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No Help in Sight, More Homeowners Walk Away
NYT ^ | 02/03/10 | DAVID STREITFELD

Posted on 02/03/2010 7:05:10 AM PST by TigerLikesRooster

February 3, 2010

No Help in Sight, More Homeowners Walk Away

By DAVID STREITFELD

In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040.

“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”

After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing.

New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: bhoeconomy; foreclosures; fourth100days; jinglemail; mortgage; realestate; underwater
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NYPost carried a smiliar article on 'walking away' a few days ago.
1 posted on 02/03/2010 7:05:11 AM PST by TigerLikesRooster
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...

P!


2 posted on 02/03/2010 7:05:42 AM PST by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster

Yep, however that is not a happy story either. Try getting credit at a reasonable interest rate after doing that.


3 posted on 02/03/2010 7:25:47 AM PST by sickoflibs ( "It's not the taxes, the redistribution is spending you demand stupid")
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To: TigerLikesRooster

Is everyone a victim to the Times? Are all the lending institutions evil and greedy?


4 posted on 02/03/2010 7:27:09 AM PST by johniegrad
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To: johniegrad
Are all the lending institutions evil and greedy?

Nope, but it was a systematic conspiracy from top to bottom, from GS to your local real estate agent, loan broker and builder, to extract as much in fees out of the flow of funds involved in forever leveraging up the total global real estate holdings. When valuations exceeded some large multiple of value and when then difference was borrowed from a banking system willing to lend it, there are no "innocent" parties except perhaps the young person starting out life who has a job and a family and just needs a place to live and has no control over what the masters of the universe have done.

Want a guilty party. Try Greenpsan who made the statement that it did not ever occur to him that executives would put their companies at risk by engaging in this kind of behavior, exactly while watching for a decade while they engaged in exactly this kind of bahavior. No, not one decade. Three decades. Just that after two decades of getting away with it they got really greedy.

5 posted on 02/03/2010 7:33:32 AM PST by AndyJackson
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To: TigerLikesRooster

Hey Benjamin, you are a financially illiterate moron for buying an overpriced condo at the peak of a the Housing bubble. That’s life.


6 posted on 02/03/2010 7:33:58 AM PST by petercooper (GOP: Big Tent Party??? Not if you are a CONSERVATIVE.)
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To: johniegrad
It is NYT, after all.
Anyway, the real news is that NYT’s of the world are now covering the looming large-scale default of home loans. Things are really bad, when even Zero's cheerleaders have to acknowledge it.
7 posted on 02/03/2010 7:35:01 AM PST by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: AndyJackson
In your scenario, you blame everyone but the individual who took out loans they couldn't afford.

In my opinion, I would agree with you for the individual who, through no part of his own, loses his job.

Otherwise, people have to be responsible for poor borrowing decisions. The fact that the money was available does not make taking it irresponsibly any more responsible.

8 posted on 02/03/2010 7:38:45 AM PST by johniegrad
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To: TigerLikesRooster

I didn’t read far enough into the article to get to the part where they blame Bush, but since it’s the NYT, whatever they end up concluding is pure propaganda and decidedly irrelevant.


9 posted on 02/03/2010 7:40:22 AM PST by Spok (Free Range Republican)
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To: Spok
Yes, ignore their conclusion.
10 posted on 02/03/2010 7:47:40 AM PST by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster

So when you owe more on your car than it’s worth, you just walk away. Let it be repossessed by the bank.

So much for your credit rating.

Where was it guaranteed that the house you bought would appreciate in value or even not go down in value?


11 posted on 02/03/2010 7:48:11 AM PST by Carley (Are you better off now than one year ago? HELL NO!!!!!)
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To: TigerLikesRooster

NYT is shilling for the Barney Frank Cramdown plan again


12 posted on 02/03/2010 7:49:08 AM PST by Buckeye McFrog
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To: Buckeye McFrog

Wait until this Bozo gets the tax bill after the bank dumps it in a short sale and then he gets charged a tax gain in the difference between his mortgage and what they sold it for.


13 posted on 02/03/2010 8:03:53 AM PST by marlon
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To: TigerLikesRooster

This is killing localities. When these people bogue on their mortgage, they are likely also bogueing on the property taxes as well, and that puts small towns and County governments in dire straits.

Here it meant 44 layoffs in town, 20 more open positions that will go unfilled and a bunch more people who are being offered early retirement. That may sound good on the surface to some, but when the very real services that we expect our cities to provide start going away the problems will only mount.

We are seeing the beginnings of a completely new paradigm emerging that is going to fundamentally change the way we live and do business in this Country. We have so far outgrown our capacity to support ourselves in any that the change that is coming is going to be traumatic, and probably fatal for many.


14 posted on 02/03/2010 8:09:31 AM PST by Bean Counter (Stout Hearts...)
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To: sickoflibs

Do you mean the way people who file bankruptcy start recieving regular credit card approvals a mere 3 months AFTER FILING a bankruptcy? (even before discharge)

This is no longer as big an issue as you think.


15 posted on 02/03/2010 8:10:05 AM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Carley
Where was it guaranteed that the house you bought would appreciate in value or even not go down in value?

Its in the Constitution after free health care and cheap gas. Dude...read.

16 posted on 02/03/2010 8:11:26 AM PST by GUNGAGALUNGA (Democratus Suckus Teatus is the Latin root for Democrat and it means to tax)
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To: TigerLikesRooster

Why would you walk away solely based on what you think the house is worth? Look at your car, people.

I predict in 3 years, the Democrats will be screaming for banks to loan money to people with bad credit again.


17 posted on 02/03/2010 8:12:10 AM PST by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
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To: TigerLikesRooster

Deflationary for sure...


18 posted on 02/03/2010 8:13:05 AM PST by dennisw (It all comes 'round again --Fairport)
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To: marlon

“he gets charged a tax gain in the difference between his mortgage and what they sold it for.”

Mortgage value is irrelevant to tax value. If you bought it for $200k and they sold it for $125k, that’s a loss. It doesn’t how much you owe on it.


19 posted on 02/03/2010 8:14:23 AM PST by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
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To: GUNGAGALUNGA

And I just remembered, the constitution also guarantees you the right to kill your baby in your womb and get the gummint to pay for it too.


20 posted on 02/03/2010 8:16:01 AM PST by Carley (Are you better off now than one year ago? HELL NO!!!!!)
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To: Carley

Its not such a credit rating hit these days. It takes about
4 years to recover, 7 years to have it drop.

You don’t expect someone to pay on a 4500/month note
on a property whose value is half the purchase price and trending down, do you. To think otherwize is to deny reality.


21 posted on 02/03/2010 8:19:36 AM PST by rahbert
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To: longtermmemmory; TigerLikesRooster; ding_dong_daddy_from_dumas
RE :”Do you mean the way people who file bankruptcy start recieving regular credit card approvals a mere 3 months AFTER FILING a bankruptcy? (even before discharge)

If you look back at my reply it does include that. Those offers will be for very high interest rates and low credit limit, I bet < $500. I would not want that. Plus most good jobs do a credit check too. Not good. With the Democrat reform bill these rates will be even higher to start, because they cant raise them on existing balances after the fact.

Credit cards are NOT a progressive redistribution system like Social Security is. Those that pay the balance every month are the kings and get cash back and no interest grace period. The suckers who use it for loans get high interest rates and fees and fines.

22 posted on 02/03/2010 8:20:16 AM PST by sickoflibs ( "It's not the taxes, the redistribution is spending you demand stupid")
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To: TigerLikesRooster

“In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040.

“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”

Just great logic here. I think a stint in jail would help this f@#kwad appreciate his condo.


23 posted on 02/03/2010 8:21:44 AM PST by Commander X (TOTUS...destroying the USA as planned)
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To: TigerLikesRooster
“Why not let it go in default and rent a better place for less?”

Oh, I don't know... Maybe because you SIGNED YOUR NAME ON A LEGAL CONTRACT!

People need to grow up, act like adults and quit whining about how unfair life is.

24 posted on 02/03/2010 8:22:21 AM PST by TChris ("Hello", the politician lied.)
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To: TigerLikesRooster
Babyboomers got a lot of financial help from the wealth of their parents,( I did not), and received their parents wealth after they past on, (I did not). NOW, that wealth is long gone,spent. And ,also baby boomers spent tons of dollars on their children, (I did this} Now a lot of the babyboomers (me included) are broke. No dough, no bread. There is no wealth anymore to draw on. It's gone.

And now were are being TAXED TO DEATH. BY THE CURRENT POLITIANS!

25 posted on 02/03/2010 8:23:01 AM PST by timestax (CNNLIES..BIG TIME)
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To: Bean Counter

It is not just the mortgages, the prices on the land were artificially inflated abover real value.

The real estate taxes were inflated which created municipal bloat.

Home prices continue to REMAIN inflated because of the banks holding back on a shadow inventory and not liquidating these abandoned homes or just compromising the artifically valued mortgage down 50-60% to reflect REAL value.


26 posted on 02/03/2010 8:25:36 AM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: rahbert

If I signed the mortgage papers and agreed to the terms then YES, I expect to meet the payments.

Do you walk away from your car payment too?

Sounds like it.


27 posted on 02/03/2010 8:28:26 AM PST by Carley (Are you better off now than one year ago? HELL NO!!!!!)
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To: TChris
People need to grow up, act like adults and quit whining about how unfair life is.

Wouldn't that take all the fun out of being a moonbat?
28 posted on 02/03/2010 8:29:00 AM PST by Canedawg (Our government has become a travesty.)
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To: TigerLikesRooster

Dictators have no friends; only sacrifices.


29 posted on 02/03/2010 8:29:51 AM PST by freekitty (Give me back my conservative vote; then find me a real conservative to vote for)
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To: Carley

You can believe what you like. All my vehicles are long since paid for.


30 posted on 02/03/2010 8:30:24 AM PST by rahbert
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To: TChris
Oh, I don't know... Maybe because you SIGNED YOUR NAME ON A LEGAL CONTRACT!

So?

He signed a contract which outlined what would happen if he doesn't live up to his end of the bargain. the lender is, or should be unless he's stupid, protected in case of default.

Contracts are the very absence of moral obligation.

31 posted on 02/03/2010 8:31:22 AM PST by Trailerpark Badass (One good thing about music, when it hits you feel no pain.)
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To: timestax

That sums it up quite well - we ARE broke. The next time the lib next to you starts bellyaching about the need for more ‘stimulus’ from the government, remind the idiot of that simple fact -

WE ARE BROKE!! THERE IS NO MORE MONEY TO SPEND!!!


32 posted on 02/03/2010 8:33:20 AM PST by reagan_fanatic (The liberals are asking us to give Obama more time. Is 25 to life enough?)
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To: TigerLikesRooster
“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”

I am a property manger and I rent apartments for a living. What makes this guy think I want to rent to someone that screwed up his credit.

33 posted on 02/03/2010 8:33:59 AM PST by muggs (If Obama is the answer, it must have been a stupid question)
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To: Trailerpark Badass
Contracts are the very absence of moral obligation.

You and I disagree completely.

When I sign my name, it means something. You should warn potential lenders and other business associates that this is not the case for you.

34 posted on 02/03/2010 8:34:47 AM PST by TChris ("Hello", the politician lied.)
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To: TigerLikesRooster

Friend of mine got a letter from her mortgage bank telling her she had 30 days to pay $4000 for Flood Insurance on 1.9 acres that has never ever flooded but is 50+ feet from a year round creek . . . very small, about 6 inches wide creek.

Friend has never been late on a mortgage payment even though they’re living on her husband’s VA and money she earns grooming dogs and kenneling dogs and cats . . . very variable income.

Our County just rescinded the homestead exemption and raised some other taxes. [Not being a homeowner, I didn’t pay much attention.]

Friend has decided to move to a rental [they can pay all bills with husband’s VA] and just let the bank take back their house and property. She loses the $5000 metal kennel building and fencing she added to worth of property. She loses the updates and improvements made in the house, the new tin roof and the wrap around patio.

She’s upset at losing her home, but at the same time has decided they’ll rent instead of own because there are less “hidden” expenses.

That’s why I rent . . . it’s not my hot water heater, roof, septic system, etc. AND I have a great relationship with my landlady . . . I get her hand me down dryer and washer and refrigerator.


35 posted on 02/03/2010 8:46:54 AM PST by HighlyOpinionated (The left have become lawless. Every strangling edict they issue carries an exemption for themselves.)
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To: Bean Counter

Maybe Clark County should not have build such a palatial tower to house its employees.

In Texas, you can buy a pretty nice 1700 sf house for not much more than the cost of a buildable lot in Clark County, WA.


36 posted on 02/03/2010 8:47:39 AM PST by SeaHawkFan
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To: TChris
When I sign my name, it means something. You should warn potential lenders and other business associates that this is not the case for you.

Me, too.

When I sign my name on a contract, it means that I will abide by the terms of the contract. It just happens, however, that the contract will contain terms of what will happen if I default.

"Defaulting" is not reneging on the contract; it's one contingency that should be, unless the lender is incompetent, accounted for in the terms of the contract.

"Contracts" make, or should make, the moral character of either party irrelevant.

That's their purpose.

37 posted on 02/03/2010 8:50:43 AM PST by Trailerpark Badass (One good thing about music, when it hits you feel no pain.)
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To: Trailerpark Badass
"Defaulting" is not reneging on the contract; it's one contingency that should be, unless the lender is incompetent, accounted for in the terms of the contract.

K.

Be sure and explain your views to the loan officer when you apply for a loan. Let me know how that works out for you.

38 posted on 02/03/2010 8:54:26 AM PST by TChris ("Hello", the politician lied.)
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To: Carley

I was kind of being sarcastic.


39 posted on 02/03/2010 8:54:57 AM PST by GUNGAGALUNGA (Democratus Suckus Teatus is the Latin root for Democrat and it means to tax)
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To: johniegrad
"Otherwise, people have to be responsible for poor borrowing decisions. The fact that the money was available does not make taking it irresponsibly any more responsible.

Here's the problem with that. There's millions out there who had no business entering into this type of financial commitment. But plenty of lenders, who know better, went ahead and gave them the money anyway.

"In my opinion, I would agree with you for the individual who, through no part of his own, loses his job."

Or suffers reduced income during an economic meltdown caused by greedy lenders?

40 posted on 02/03/2010 8:57:42 AM PST by moehoward
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To: muggs
Because he made a wise financial decision and can easily afford rent payments that are half of his former mortgage payment that he kept current.

These are unusual times and you should keep that in mind unless all your units are filled all the time.

It is also likely that he mortgage agreement is non-recourse. If so, he fulfilled his contractual agreement.

41 posted on 02/03/2010 8:58:40 AM PST by SeaHawkFan
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To: TChris
Be sure and explain your views to the loan officer when you apply for a loan. Let me know how that works out for you.

What an idiotic reply.

42 posted on 02/03/2010 8:58:52 AM PST by Trailerpark Badass (One good thing about music, when it hits you feel no pain.)
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To: TChris

If you walk away from an underwater mortgage, rent for a couple of years while saving the difference, you will have 20 % down and lenders will line up to give you a loan; especially when RE prices reflect actual values.


43 posted on 02/03/2010 9:05:11 AM PST by SeaHawkFan
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To: AppyPappy

I don’t believe you are correct. First of all he didn’t sell it so he can’t claim the sales price as a loss since he was not part of the transaction. Second, what I’m talking about is if you owe the bank $200K and they sell the house in a short sale for $125k for example then the $75k difference can be considered income since you actually owed that money and so it is treated as ordinary income. It’s like winning a house or a car in a raffle. You have to claim the value as income.


44 posted on 02/03/2010 9:05:59 AM PST by marlon
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To: marlon

I think Congress passed a law that mortgage deficiecies will not be counted as income.


45 posted on 02/03/2010 9:10:11 AM PST by SeaHawkFan
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To: SeaHawkFan

I am in an unusual situation where business is booming. New company in town hired 300 computer software writers and IT people. They plan to hire another 700.


46 posted on 02/03/2010 9:12:36 AM PST by muggs (If Obama is the answer, it must have been a stupid question)
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To: muggs
Bet your credit standards would be much different in your city is the economy was bad. Personally, if the only blemish on a person's credit was they walked away from an underwater mortgage, it would not stop me from renting to them.
47 posted on 02/03/2010 9:20:11 AM PST by SeaHawkFan
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To: TigerLikesRooster
Interesting that this article is entitled “No help in sight”. Since this is about value of property being below the loan, not necessarily the inability to pay mortgage, what help should be offered? Government propping up values or paying down the mortgage to the “value” of the property? Why is this type of help owed to anyone? Next, should we help those whose stock portfolios have dropped 20-30%, making them “whole”? It's just crazy.

I had an “underwater” mortgage for 7 years in the 80’s. Eventually it wasn't underwater. Never considered walking away (even though the interest rate was 14% - a bargain when we bought the house).

48 posted on 02/03/2010 9:20:20 AM PST by keepitreal ( Don't tread on me.)
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To: TigerLikesRooster

As long as we (the government) allow the big guys to walk away from their debts, or worse, bail them out, more and more little guys are going to do the same. Is it immoral? Probably. Only if EVERYONE is held to the same moral standard. If not, it’s just stupid to be the only patsy.


49 posted on 02/03/2010 9:22:51 AM PST by Republic of Texas (Socialism Always Fails)
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To: SeaHawkFan
I think Congress passed a law that mortgage deficiecies will not be counted as income.

Then someone should tell the IRS and the banks that are issueing 1099's for "imputed income"

50 posted on 02/03/2010 9:31:26 AM PST by Roccus (ABLE DANGER?????...................What's an ABLE DANGER???)
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