Posted on 01/30/2008 5:52:34 AM PST by RDTF
I understand what you are saying, and it makes sense for you. Don’t buy a house, it’s your choice. I know I would never sink anything into a rental that an owner can just give me a notice and I have to leave and shake up my world without it being my choice.
I do believe that many many people are victims here and were convinced by the loan companies that they would be able to handle it. Perfect and brilliant? Don’t buy a glass house and cast stones at others was my point.
>>Many people here on FR kept saying that people predicting large devaluations of housing prices last year were scare-mongering.<<
I was one of them, back in late summer of 2006. I said this would not only lead to recession but it was fairly possible it could lead to an actual depression. Ex-texan and hydroshock were a couple of others. I don’t know where they went to though.
>>seeing people who CAN pay the note NOT pay the note, but simply turn in the keys and walk away.<<
If I was in that position, I would not turn in the keys. I would stay as long as possible and simply save TONS of money every month. No rent, no housepayment... And who knows? Maybe my loan is one of the ones that got repackaged so many times that no bank can convince a court that they are the one I should be paying.
An acquaintance of mine owns three condos in downtown Seattle. He re-financed as often as possible, always keeping his equity at zero or even negative if possibele. He then invested ALL of the money pulled out of these condos. He said that if the market ever tanked, he would simply walk away. He has homes in two foreign countries waiting for him when the day comes.
I don’t sink money into my home. I DO sink money into “stuff”, like my basses, furniture and such (not to mention investments). But my home came with the amenities I needed. It is just a place to live relatively comforably, and a place to sleep and take showers between bike rides and gigs (and my job).
But I don’t believe any people (over the age of 18) were victims with this real estate run-up, except where actual fraud was involved. I’m no expert and I saw it. Heck, we thought it was nuts in the very beginning when they started approving home loans with payments up to 50% of your monthly income.
There's all kinds of "personal responsibility"--bankers and lenders are supposed to be professionals. It used to be their responsibility to lend to the creditworthy. We are in trouble as an economy because of the lack of professionalism on the part of the banks.
I'm not saying to bail them out. But I'd like these sharks held to account for their lending. Sounds like your child should never have been allowed by the lending process to borrow so much money.
You posted in part: If they walk away, I understand the bank will eat the $125K deficit, but will 1099 the kids and they will owe taxes to the IRS on the $125K which will be ugly.
***
Congress passed a law in Dec. of 2007 that eliminated treating forgiven debt as income if it is in connection with a primary residence. The lender could, however, sue for the deficiency balance (at least here in NC).
Bump for later
Thanks. I'll check into this as it will no doubt become relevant for these kids.
???
If that's nasty sarcasm directed at me, what have I done to you to ask for it?
My sarcasm was aimed at the large group of foolish lenders and borrowers who combined to ignore the plain economic realities of loans. Buyers signed mortgages they couldn't afford, and lenders happily lent them the money to do it.
Do you believe my post was incorrect?
Not me!
What the heck did they do with the $300+k in equity they took out???
They blew it on the good life and keepin up with the Jones'.
I was told by the third mortage provider to service my loan that they did not own the loan, just serviced it for a bank.
So I took freepers advice and went to the recorders office. They looked it up and and it still shows the original bank as owning it.
I called original bank and they were very helpful, unlike the mortgage servicer. Anyway bank said they sold the loan to Countrywide and thats the last they know of it. I dont know if all that means anything or if its normal for them.
Well, I’m sure it was fun on the way up at least...hope the ride down isn’t too bad.
“The loss mitigation departments of the banks are in the business of saving the mortgage, and will try hard to help you.”
Sort of - they just want to get their money back.
If you owe $100K on a 300K house they will foreclose in a heartbeat, knowing they will be able to sell for more than 100K.
If you owe $295K on a 300K house, they will likely work with you on a new payment plan.
What if you owe $400K on a $300K house ;-)
Have you considered the possibility that if your mortgage has been packaged and "securitized", the current mortgage holder may not be able to prove ownership?
I suggest you talk to a knowledgeable attorney about this. It is a stretch, but there are a couple of judges which have ruled against foreclosure in such situations.
Can you please elaborate, and/or provide links detailing this strategy, and how one can go about determining ownership? Thank you.
"Judge Boyko ordered the lender’s representative to file actual copies of the loan assignments to prove that the lender actually owned the note and mortgage on the properties at the time of the foreclosure filings. To their dismay, Deutsch Bank could only provide proof of intent to convey the rights, but could not provide actual proof of ownership. The judge gave the attorneys thirty days to come up with proof of ownership that the court can accept. Notice of this requirement has been given to attorneys in 27 additional pending cases by another federal judge in Ohio in early November of this year."
It's a stretch, but I would get an attorney to ask for this document if I was facing foreclosure.
Failing that - ask the bank to renegotiate the value of the loan to actual market price (if I could afford the payments at that price).
Failing that too, I'd mail in the keys.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.