Using Foreclosure to save $30,000 in cash

[dfeucht]

What makes the featured couple morally bankrupt isn't the fact that they just stopped paying ... it's why they stopped paying and what they did with the money instead. I perfectly understand a widower who is struggling to make ends meet on a fixed income when prices are rising everywhere. If she has to choose between food on the table and paying the mortgage, then don't pay the mortage. I won't consider you morally bankrupt. But don't expect to eat steak dinners at Outback. You'll have to eat frugal, cheap meals if you're choosing between food and the mortgage.

However, that scenario is a far cry from the featured couple, who are participating in luxury activities like weekend air-boating, gambling, and steak dinners. HUGE difference.

This is the true reason this article upset me. The attitude that is was the banks fault so forget them we are going to eat out and drive our expensive boat around.

There actually is a thread on MSN money about this same article and some contrarions argue that the banks deserve this for many different reasons (TARP money, making loans they knew couldn't be paid, etc.) It's an interesting perspective - I don't agree with it - but interesting.

[tripods68]

What makes the featured couple morally bankrupt isn't the fact that they just stopped paying ... it's why they stopped paying and what they did with the money instead. I perfectly understand a widower who is struggling to make ends meet on a fixed income when prices are rising everywhere. If she has to choose between food on the table and paying the mortgage, then don't pay the mortage. I won't consider you morally bankrupt. But don't expect to eat steak dinners at Outback. You'll have to eat frugal, cheap meals if you're choosing between food and the mortgage.

However, that scenario is a far cry from the featured couple, who are participating in luxury activities like weekend air-boating, gambling, and steak dinners. HUGE difference.

I understand the specific things you don't like.

My argument to that, companies are paying millions of bonuses to Executives that received TAXPAYERS MONEY. Your appointed Senators if your own state enjoys, lavish gifts and weekend trips all the time paid for LOBBYISTs in Washington to buy their votes. What's makes it that far a far cry different for someone who wish to eat a steak for dinner or have some gambling their money away from time to time. After all, its their hard-earned money who decided to not pay those bank executives their bonuses who aren't even willing to help you out. I'd say, don't feel guilty if you're not going to pay your mortgage. In fact, have fun doing it with while you can

[jpg7n16]

I understand the specific things you don't like.

My argument to that, companies are paying millions of bonuses to Executives that received TAXPAYERS MONEY. Your appointed Senators if your own state enjoys, lavish gifts and weekend trips all the time paid for LOBBYISTs in Washington to buy their votes. What's makes it that far a far cry different for someone who wish to eat a steak for dinner or have some gambling their money away from time to time. After all, its their hard-earned money who decided to not pay those bank executives their bonuses who aren't even willing to help you out. I'd say, don't feel guilty if you're not going to pay your mortgage. In fact, have fun doing it with while you can

I disagree with just oh so much of everything you have written in this thread so far.

[tripods68]

I disagree with just oh so much of everything you have written in this thread so far.

I'm not here to convince you....I have no problem stating my opinion in this forum regarless of your own personal view. This what makes this site great! We can all learn from each other. I'm here to learn and understand why people do things the things they do without judgement, while keeping an open-mind about it. Cheers

[disneysteve]

My argument to that, companies are paying millions of bonuses to Executives that received TAXPAYERS MONEY. Your appointed Senators if your own state enjoys, lavish gifts and weekend trips all the time paid for LOBBYISTs in Washington to buy their votes. What's makes it that far a far cry different for someone who wish to eat a steak for dinner or have some gambling their money away from time to time. After all, its their hard-earned money who decided to not pay those bank executives their bonuses who aren't even willing to help you out. I'd say, don't feel guilty if you're not going to pay your mortgage. In fact, have fun doing it with while you can

So your stance is basically if everyone else is doing something wrong, I should join them. The saying, "two wrongs don't make a right" comes to mind. So does, "if everyone else jumped off a bridge would you jump too?"

I don't base my personal sense of right and wrong on what others are doing with their lives.

[tripods68]

So your stance is basically if everyone else is doing something wrong, I should join them. The saying, "two wrongs don't make a right" comes to mind. So does, "if everyone else jumped off a bridge would you jump too?"

I don't base my personal sense of right and wrong on what others are doing with their lives.

Nope! All I said "I sympathized with them" because i know friends and coworkers who have gone through this aswell. I also didn't say, "go join them" either.

I don't have a problem seeing other people point of view without sacrificing my own personal beliefs. You make your own personal choice in life and sleep in your own bed. If you do, enjoy doing it.

[jpg7n16]

...IF you fit this bill i just described, and the banks continue to ignore you, I'd say, let them taste their own medicine. Don't pay your mortgage.

...After all, its their hard-earned money who decided to not pay those bank executives their bonuses who aren't even willing to help you out. I'd say, don't feel guilty if you're not going to pay your mortgage. In fact, have fun doing it with while you can

Nope! All I said "I sympathized with them" because i know friends and coworkers who have gone through this aswell. I also didn't say, "go join them" either.

Yeah... you pretty much did.

[tripods68]

Yeah... you pretty much did.

I know what i said but if you're going to use my explanations to make yourself feel better go at it. Enjoy!


1.7 million are currently in the foreclosure process...I think we are way passed for "adovocating" don't you think....?
That number will continue to grow....

[am_vanquish]

I know what i said but if you're going to use my explanations to make yourself feel better go at it. Enjoy!


1.7 million are currently in the foreclosure process...I think we are way passed for "adovocating" don't you think....?
That number will continue to grow....

The fact of the matter is that a large majority of those 1.7 million people are in that position because they overextended their financial position and lived beyond their means. I would like to think that the foreclosure process would be an eye-opening experience to many people - showing them the ramifications of over-leveraging their personal finances. However, people like the featured couple, who continue to pursue expensive luxury hobbies, make me believe that our country's in for a very difficult future.

[tripods68]

The fact of the matter is that a large majority of those 1.7 million people are in that position because they overextended their financial position and lived beyond their means. I would like to think that the foreclosure process would be an eye-opening experience to many people - showing them the ramifications of over-leveraging their personal finances. However, people like the featured couple, who continue to pursue expensive luxury hobbies, make me believe that our country's in for a very difficult future.

I agree.

What's happening now, FORECLOSURES are now treated just like any other transaction--nothing more. When Lenders again start requiring borrowers to put down 20% minimum, maybe we'll get back to the "ole days". Who knows...

[disneysteve]

When Lenders again start requiring borrowers to put down 20% minimum, maybe we'll get back to the "ole days". Who knows...

I definitely would like to see lenders go back to the standards that used to exist: 20% down and no more than 28% of income going to the mortgage and 36% of income going to total debt servicing. We wouldn't be in this whole mess if those standards were still in place. The problem is the lenders got greedy and the borrowers got stupid. They figured that if the lender said they could afford the loan, it must be true. They didn't bother to run the numbers to determine if they actually could afford it.

[banditfist]

Some are missing the point.

When you take out a home loan, you agree to make an agreed upon payment each month, If you don't, the lender gets your collateral ala, the house. That's the contract. That is what you agreed to, and that is what the bank agreed to. Morals have nothing to do with it! It is a business. You certainly don't see Morgan Stanley care about defaulting on an entire office building in San Francisco. They made a business decision.

What no one has brought up is why are the banks allowing so many people to not pay their mortgage without foreclosing? Due to our great accounting system, when they foreclose and take possession of the property they have to realize the loss of the loan. They don't want to do that. The fact remains that the financial stability of the US is still unstable. The losses have not been realized. The system will continue to limp along or decline until those loans that are bad are realized. Hello Fannie and Freddie!!
Loans don't become bad over time. Bad loans are made at origination.

[GrimJack]

A couple of interesting things:
Florida is a state that excludes a home from bankruptcy - with no limit on the value of the home, ie take all your money out of your business and personal put it into a house in FL and declare bankruptcy there. You get to keep the house and the debtors get nothing - after the debt is discharged, you can sell the house and buy something more reasonable (well, before the current difficulties).

The IRS considers debt forgiveness as income - in some cases, when the bank writes off your $50,000 loan as a loss, it will be taxed as income.

YMMV - check with your financial adviser for any reality checks.

[maat55]

In the beginning, I was of the mindset that individuals should take responsibility for their actions, and to a point still am, but I have come to the conclusion that the government is more to blame for this than anyone else.

Many of these bad loans were given with the blessings of the government through the CRA. Fannie and Freddie accepted many of these loans which ignited an moral hazard frinzy by mortgage brokers to play or die.

Had the free market not been intruded on by the government, mortgage comapanies would have not given these risky loans. IMO, the government caused the bubble and the free market put a pin into it, now the government needs to let the bubble deflate, but it has chosen to keep as much hot air in as possible, which will lead to another 30's style depression.

[disneysteve]

In the beginning, I was of the mindset that individuals should take responsibility for their actions, and to a point still am, but I have come to the conclusion that the government is more to blame for this than anyone else.

Many of these bad loans were given with the blessings of the government through the CRA. Fannie and Freddie accepted many of these loans which ignited an moral hazard frinzy by mortgage brokers to play or die.

Had the free market not been intruded on by the government, mortgage comapanies would have not given these risky loans. IMO, the government caused the bubble and the free market put a pin into it, now the government needs to let the bubble deflate, but it has chosen to keep as much hot air in as possible, which will lead to another 30's style depression.

I think there is plenty of blame to go around but I still believe the bottom line lies with the borrower. It is your responsibility to determine how much you can afford to borrow. When my wife and I were ready to buy our home years ago, I sat down and reviewed our income and expenses and calculated how much we could afford to pay each month. Then we sat down with the mortgage broker who pre-approved us for a loan of about $20,000 more than I had figured out we could comfortably afford. Had we just depended on her calculations, we would have been overextended and struggling to support that loan.

In recent years, that situation got way out of control with lenders approving ridiculous loans to people who couldn't possibly come close to affording them. Was that the government's fault? Perhaps they had a hand in it, but the lender had to know the loan was bad and the borrower absolutely should have known that he was taking out a loan that there was no way he could repay. When people were borrowing 5 or 6 or 7 times income, where did they expect the money to come from to make the payments?