Posted on 09/26/2010 7:41:50 AM PDT by Oldeconomybuyer
Millions of middle-income home- owners are struggling to pay down bloated, underwater mortgages while wealthier Americans are simply mailing in the keys to the mansion and calling it a day.
It's time for average Americans to start seeing their mortgage papers for what they are: records of financial transactions, not moral documents.
In a free-market society, an individual homeowner is not responsible for the strength of the nation's housing market. If anything, walkers may stimulate the economy, by spending a portion of the money they were sending to the banks each month.
Take a look at your finances and decide for yourself whether homeownership makes sense. A better decision for the future of your family may be to rent, pay off your credit cards, and put the savings in a college fund for your children or grandchildren.
Walk away from your house if it will be better for you to rent. And remember, walking away now doesn't mean that homeownership may not work for you later.
(Excerpt) Read more at mercurynews.com ...
This author belongs in congress.
As a democrat.
Mortgages are purely financial transactions. Mortgages are a business transaction, not one of morality. The sooner you get off your high-horse and understand it is business the better. If it were a moral transaction there would be no need for the mounting pages of signed business and legal documents. What happens when a person defaults on the mortgage is clearly spelled out in those documents. There is no emotion to it. To you, sure, but not to the busineses involved, and it is obvious you do not understand the nature of business.
I’m sorry FRiend, but I don’t understand what your question.
It also includes the (never-mentioned in these articles) risk of inflation.
They may find themselves paying high rent a few years down the road.
And burdened with a lower FICO score they’ll have no alternative.
It would be a shame to find one’s self ‘whipsawed’ on the largest investments of their life.
Its foolish to blame the bankers, they react to rules provided for them by the USG. From the passage of the first 1976 (or 1977!) Community Reinvestment Act under Carter, the setting up of Fannie & Sallie Mae, the subsequent retuning of that Act under Clinton. ( I do applaud the McCain on being one of the few GOP’ers who actually made noises warning about this! Remember Zero as a agitator for ACORN actually led sit-ins at Chicago banks demanding home loans to people who couldn’t afford to pay them!) Bankers are there to maximize profits for their shareholders same as any other businessmen. It’s just the federal government created a situation where there was no risk to the loan, therefore no risk to the bank. Politician clowns like Barney the Homosaur, Dodd, & Zero encouraged the notion that there was an infinite supply of money and there was no risk, (And GOP’er for the most part hid under the table to avoid being insensitive to the needs of the poor or racist). No surprise to me that eventually the bill for all that became due!
Again there is NO FREE LUNCH and every politician tries to pretend there is!
Though Rats tend to do this more then GOP’ers.
So, while the law allows for breach of contract (and it's consequences) that does not make it moral to do so. You disagree, I understand. That's just the difference between you an me.
So... The seller sells the buyer something that has a stated value. Clearly the buyer was convinced by someone that it did, and it turns out that it didn’t have that value at all.
As an example; you sell me a gold bar that you and I both believe is real and it turns out to be gold plated lead. Should the buyer have to pay you the balance owed once the assay was completed, and it turned out to be worthless?
Suppose you borrowed $1,300 from a friend and bought an ounce of gold at today's price from the coin shop.
Tomorrow Red China dumps all its gold into the world market and the price of gold plunges to $200 per ounce.
Are you going to stiff your friend?
This bubble was caused by Barney Frank and Christopher Dodds
Now you get it. That's the point. I have seen all of these sanctimonious posts about the moral and legal obligation for people to pay their mortgages no matter what rather than making a financial decision based on personal circumstances. The banks are right to repossess the homes and force people out who can't pay their bills. But, there are two parties to this deal, both of whom assume a level of risk.
I have no problem with homeowners walking away from their homes. The banks made the loans after making a decision on the amount of risk involved. The problem is that the taxpayers are bailing out the banks but not the homeowner. They both should bear the consequences of their decisions.
Luckily, most citizens didn't fall for the con, - they bought homes they could afford and didn't use their homes as ATM machines. Most were responsible - and they should not be punished by those who showed a lack of thought, greed, a need for instant gratification.
You seem to believe that the record number of foreclosures are the result of someone falling for a "con." The reality is that we have close to 16% (U-6) unemployment rates. If you lose your job, you have serious problems making your mortgage payments. Everyone is being punished by the taxpayers bailing out the banks and mortgage companies. We are all paying for this.
All? How many people walked away solely because they saw their home's value decrease? You are making up phony strawmen. Most people are "walking away" because they can't afford to pay the mortgage. The falling housing values are the result, not the cause of the massive, record foreclosures.
If you can afford your home but "walk away" because it is underwater, you are committing an immoral act.
LOL. What planet are you living on? Both parties signed a contract, which had penalties for failure to live up to the contract conditions. If you "walk away" from the deal then you lose the house, any equity you have built up, and run the risk of future problems obtaining credit. It has absolutely nothing to do with morality. We have bankruptcy laws in this country. Are they immoral?
As far as cashing in other assets to keep the home, that is what is required if you have such assets. When you have $100,000 in liquid assets and a bentley in the garage, and you refuse to use them to pay the mortgage, you are in the same boat as someone who has a job but refuses to pay. The bank probably used those assets to justify giving you the loan. If you have $15,000 and a crappy car and that's all you've got, and no job prospects, you're not taking any money from the bank by not cashing those in. You are only delaying the inevitable, and they can't touch those assets anyway.
That is one of most ridiculous comments I have ever read in the almost 7 years I have been on FR. Why should anyone liquidate all of his assets just to keep paying a mortgage on a home that he may lose anyway? The house is the collateral that the loan was based on. The bank made the decision to loan the money based on the value of the home and the credit rating of the prospective owner. The bank gets the home and any equity that was built up by the person who is defaulting on the loan.
So, the morality of it comes back again to whether you are able to stay in the house, whether through income or assets, or whether your circumstances don't allow it. If you are forced to give up the mortgage, give it up. If you are not forced to give it up, then keep making the payments, even if you are underwater.
I really don't care nor should you about what motivates someone to stop paying his mortgage. It has nothing to do with the ability to pay. You have a rather twisted view of what a home mortgage is all about. Banks make plenty of money off of most mortgages. People pay far more in interest than the do in principle on a 30 year mortgage. Why? Because the banks are covering their risk. You also pay mostly interest over the first 15 to 20 years of a 30 year mortgage. I have no sympathy or sense of obligation to the banks. We both signed a contract. If you don't live up to the contract, you suffer the consequences. Why is that such a difficult concept to comprehend?
Yep, read all of the various posts on this thread that speak to the morality of paying your home mortgage. Yet, when you use that kind of logic, then it follows that it is immoral for the banks to throw someone out of his house because he can’t pay the mortgage. Morality should have nothing to do with it.
Yep, pretty amazing. I guess honoring one’s obligations is no longer a conservative value....at least among some who think they’re conservatives.
It doesn't make it immoral to do so either, so your apparent self rightousness seems to be misplaced.
Why is that always the immediate assumption that this is the case? Is that happening? Sure, undoubtedly. There are also a lot of people who face the choice between "pay the mortgage or starve," and too many idiots on FR are demanding those people starve since they made an unwise financial decision several years ago. That is unacceptable.
While I understand your views on the CRA, and I completely and totally agree as to its damaging affects, it is not so foolish to blame the bankers. They had a hand in this beyond the CRA. Some banks, like Wells Fargo, did not do dubm things and didn’t suffer, until they bought Wachovia.
“it moral to do so. You disagree, I understand. That’s just the difference between you an me.
“
Oh, seriously, get off you holier-than-thou high-horse. It is business, not morality. I dare you to got to court on any of these issues, for either side, and make a claim of “morality” to the judge. Good luck with that.
Dear Lindsey Owens,
It is a legal obligation.
I know I would never open any type of charge account for someone or make a loan to someone who walked away from their mortgage nor would I rent to them.
I'll start by saying I'm not in a position to walk away from my notes. I've owned my homes for years and still have significant equity.
Mortgages from 2004-2007 were made in an unrealistic bubble much like internet stocks in the late 90’s. Simply put the homes were never worth 2x’s what they were worth in 1999 anymore than yahoo was worth a PE ratio of over 100. It comes to a simple business decision that the commercial side takes every day. I see no difference. Is it worth it to walk away and start over if you are $x under water?
Is it despicable to walk away from a mortgage? Mortgages were supposed to be made once upon a time with buyers skin in the game with 20% down. Walk away and there's equity left on the table. These mortgages were made with little for down payment, nor thought to whether the new home owners could pay the mortgage. Many were were made only to be bundled, rated by Moodys & S&P, securitized and sold to the world. The banks/brokerages that provided the money put our freedoms at risk here to make a buck. Bring back Glass-Stegle and start heating the tar.
Claw back the bank fees from the major banks and Goldmans, et, al. There's plenty of blame to spread in this situation besides people walking from bad decisions & mortgages.
“Karl Marx is that you?
“
You obviously know nothing of Marxism. If you did, you would notice the similarities between what you are advocating and Marxism. I am advocating that mortgages are a business transaction, not emotional morality. You want mortgages to be government controlled and regulated all in the name of “morality” and that is Marxism.
Go read the works of Marx before sticking your foot in your mouth again.
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