrower was speculating. But the borrower may not even have known this - "Buy now or be forever locked out" was pretty much the mantra for a while there, wasn't it? "Real estate never goes down!" Remember that one? The creditors KNEW they were speculating, whereas the borrower here probably had little comprehension of the risks, and might reasonably have assumed that if someone were willing to lend 100% of the purchase amount, the bleeping house really would appreciate!

I can't believe the people in this thread who are imposing much harsher judgments than mortgage underwriters do, and who are blaming the borrower here for everything wrong about this transaction.

Yeah, selling a bunch of homes via spec loans drives down property values and hurts homeowners who are paying their mortgages. That is true. But why do you blame the borrowers and not the jerks who were lending this way? In what other financial transaction is the least knowledgeable party assumed to bear the primary responsibility for the outcome?

[dkf]

409. If the borrower couldn't afford an interest only loan obviously they couldn't afford a regular

Mortgage.

And you correctly point out this was speculation in real estate with the result that the value went down and the borrower walked away.

What's the big deal? The system is the one that gets hurt which doesn't seem to stick in the typical duers craw. I kind of see it as rent to own with ownership contingent on appreciation and refinancing.

[comtec]

119. I declared bankruptcy before the law change, and it was a humiliating process

The amount of utter SHAME you feel before you finally turn in those papers is beyond words.
SUICIDE INDUCING in many people.

but the relentless calls, literally I was told to steal money from my family to pay!

it was too much.
then the phone went silent when i told them i was declaring bankruptcy.

they went away.
I only actually declared for 6k of debt that I knew I could not pay.
I had no job, no prospects of a job that would allow me to pay rent AND my debt.
Rent comes first.
I was moving to Europe with my last dime to live with my wife, and I needed a clean slate here.

It was probably one of the better decisions i've made.
I tried to be reasonable with the banks, tried to negotiate principal payments, thus ruining my credit.
i TRIED... and they flat out refused to help me.
FLAT OUT!!!!!

Those haters out there.. fuck you!
You can't know what a horrible situation t is leading up to bankruptcy.
yes there are normal people who abuse it every 10 years, but very few.

The reality is you're living in a propaganda world. your ivory towers are too tall for you to see the lake of blood it sits in. and honestly I don't wish you to have to live in the real world... it's a horrible place. so you can stay there.
stay in your dream world where you never miss a payment, you never worry about money, you are NEVER EVER ONE CHECK FROM THE STREET!
stay there, because someone has to live in the clouds.

In my shame, I also admit that I am currently looking into buying foreclosed houses.
Just one.
But they are so cheap, and I'm just starting to make it... 30k for a home, even with the repairs it needs... it's so much cheaper than 200k!

30k and I can own it in a dozen years if not sooner.

I'm so sorry, but I have little choice.
i will always be a slave to an apartment holder.
After the marriage I just had... I refuse to be a slave to ANYONE AGAIN!

[BOHICA12]

121. Such a small mortgage (30K) means ...

... you are buying a house to live in and not as a tax deduction. Very good move.

After almost loosing a house to foreclosure in the early 90's - I promised myself that the next home would have a mortgage I could pay on minimum wage. It's worked out okay.

[comtec]

125. assuming i can get it...

I hope can... funny thing is mom could probably put it on her credit card and get a BETTER interest rate than i'll get >.>

But yeah... I figure if I get a house before winter hits I will be able to make it livable before the tundra lands...I hope.

Im starting a new job Friday that only pays $10.75.... before you jump on me... I have 10 years in IT and this was the only job I could get.

I'm happy to have it. it has benefits, and is 40 hours. but it's half what I should be making at a low paying IT job for my level of knowledge and experience.

[Blue_Tires]

334. well said...

thanks for the insights

[SmileyRose]

422. Hey

:hug:

[comtec]

440. thanks ^^

:hug:

[Lorien]

129. This thread just goes to show how compassionless and hateful a society we've

become. Seriously, spewing venom at someone because they have medical bills that are so crushing that they have to walk away from their "American dream"? Remember when it was OK to have one of those? Now people are just as hateful toward someone who is ill and needs to fire bankruptcy as teabaggers are toward those "lucky duck' public school teachers. I'm disgusted by what this Country-and this board-have become.

[shireen]

133. +1

some of the responses in this thread are really cold and judgmental. But i'm also glad to see so many supportive people.

[coalition_unwilling]

135. The one that got me was the person pissed b/c they now had to come up

with $100K to re-finance their (presumably) $500K house:

65. It's people like you who are making refinancing for people like me impossible

That poster should make sure he or she has callouses on his or her hands when the revolution comes is all I'll say.

[in_cog_ni_to]

181. Yeah...that one gave me a gut laugh. We paid less than $100,000 for our house. And he/she is whining

over having to come up with $100,000 for a down payment on their mini-mansion? :rofl: Pathetic. I will never support the damn corporations/banks/institutions/insurance co. that have screwed this country over. Whatever it takes for Mr./Mrs/Ms. Average citizens to survive, I'm all for it. If that means walking away from a mortgage....so be it. It's now a matter of survival.

[taught_me_patience]

193. The poster is not a victim and I feel no sympathy for his/her actions

which cause harm to others in society. Why don't you reply to my post if you have issue with it? No money down loans are the chief reason why housing got so expensive here in Los Angeles... and the chief reason why 500k doesn't buy much. I'm swimming in riches in a two bedroom apartment.

[coalition_unwilling]

327. I saw no need to pile on, as there were plenty of decent DUers who

pointed out the total absurdity of your original post #65 along with its heartlessness and cruelty, traits which are exemplified in this post also, e.g., "I feel no sympathy for his/her actions."

If you feel no sympathy for his/her actions, why would you expect any of us to shed a single tear for your plight?

[DaveJ]

270. I'm sure the bank profited off the deal

They know how to profit off every deal. I doubt his handling of transaction will effect others.

[taught_me_patience]

196. The OP is playing the victim card and it's disgusting

The whole, I'm a victim it's not my fault argument is what's pissing people off.

[Starry Messenger]

134. +1

[lumberjack_jeff]

199. The responses would be different if the situation were presented differently.

"I'm broke, I can't pay my bills. I'm sorry" is different from "You exploited me so I refuse to pay my bills. (Besides, I'm broke)."

[Puglover]

227. No kidding.

My ignore list fondly known as The Idiots Playground just got two more inmates.

[chervilant]

406. Yup...

Three more on my list. I have no interest in reading hateful, mean-spirited, condescending posts.

[chervilant]

405. + a gazillion

So much hate...so much vitriol. This time, I may leave for good.

[totodeinhere]

462. Desperate times like we are in now can bring out the worst in people.

A lot of people are flailing around and lashing out not knowing what to say or do. Perhaps we should not be quick to judge anyone on either side of this issue. The whole thing is really sad.

[shireen]

131. still a difficult thing to do

I'm so sorry to hear you had to go through it. Please take care ...
:hug:

[phrigndumass]

176. Thanks, shireen :)

[BlueCheese]

132. I don't think there are any moral judgments to be made here.

Maybe I once thought a borrower should try really really hard to repay the loan. But now I think it's all a business decision. The contract says that if you pay, you keep the house; if you don't, you lose the house. If it makes more sense for you to give up the house, then more power to you. It's a decision every business would make--indeed, should make. Individuals shouldn't be held to a more ruinous standard.

Best wishes. It sounds like you have enough to deal with without the mortgage.

[phrigndumass]

177. It's not like I haven't tried to repay the loan

I've been doing that through some pretty tough times, I was on disability for three months earlier this year and that ate into my savings. Folks here on DU (thanks to One Grass Root) held a fund raiser for me.

Thanks for the well wishes, BlueCheese! :hi:

[coalition_unwilling]

139. You should not feel one iota of guilt, as you are engaging in what

the industry refers to as a 'strategic default' (where you make the decision that the costs of staying in the mortgage impermissibly exceed the costs of getting out of the mortgage).

Businesses and corporations do this type of strategic default constantly. Half the bankruptcy attorneys in this country would be pounding the pavement looking for other employment were it not for said strategic defaults.

Glad also to hear you have an attoreny protecting your interests now. That is also probably getting you some much-needed peace of mind.

Best of luck in your future endeavors.

[phrigndumass]

178. Thanks, coalition_unwilling :)

[coyote]

140. Geez, I wish we would get half the replies here when

a corporation lays off thousands of people to save cost and ship those jobs overseas. You see no moral benchmark held up to corporations or their social responsibility.

But my god, when 1 single person walks away from their home because they are paying 99% interest and have medical problems, then let the dogs loose.

Sven, it was a perfectly logical business decision. Fuck all the nay-sayers :-).

[jtuck004]

142. I second this one - and a few of the others. Good luck, smart move. /nt

[timtom]

149. First of all, thank you for sharing.

This is evidently a major life experience for you. I salute you for your bold determination.

Second of all, based on the responses on this thread, I would NEVER share something personal on this board. When sharing, I don't need to be "educated", excoriated, or pitied.

I have considered doing the same, over the years. But circumstances preclude that action on my part.

Thanks again for being so open. I salute you, once again.

[blueamy66]

185. I've learned myself.

I won't share much anymore either.

:(

[NNN0LHI]

155. Seeing you are in the same state as me I would say you probably did the right thing

We just about have our house paid off after struggling for decades to accomplish that.

And when we have it paid for we won't be able to afford to stay living here anyway due to increase in the property taxes. They have quadrupled since moving in.

The monthly tax bill alone will be more than the initial house payment was when we bought this house which back then included principle, interest, insurance and property taxes.

So after making the payments diligently for all these decades on this house until it is paid for we are going to lose it anyway.

You are the smart one. Lot of people will figure this out for themselves some day.

Don

[phrigndumass]

180. Sorry to hear about your situation, NNN0LHI

I wasn't aware that taxes can eat up your life savings toward the end of the mortgage. Best wishes to you :)

[NNN0LHI]

194. Thanks for the kind words but I am not looking for any sympathy

I consider myself a survivor. Just a case of living and learning. It is a process we all go through.

Good luck and best wishes to you too.

:hi:

Don

[deaniac21]

214. Do the property taxes go to the local public schools?

[KarenS]

187. Best of luck to you and

:hug:

You're doing what you need to do.

[lumberjack_jeff]

195. Did you do this after consulting with your bankruptcy counsel?

In general, the advice I've read suggests that the house is the last thing you want to give back because bankruptcy court gives homeowners some protection.

[NewJeffCT]

203. +1 on this advice

in regards to consulting a bankruptcy attorney or counsel.

[phrigndumass]

234. Yes, it was my bankruptcy attorney who suggested I walk away from it

Good question! There was no way I could keep the house, though, with the medical bills.

[pintobean]

197. Our pensions and 401Ks are stuck with your bill.

Do you dine and dash, too?

[truebrit71]

206. They are? I know that mine aren't....

...and I love the sympathy there too...nice little dig on the dine 'n' dash comment...very compassionate of you...:puke:

[hay rick]

215. Really?

The mortgage company collected $68,000 in interest and they get the house. If they still lost money, they were acting recklessly. I have no sympathy for the mortgage companies or the investors who thought these shysters were worth investing in.

Perhaps you missed the part about medical bills also being a factor.

[pintobean]

236. Perhaps you missed the part

where others are encouraged to do the same. Looks like a case of vengeance to me.

[jeff47]

344. It's not the borrower's fault when the bank makes a bad loan.

That's supposed to be the reason the people in the bank are paid so much - they're supposed to actually figure out what's a good loan and what's a bad loan. But thanks to modern banking, banks sold the loans in 6 months, so who cares if the borrower defaults in 5 years? They got their money.

Would you blame him if a mechanic told him he needed something fixed on his car when he didn't? No, because the mechanic is supposed to be the expert. So why blame him when the expert in financing fails at his job?

[pintobean]

364. That load of bs has nothing to do with the post you replied to.

I will tell you this; when I took out my mortgage, the lender and the realtor both told me that I could afford three times what I wanted to borrow. The fact that people buy more than they can afford is their own damn fault.

I won't reply if you reply to this. I'm done kicking this thread.

[jeff47]

397. Do you tell your doctor how much medicine to prescribe?

Oh wait, it's only mortgages where we expect the completely uneducated to be more knowledgeable than the experts.

[joeglow3]

429. Do you listen if your Doctor tells you to take 8,000 miligrams of ibuprofen?

[jeff47]

453. Do you know what the LD50 of ibuprofen is?

'cause 8,000mg isn't a lethal dose to an adult.

http://www.sciencelab.com/msds.php?msdsId=9924344

LD50 is 636mg/kg. A 200 lb person is about 90 kg. 636 * 90 = 57,240 mg.

If you'd prefer the lower guinea pig-derived LD50 of 495mg/kg, our same 200lb adult would have to consume 44,550mg.

So, you've demonstrated an example of why we trust experts that are trained in the relevant area to provide advice.

[joeglow3]

454. Jesus, that went over your head.

Fine. Would you listen to your Doctor if the told you to take 8 quadrillion mg's? Do you see the point now????

In case that too went over your head, the point is that if you blindly accept everything you hear from every "expert," then you can expect to get fucked in the ass a time or two in your life.

[jeff47]

455. What you do in that situation is ask the expert why, not blindly accept everything

While this is a lovely tangent you're trying to work in here, it doesn't change the fact that when the doctor gives bad advice and the patient takes it, it's not the patient's fault.

When the loan officer gives bad advice and the borrower takes it, it's not the borrower's fault.

[joeglow3]

456. Did the loan officer give bad advice?

Did the borrower read the truth in lending form they are required by law to sign? Did they look at the amortization schedule they are required by law to receive? Experts are intended to provide insight on highly technical aspects, but they do not absolve you of common sense.

[jeff47]

457. Yes.

The loan officer thought it would be a great idea to make a 100% LTV loan with no PMI. That only makes sense if property values will always go up, and always go up substantially. So the loan officer gave bad advice to at least the bank.

Usually, such loan officers also tell the borrower that the loan is either affordable outright, or can be easily refinanced in the future. A good chunk of the mortgage explosion occurred because the loan officers assured buyers they'd be able to refinance before the teaser rate ended.

And common sense would tell you that a financial professional that has reviewed _everything_ about your finances would give good advice. That was not the case, because that professional only needed the loan to stay good for 6 months. In fact, they got paid more if they conned buyers into loans that were worse for the buyer.

[NewJeffCT]

201. Sorry to hear about your situation - the bank took advantage of you

by financing 100% of the home's value through 2 mortgages. And, interest only loans are a bad idea in the first place.

Too bad there wasn't a place you could have gone to for advice beforehand on mortgages.

Good luck with your situation.

[myrna minx]

204. Hi phrig -

It's great to see you. :hug: I hope things are getting better.

[phrigndumass]

230. Thank you myrna minx!

:loveya: :hug:

[Change Happens]

205. Nice move, God bless you...I support you 100%!!!!

Enjoy your freedom...

[fascisthunter]

207. sorry for your struggles

and sorry for the pricks giving you shit here... you made the sacrifices and are paying for the consequences of your actions. They act as if you plotted and schemed the system by walking away with NOTHING. You aren't the stupid one...

[phrigndumass]

233. Thanks, fascisthunter ...

... for understanding :)

[Historic NY]

209. Yes sometimes the learning curve is horrible.

[BigD_95]

210. I thought it was common sense to get a fixed interest rate loan.

It was the question I always asked. Is the rate fixed ? 30 years fixed at 6% on my first mortgage. It didnt really seem that hard. They show you the pay back and how much interest you pay back and what goes to the balance before you sign. Did that when I bought and refinanced.

Trust me when I say Im not smart in this matter. I did little research. Just used common sense.

There is also FREE home buying classes in the county I live.


With all that said. I dont blame you one bit phrigndumass

If the banks want to screw people over with those type of deals and BS loans ripping people off then screw them. I hope you do feel guilt free. I feel guilt free for you. As a matter of fact Im glad you are doing it. I feel bad that you signed that type of loan. It shouldnt even be offered. If your credit was good or even ok then they shouldnt have been even offering you loans like that. They did it to rip you off and its BS.

I wish you well.

[tinrobot]

212. Rich people do this all the time...

It's called throwing good money after bad, and most rich people have learned not to do it.

Good for you.

[Demeter]

213. Aw, P Man, I'm so sorry

I hope it's all getting better from here for you.

[phrigndumass]

231. It will get better from here, thanks!

:loveya: :hug:

[Demeter]

394. Malt does more than Milton can

to justify bank's ways to Man

:toast: :beer: :cry:

[proReality]

218. You definitely are the victim!

When we went in to sign papers for this house 10 years ago, they tried to talk us into a 0% down loan, telling us it would be so much easier for us to furnish the house with new things and have money to spend on other things we wanted to do. They couldn't believe we were going to "waste" our money by putting 20% down since "nobody else is doing that now." They tried every argument they could come up with for over an hour till we finally told them we needed to leave, we had another appointment. Once the papers were signed they actually said "you're smart to be doing it this way."

[Motown_Johnny]

226. did you try to short sell it? It is easier on your credit

[phrigndumass]

232. Yes, I tried that ...

But there was a flood during the short sale process and it wiped out my furnace and water heater in the basement, not to mention the cost of drying out the support beams. The house was in the short sale process until I walked away from it, since nobody would want to buy a house with damage like that.

:hi:

[Motown_Johnny]

235. argh, no flood insurance?

[phrigndumass]

245. Had to let the flood insurance lapse when I was on disability and

put the house on the market. I figured there hadn't ever been a flood there, and I couldn't afford it, so I let it go. Bad move on my part.

[leftyladyfrommo]

242. I made home loans for 30 years and I agree with you.

Don't give me the old "didn't you read what you were signing" routine. have you seen those mortgages? pages and pages of small print. Only a real estate attorney could make sense of it.

People who are buying a house are sitting ducks. They fall in love with the dream of having their own home. They sign the papers.

Customers were suckered into those deals. I have no pity for the banks that did that - all they cared about was the enormous profit they were raking in.

[Honeycombe8]

264. It's against the law in TX to finance the down payment. There's a reason for that.

Because of what happened this OP. It's against the law not to protect the companies, but to protect the buyers, who would fall victim to companies taking advantage of people with no money.

Even FHA buyers must come up with a 5% down payment....not financed. It must be cash.

The OP knew the approximate amount of the total mortgage amount, including insurance and taxes. He approved that amount. Regardless of the financing arrangements.

Even if a company will approve a buyer who is buying a house with a mortgage that will take 50% of his gross income (which I think is illegal here in TX, but I'm not sure)...there is info all over the internet to gauge how much of a mortgage payment a person can afford. I would bet that the motge amount total (for both mtges) is more than 30% of his gross income...which is too much.

Best to buy less house than you can afford. They always cost more than you think. And ins & taxes go up every year. It's hard to buy less than you can afford, but how much happier a person will be once they start paying the lesser mortgage!

But he did what he had to do to get out of the situation. So now he can go forward and hopefully not make the same mistake again. (Save $$$ for a down payment; then save $$$ for an emergency fund that will not be used to buy the house; wait for the BR to clear off his record so he can get a low interest rate on his next house.) Also...he'd let the flood ins. lapse, and it flooded. So...can't say that he was victimized there. Esp if he lives anywhere near water. But I understand he was in dire straits, so....

[Atypical Liberal]

312. We bought a brand new home with zero money down.

We bought a brand new home, manufactured to our specifications, for zero money down and zero closing costs. We put down $100 earnest money - that was it.

Now homes in our neighborhood are selling for half the price of what we owe on ours.

The good news is that we have no money invested in the home. We could consider what we have been paying as rent should we choose to walk away.

[chervilant]

408. hmm...

Just five short years ago, Countrywide was doing 80/20 and 80/15/5 loans here in Texas. We had NINAs, SISAs, 100%, 105%, and 110% loans for people with exceptional credit scores. Lenders offered all kinds of scummy sub-prime loans, vigorously marketed as 'affordable' and 'safe.'

Anyone vilifying this DUer for his decision should remember this basic truth:

Banks always, always, always, always--have I said always, enough?--ALWAYS get their money.

[Honeycombe8]

435. No one's villifying the purchaser. But let's get real...an adult is responsible...

for purchases he makes, unless he's defrauded. He bought a house...knew what the purchase price was...knew what the approx. closing costs would be....knew he was taking out two loans simultaneously....knew what his total obligation would be....knew that his ins. and taxes would go up every year....knew what his gross and net income was.

None of that changed. What happened, he said, is that he had a medical emergency. Because of htat, he let his flood ins. lapse, and then the house flooded.

So it was because he had a medical emergency that he lost the house. It has nothing to do with the big, bad banker. He would've lost the house, regardless of whether he had one loan, or five loans. Doesn't matter.

He simply couldn't afford the mortgage anymore because of the amount of it, compared with his financial situation...and he couldn't sell it, because he let the ins. lapse & the house was seriously damaged.

So he did what he had to do: let it be foreclosed on. Now he can move forward, and not make those same mistakes again. Be sure and have an emergency fund, good health insurance, let the BR clear off his record, buy less house than he can afford (so he'll have some room in his expenses, should something happen). I had a foreclosure. It happens. The world doesn't end. But don't try to blame someone else because of some bad breaks that happened to you, and the decisions you made.

[Hissyspit]

266. NO, NO! OFF TO DEBTORS PRISON WITH HIM, THE DIPPERING DOLLYMOP!!!

And sell his children off, too!

[phrigndumass]

321. +1

:)

[closeupready]

243. Good for you! Here's to hoping your life improves from this point forward.

:) Peace. K&R

[Honeycombe8]

261. Sounds like you've done what you had to do to go forward.

I wouldn't say you're a victim. You saw how much the monthly payment would be, you qualified for it, and more importantly, you approved it. So...can't say they tricked you on that.

Still, regardless of WHY you got into trouble with the house, sometimes you just have to take a licking on mistakes made, walk away honorably, and start over (hopefully not repeating the mistake!).

At least you called the mtge company & told them. Hopefully you left the house in pristine sell-ready condition, so they don't have to spend money and time cleaning it. And they can sell it for as much as possible. (Since they can still sue you for the balance between what you owe, and what they were able to sell it for. If they do, they will also claim from you the costs for cleaning and selling it.) Hopefully the bank will sell it for enough not to be worth it to go after you for the balance. Esp in this recession.

I hope you don't have extra money sitting around in bank accounts, because the mtge company will find it and maybe go after it. But it sounds like you're wiped out from medical costs, anyway.

Good luck. I've had a foreclosure. A lot of people have. We all get into trouble from time to time. The main thing is to recognize what you did wrong, so you don't repeat it, and to move forward and get back on your feet financially.

The foreclosure will stay on your record for...here in TX I think it's seven years. But that will pass.

Kudos to you for doing the brave thing to go forward with your life! Don't look back! Spilled milke and all that.

[DesertFlower]

263. at least you had a hefty tax deduction.

so many people bought houses they couldn't afford.

[county worker]

280. If you are like I was you don't understand what was happening.

In the past when you bought a home you were pre approved. A mortgage company looked at your resources and told you what price house you could afford.

Then came the ownership society. Buyers, relying on the practices the mortgage industry use to adhere to went blindly into a deal thinking that the mortgage company would not lend to someone who could not afford the house. It sounds simplistic but think about the buyer beware idea and how we trust that there are regulations in place to protect us in the market place. We all think like that. Well the protections went out the window along. Paper work wasn't even done in most cases. The loans were made, bundled and sold as securities. Money was being made by construction companies and Wall Street banks. It was not sustainable but it all relied on the ability to convince someone that they could afford the house whether the could or not.

Not very many of us know how much money we have or how much we spend on things. I know that because I hear the outcry of DUers who have spend beyond the balance in their checking account and get hit with penalties and who claim the bank should inform them of the outstanding balance in their accounts when only they know what checks were written or debit charges they just made.

We just are not trained to manage our money.

[DesertFlower]

367. we didn't buy our first house till i was 48.

we had to put 10% down, but put 20% because i didn't want to pay PMI which would have run almost $100 a month and is not tax deductible. i knew how much we could afford.

i always said i didn't want a house unless i could afford to heat and cool it properly. you also have to have money aside for emergencies. even though our house was new the water heater only lasted a few years.

if people can't manage their money then i don't know what to say. maybe it should be taught in school.

we over spent when we were younger, but never to a point where we couldn't pay our bills. never bounced a check in my life and i'm almost 70.

i know everyone wants to own a home, but not everyone should.

[county worker]

439. You don't understand what was going on.

Your story is what we all should do but until you understand what was happening in the real estate market and the securities market in the mid 2000's your story doesn't fit the situation.

[DesertFlower]

441. i understand that people were given

mortgages they couldn't afford. they were given low interest rates that adjusted. they were offered loans with no money down. that being said you still have to take personal responsibility about your finances.

[unapatriciated]

400. We didn't and our mortgage now is more than what our house is worth.

Bought a small three bedroom ranch in 2006 for 165,000 put 30,000 down. We still owe about 128,000 and it was recently appraised for 103,000. We can afford our payments but we still lost money. It took us years to save that 30 thousand and less than two years for it to evaporate into thin air.

[DesertFlower]

402. it's an unfortunate situation. i have several

friends who bought in '05-06 when prices were high and now their houses are worth in some cases less than 1/2 of what they paid.

we built a custom home in '02. cost $320,000 with the 2-1/2 acres. when it was completed the bank appraised it at $385,000. in 2 or 3 years it was worth $850,000. now it's back to around $320,000.

[KansDem]

267. Some folks I've talked with believe life is a continuous flow...

...with bumps now and then. I believe life is made up of chapters, and these chapters are marked by major life events: marriage, divorce, birth, death, and so on. These aren't merely "bumps" but life-changing events that mark a new chapter.

Sure, we can continue on with the "flow" if we try hard enough, but for those of us more astute to take advantage of an event, then it begins a new chapter.

Good luck to you on beginning a new chapter! :hi:

______
I may be joining you in a new chapter of my life as well!

[phrigndumass]

425. Thank you, Kans Dem :)

The universe is a wondrous place, isn't it? Good luck to you also on your new chapter (I read your sig line).

:hi:

[DaveJ]

271. You made the banks very happy

How many people get PAID $70k for buying a house. Only the banks.

I wish I could apologize for all the people giving you a hard time.

You know, credit card companies call people who pay their bills on time 'deadbeats'.

Best of luck in your future endeavors.

[TlalocW]

273. I'm looking to get out of mine

I did a no money down mortgage as well. Not in my defense because I readily admit I was ignorant about home ownership but I was convinced by "smart" friends that I should stop throwing my money away in rent and get a house. Never really wanted a yard. Didn't have money after the house payment to keep up repairs, etc. Never felt at home in it. I'm single and bought too much house and just bent over at my friends' insistence. After about 10 years of owning it and going through some bouts of unemployment where I used BOA retention services for people having trouble with their mortgage, I owe the original price on it still. Some people who do short sales think they can help me - definitely not with the original price, but BOA is so upside down with houses they can't sell, he may be able to convince them to take a lot less for the house so they don't have another one that they have to repair and fix up and try to sell. I hope it works out. I want to move from my current city to Kansas City. I'm finally making okay money from being a contractor for a guy in my current city (which will continue in KC) and restarting my side business and want to live in a cheap apartment for a while and save up money for some sort of store front with living quarters above it.

TlalocW

[RUMMYisFROSTED]

274. Aka "Rent."

Good gamble.

Good to walk away if it wasn't working.


Renting is also throwing money in the shitter.

[Broderick]

275. To all the people patting themselves on the head

and deriding the OP because he had a no down payment loan I want you to think long and hard about that.

There are likely millions of families that made significant down payments on their homes that are now underwater.

[county worker]

276. You are a victim of predatory lending. I use to think that it was the fault of the buyer

but the lender intentionally misrepresented the facts. That is what made the housing bubble and paid Wall Street trillions.

I just bought a house this year and they asked for bank statements and pay stubs each month the escrow was open. That was not the way they did business a few years ago and it was the way they did business years before that. It was the ownership society that Bush talked about which created this mess and our present economic situation.

[salib]

278. Wow. Amazing how hard some are fighting to confuse the original point.

The point is:

"There's no need to feel guilt"

All the rest is just obfuscation.

Don't think for one minute that any of the "players" feel one iota of guilt. These include:

- The banksters who are committing fraud/deception/theft/etc.
- The right-wingers who are bought and paid for and simply ensure that the banksters can get away with it
- The teabaggers who are played like a Stradivarius
- Those who work in the mortgage lending industry and make a living off of these practices
- etc.

No guilt whatsoever.

[BanzaiBonnie]

297. Peace to you Sven

Hugs,
BB

[CreekDog]

300. Do what you have to do

take care of your health first

yourself second

your mortgage --673rd. :rofl:

:)

[TomClash]

305. Here's how to feel even less guilty

You made the payments dutifully and those payments went through your mortgage servicer an/or sub-servicer to investors. Those investors were most likely hedge funds, mutual funds or other assorted vehicles of wealth too numerous to name. Of course, the servicer or sub-servicer now has to pick up your load but what the hell, they're are owned and managed by slightly less wealthy people (no fourth homes or second yachts!). And it's all insured anyway.

Oh what a lovely class war!

[Xtraneous]

306. I know this is about mortgages and walking away from them....

for certain reasons, health care bills in this case. But what about the bigger picture beyond the inflated real estate market, the easy/deceptive/subprime mortgage contracts? Even if you held a good long term job, could easily afford the payments, had 6 months to a year in savings in the bank, what happens when you lose that job, the job market crashes, consumer spending crashes as has been happening for years now? There may be many "strategic" defaults going on, but why is the real estate market falling? And whose fault is that? It falls to the bankers who've only been rewarded so far. This whole clusterfuck situation can pretty much be traced to what the banks did- with subprime mortgages and derivatives- so they basically screwed EVERYONE with mortgage. Two wrongs never make a right but that pertains to an equal equation. One side of that equation scorned and used the other side believing, as we now see, they would never have to pay for their cheating ways.

[gunnergoz]

307. Sorry that you lost your home this way

and you are far from the only one. We have for too long let the financial industry direct our lives and the economy of this country. I can well understand why there is interest and why they need to make a profit...but 6 years of payments and only two grand in principal? They have nothing to complain about. If the house was overpriced to begin with, they did agree to finance it so any loss on this end on the new valuation is on the bank, not on you. Best of luck for the future.

[Kaleko]

310. I've read all the replies to you so far, phrig,

and some of them made me tear up in frustration with their brutal lack of empathy.

What we need during these times is more empathy and more solidarity with one another.
That's what distinguishes us as progressives. The only way to alleviate the constant survival fear purposefully instilled by our oppressors is to recognize we're all in the same boat and to take care of each other.

Here's what I will do to put some teeth into these words:
My sweetheart and I will send you enough $$ to cover your next two months rent,
and if anybody else here feels inspired to add to the pot, hey, that would be awesome and make us all feel a little bit better.

[fascisthunter]

313. what you said

[phrigndumass]

318. OMG, what a thoughtful, generous thing to offer!

I'm astounded that you would offer to pay my rent for two months! You've left me speechless!!

Unfortunately I have to refuse, partially because I couldn't accept such undeserved generosity (I got myself into this mess), but mostly because I would have to document and explain any extra income in my bankruptcy filing. If the court trustee sees an influx of funds in my account, the trustee could force me to take Chapter 13 reorganization instead of Chapter 7. I hope you understand.

But I'm completely floored for your offer and kindness! :loveya: :loveya: :hug:

[Kaleko]

328. Ya, well, once I've embarked on a trail, I'm not easily derailed.

:)

You are due for a break, my dear friend. (The universe told me so, ha ha.) And where there's a will, there surely must be a way to give it to you.

:hugs:

[phrigndumass]

345. ...

:loveya: :hug:

[abelenkpe]

322. Good luck and don't feel bad

There are literally millions of others in your same situation.

If I had not already been burdened by student loans who knows, I might have been in the same situation. The housing boom was insane and every article and ad told people to get in or be priced out forever. I cannot tell you how many financial advisers, friends, relatives, real estate agents, etc told me that I was making a mistake not buying a home between 2000-2009. Funny, they never mention it now.

[OneTenthofOnePercent]

324. Why "walk away"? Just squat until they evict you... then you can live free for about a year.

It's taking alot of areas MONTHS up to a year or more to actually forclose/evict. Just think what 8+ months of rent could do for your other debts or money to get you a decent apartment.

[frazzled]

330. I hate to be the cynic in the room, but ...

How do we know the OP is even telling the truth? What if he is James O'Keefe, pulling a "pimp walks into Acorn" stunt here? We know nothing about each other here: you don't know me either.

This may be a perfectly legitimate story, but it also could be a ruse to get reactions from people. Which we could then see published.

My reaction, if it is true? I don't think not understanding that with a conventional 30-year mortgage you pay mostly interest for the first years is an excuse for anything. That is not being tricked. That is not what the subprime scandal was about. This person was not a victim. They're not saying that it is mostly because of mounting medical bills (is he/she insured?--no? didn't understand you need to buy health insurance, too?). They're not saying they lost their job. Maybe this person shouldn't have bought the home; maybe the bank shouldn't have made the loan; maybe they got in over their head. I have sympathy that they apparently didn't understand a thing about home ownership. I'm sorry they had to declare bankruptcy. But I don't see this person as a victim.

[Kaleko]

377. Phrig is a well-known and much loved DUer.

During the Obama Presidential campaign he provided DU with statistical calculations that were extremely accurate about who would win what, by how much, and where. Phrig is a math genius and a very sensitive, soulful person who gave freely of his time and skills at no charge to anyone reading DU. No wonder that now, some of us are happy to be able to give a little bit back in return for his contributions to the whole.

We've all been taught to be wary and suspicious -- and for good reason! I tend to fact-check every news report before jumping to conclusions about anything these days. But here is one man who deserves our good will and trust in my opinion.

[taught_me_patience]

442. The "cheerleading" in this thread looks real bad to outsiders

I showed this to my wife who was pretty shocked.

[Recursion]

342. In six years I've payed $87,000 in rent

Is a bankruptcy worth $17,000 cash? Possibly...

[NAGAUEL]

379. Still a home is a good investment

Buying a home is still a great investment. You build equity and it is money you

can not touch until you sell your home.

I pay less than I would if I rented (refinanced once) and have more square footage to live in!

I also have a home nobody has ever lived in, but me and my wife. Nobody else funk on the walls.

Waiting for the housing market to recover just means higher priced homes and higher interest rates.

Get in when homes are cheap not expensive.

[Pacifist Patriot]

387. *sigh* build equity. Yeah, that's what we thought.

We bought before the boom in our neighborhood and our house is now maybe worth about what we owe on it. We put 30% down and have been paying on the mortgage for 1/3 the term of the loan. Build equity? I wish!

Fortunately we're not going anywhere in the foreseeable future so we can hopefully ride it out. Still leaves me a bit miffed at the people in my neighborhood who tossed the keys over their shoulders. Two on my street. Not foreclosures. Walkaways. And we're left with no equity and have to watch the prairie grass grow in their lawns.

I'm not without sympathy, but it can't hurt to acknowledge our personal decisions affect a lot more people than we generally assume. For those who feel they have no choice...well, that's life I suppose. Not many people are complete selfish bastards or total altruists. It's usually far more complex than that.

[Romulox]

432. There is no "equity" when your home is worth 40-50% less than you paid for it.

:eyes:

[quakerboy]

450. Equity is only as good as the market

Seems like most people have no equity now.

The other are the more important financial points, and the things that everyone should have been looking at all along. What does it cost to buy vs rent. If it costs more to buy, will you be there long enough to reap the benefit of enjoying ownership after it is eventually paid off? If it costs more to buy, what benefits do you see for that extra cost, and are they worth the extra cost.

[1monster]

380. My husband took a second mortgage on our house many years ago. At the time my name was not

on the deed, and I didn't pay much attention.

However, after paying out $10,000 on that loan over a two and a half years, I thought to ask just exactly what was the balance on the loan. (They didn't give that out with the receipt or the payment statements.) When the teller told me that the balance on the original loan of $15,000 was $13,000, I just about flipped. I asked what was the interest rate and was told it was 15.99 percent. I got involved. BIG TIME.

My husband trusted those people and they never told him just how much interest he would be paying. Fortunatly, it was much easier to refinance back then. I refinanced the first and second mortgages together. The first morgage was 9.75%. Our new mortgage was 7.5% apr, fixed rate.

Those mortgageters will catch you coming and going if you don't watch every flick of their fingers...

[dkf]

404. $972 a month is not bad at all. I don't think that pays for a studio rental here.

[Violet_Crumble]

420. No matter how relieved you feel, it can't be emotionally easy walking away from yr home...

Nothing much surprises me anymore about how mortgages work in the US, but to only pay $2000 off the principal in six years? That's mind-boggling. I've only had my mortgage for 2 and a half years and I've already paid $15,000 off the principal...

I wish you all the best for the future...

[phrigndumass]

426. Thank you, Violet :)

It was a very emotional decision, and I appreciate you sensing that :hi:

[Blue_Tires]

445. Good...more people should do this

nine years ago I was unemployed and feeling trapped under heavy credit card and other debt and was *this* close to ending my life...seems silly that I ever considered it in hindsight, but I was under that much stress...

in the unlikely event i should be in that situation again, instead of killing myself I'll make the collectors die of exhaustion trying to find me...

[quakerboy]

449. As someone whos property is devalued due to others walking away

I say good for you. Although, I am with the others who said stop paying, stay free until they can legally get you out.

I bought a condo last year. It was a sound financial decision, I believe. My total payments for a three bedroom, including HOA, mortgage and insurance, are $4 more per month than the one bedroom apartment that I was renting (the cheapest sans rats apartment that I could find).

My neighbor has the exact same condo I have, mirrored. She bought in 2007. Her contract is for more than twice what I paid. She is thinking about walking. She wants to, but has a hard time, as she has never made a late payment, and is the kinda person who has a hard time with that. She did what you did, 100 % financing. Given that another unit just sold for half what I paid, no bank will look at refi the amount she has outstanding. And because she makes no late payments or anything, the bank refuses to work with her on a loan adjustment.

Who loses if she leaves? The bank loses because they refuse to work with her. She loses because her credit is slammed. Not me. Well, sorta me, because my property values supposedly go down. But that only counts if I want to sell right now. But as a responsible buyer, I bought a home with a mind to what I could afford and what was a good financial choice for me. Not speculating that it would be some great investment that would increase in value so I could flip it. My financial choice was based on a 30 year fixed, when rent will likely go up. My savings is in getting it paid off, no payments left, where as rental always has a payment.

So, to any of your detractors who complain about people like you harming their property values: Why are you so irresponsible/uninformed that you are speculating on property without knowing the risks? You should be more responsible and diligent, buying only what is an actually appropriate deal for your budget. Naughty naughty bad owners

[Flatulo]

452. Just curious... you claim that you were the victim of an unfair

mortgage situation.

Were you aware that it was unfair when you agreed to the terms?

Did you understand the difference between interest and principal? Did you understand that the earlier payments are almost entirely interest? Did you ask to see an amortization schedule?

I'm not passing judgement on you; I'm genuinely curious as to the level of ignorance with which you entered such an important financial arrangement. Also, if you don't mind - what's your education level?

[barb162]

458. If you had a fixed rate loan, 30yrs, 20% down, you wind up the same

with about 2000 toward the principal and 70,000 toward interest after 6 yrs. Almost all monthly payments go toward interest the first several years. What's new for the last 70 or so years? You're not a victim. Did you have a lawyer? Did you go through the number crunching on what you could afford? Did you understand the terms of the loan documents? If you did, why did you take this "deal" in the first place if you couldn't afford it. If you declare bankruptcy, you'll find out a lot has not been lifted from your shoulders, at least from what I have heard from people who have declared bankruptcy.