Skip to comments.LA times: Leaving North Las Vegas no option for many 'underwater' homeowners
Posted on 05/31/2011 7:14:56 PM PDT by vmpolesov
Reporting from North Las Vegas, Nev. Charles Mills can barely afford to stay here. But he also can't afford to move.
That's why the 44-year-old heavy-equipment operator was preparing to leave his wife and young daughter here and go where he could find work the Oklahoma oil fields. Mills has a mortgage to pay, even if its size pains him.
He purchased his house in 2006 for $308,500. Current value: $105,797.
"We talked about it: What can we do with the house?" Mills said. "Nobody's going to buy it. Nobody's going to rent it. If we walk away, my credit's shot. We're stuck."
(Excerpt) Read more at latimes.com ...
Every investment has a risk.
That doesn’t mean I don’t feel sorry for anyone (including myself!) who loses out.
But when we make a good profit, we don’t share it with everyone. So when we make a bad loss, we shouldn’t share that, either.
I hope they make it ok.
Sounds like the boat I am in... I just plan to stick it out until I get the mortgage down to the value of the house, and then consider my options at that point.
He’s put his credit rating above his family. The question has been asked, “Would you sell your family’s happiness for a _________ amount of dollars” and he has answered.
If he can’t make the mortgage, like I can’t, and no one will buy it - Then I’ll face poor credit, bill collectors and, I sigh as I type it, bankrupcy. But I’ll never leave my wife for a job across country. She comes with, but I won’t leave her alone.
And with a kid ? Yeah, they have the house and stuff, but no dad. That kid needs a dad. My dad wasn’t rich, and we lived in small apartments my whole life - but my family was together.
Credit isn’t _you_, and you are not your credit. Don’t let “them” convince you otherwise.
Start a new life without a $200,000 weight around your neck.
My old Air Force work-associate moved to Florida in 2007 and bought a house for $215k. As she was doing the final paperwork on the purchase....she found the original price when it was built in 2003 was $145k. Imagine a house that goes from $145k to $215 in four years. She had this fantasy that she’d sell it in three years for $230k. When the bottom dropped out twelve months later....she was stuck with a house that can’t be sold for more than $180k max. It’s a nice house...brick...decent yard...twenty miles from the beach....but it was never worth $215k to start with.
Start a new life without a $200,000 weight around your neck.
Nevada is a state that allows a lender to sue a delinquent borrower. Either way, this person will be on the hook for paying back this loan. If he's stuck... he might as well have a house and a break on the loan interest at the end of it.
Bankruptcy only costs about $1000.
The guy did the right thing. Some people would have just said screw it.
If that is your attitude, you will easily be replaced in the labor force by an illegal alien with a more realistic philosophy. Don't know what becomes of your wife, but that's between you and the unemployment office, I guess.
I thought it was more like $2000. W and Biden made bankruptcy more difficult and more expensive. It’s too bad they didn’t work on solid economic policy instead. Bankruptcies have gone up dramatically in spite of their efforts.
I feel bad for him...but barely, because I was there.
We bought in SoCal for $385k in 2006, and just finished a short sale in 2011 for $202k. We made a mistake then...I lost my job in 2010 and now we are paying for it.
And I am very happy renting, with my family intact, in Wisconsin.
I guess it depends on where you live. Near Nashville it costs about $900 which is about twice as much as it used to cost.
If they try to take recourse on me they'll have to track me down in India.
I agree. While I think they have some partial responsibility, most of this mess was caused by big government and big finance. I don't think individuals should be shouldering all the burden while the big guys are getting away almost completely. The perks in big government are better than ever.
I cannot believe so many people on this thread do not believe in personal responsibility. I have always thought personal responsibility is the cornerstone of conservatism. My husband and I could be in the same boat but since we keep our agreements we make sure we know the risks involved before we make the most important purchase of our lives. We made a foolish deal in 1982 when we bought our first home and we learned our lesson by paying on a high interest loan for several years before we could refi at a better rate.
I feel bad about my house going down in value by 30%, I can’t imagine losing 2/3rds of the value. I’m stuck too. If I file bankruptcy, it may sting, but that only lasts 7 years. I can’t wait 20 years for my house to get back to where it was.
What happens to the balance on your house? Are you on the hook for the difference?
I know folks with a 4,000 sq ft house who cant afford the air conditioning and property taxes.
They wont run the AC till like 10 at night. It’s over 100 deg in there. in summer
He works OT all the time to pay the bills.
I live in a 1500 sq ft that will be paid in Aug on a 10 year note.
I run the AC with the windows open when I feel like it, just to piss Obama off.
Folks who bought McMansions are going to be screwed for a while
“If I file bankruptcy, it may sting, but that only lasts 7 years.”
Legally, bankruptcy only lasts 7 years but there are plenty (most, all) credit instrument questionaires which pose the question: “Have you ever filed for bankruptcy?”
Remember, “ever” means forever.
My husband and I lived in Las Vegas. In 2005-6 a friend of ours wanted to buy a house. My husband was in real estate years ago. We both saw the writing on the wall. This was confirmed by talking with a Realtor who said an Asian client wanted all his properties sold ASAP at whatever price she could get. My husband told his friend that he should wait till the prices start coming down, rather than buy while they’re on the up swing. He bought and ended up having to short sell. Luckily for him he sold before the foreclosure crisis was full blown.
We’re moving back to Las Vegas this summer and will be renting. The Realtors say, “this property won’t last.” We just laugh. We’ve been gone a year. When my husband was there in Feb., he said I wouldn’t believe it, how even more deserted it was and not much traffic on the freeway.
Good luck trying to get a job to start that new life, when you have a black mark on your credit.
I handle a lot of consumer bankrupties and the going rate here in SW MO is $1200 plus the filing fee, which is $299. The 2005 bankruptcy law mainly added a lot of extra paperwork for debtors and attorneys. The types of abuses that that law was supposed to end could have been addressed under the old code by better enforcement by the US Trustee program.
A mortgage is a business deal. There is nothing sacrosanct about it. If the equity was rising and the homeowner lost the ability to pay and the bank took the property back, reaping all the benefit, would anyone say that wasn’t fair? Of course not. They would simply say that was the risk inherent in the deal and buyer should have known and accepted it. It is the same thing in reverse. It is not good or bad it is just business.
Furthermore, businesses/companies default all the time on deals which become unprofitable. As shareholders we demand they do so to protect the company and the stock price. People need to lighten up on strategic defaulters. By giving up the property that was the subject of the mortgage they have fully performed the contract. The banks made poor judgment in making the deal and should not be protected or bailed out for doing so.
Typical government crap. Instead of enforcing the existing laws, their solution is to create a whole bunch of new laws.
What’s really sad is to be in your 50’s and 60’s facing foreclosure and knowing you may never again be able to buy a house if you walk away or the actual foreclosure takes place. That’s one thing that keeps us in our house. Fortunately, we bought it before the housing bubble and have a decent interest rate.
Banks made these loans without recourse, which is a stupid decision on their part. You can morally take advantage of their stupidity; Banks are supposed to be intelligent investors, and they failed.
If every under-water homeowner walked away, guess how fast mortgage contracts would be re-written to have recourse against the homeowner’s future income? A couple of weeks.
Needs to cut his losses and file for bankruptcy.
Holding on is only prolonging the pain.
Renting is not the end of the world.
The bankruptcy laws exist for a reason. One purpose of these laws is to shift some of the responsibility for non-payment to lenders who make unnecessarily risky loans.
The interest paid on loans needs to include a portion to cover the possibility that some loans will not be repaid.
Lenders who receive government money to make loans and who face no risk themselves are a serious problem for our economy. If it was the lenders facing the losses now they would be bending over backward to help their borrowers stay in their homes and make the payments.
I don't deny that there are plenty of people who are irresponsible. Government policies have encouraged and rewarded such irresponsibility for some time.
I understand that there are two (or more) sides to the story. This house is tearing his family apart. And to protect.. what, exactly ? If the place is so expensive, then some other sort of housing should be found. With the whole family.
But all I see being salvaged here is his credit rating. He’s put it above a whole and stable family unit. Giving his kids a father. An opportunity to teach between right and wrong.
I’ve had plenty of opportunity to sell my soul for a few bucks. And isn’t this the decision that mothers must face as to whether they should work, or be at home ? Is it worth the money to leave the kids without parents for more than half the day ? Is there a price there ?
The bank wrote it off...after all, they got someone to pay the 202k...it kills my credit for 2 or 3 years.
But, I was able to take it off my back.
Your attitude is wise - I very much wish you luck - and also the family in this article.
I disagree with many commentators on this thread. If there is a burst of monetary inflation - history says this is likely - then all of a sudden your debts are worth much less and your property value is more secure. So who knows what the future holds?
People who are walking away now, might regret it in two years, just as much as the people who bought during the boom.
The issue for them is all about a lack of work. I doubt the home has a high interest rate and the mortgage is probably fairly low.
Yeah he’d like to make payments on $105,000 but had he seen his house go to $660,000 we would never have heard of these people.
Isn’t recourse determined by state law?
The problem with taking such a flippant attitude towards credit is that it isn't just needed for borrowing. Getting your next job might depend on your credit. Many employers now consider credit scores when hiring people. Many people who are unemployed and had their credit wrecked are running into more trouble getting work because of this, and that was not even their fault.
Why willingly put yourself in that boat?
Yup... bankruptcy is the financial equivalent of genital herpes. Try not to get it unless you really have no other choice.
“Good luck trying to get a job to start that new life, when you have a black mark on your credit.”
You are $200,000 in debt. Who would be worried about a credit rating? Going to buy a new car? Doubt it, you buy used. Going to buy a new home? No, you will rent. No way is a tarnished credit rating worth $200,000.
The lender took a risk also, they gambled the value of the house would go up, and the house was their collateral. The risk didn’t workout, if the borrower walks away, they still have the house.
“I understand that there are two (or more) sides to the story. This house is tearing his family apart. And to protect.. what, exactly ? If the place is so expensive, then some other sort of housing should be found. With the whole family.
But all I see being salvaged here is his credit rating. Hes put it above a whole and stable family unit. Giving his kids a father.”
I have a little different perspective, being married to a pilot and having moved often. The children have a home, friends and community ties. Their father will be able to go back and visit. Once the home is given up, it’s gone, along with the children’s sense of security- their home, friends, school, community. The job situation is potentially temporary. Losing a family home is permanent. This is no different from Filippinos, Mexicans, etc. sending money home to their families. I don’t think anyone would dispute keeping a family together is good, but in this case, I think it would be much harder on the family to be up rooted to another state and potentially be in a worse financial situation. Moving has been harder on my daughter than her father being gone. Her father comes back to visit. Once she’s moved, a huge chunk of her life is lost.
In my upbringing, my family moved around (Financial opportunities = Getting evicted because rent couldn’t be paid). Of course my parents were upset about moving me and my sister, from our friends. But in the long run, I made far more friends, more quality friends, and have a lot less regret having adjusted so often during my childhood. I suppose I see an angle of this that few others see.
Good luck finding a halfway decent rental in a livable area with such a major black mark on your credit.
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