Posted on 11/16/2008 11:11:44 AM PST by BGHater
Should you keep paying your mortgage?
If you have significant equity in your home, absolutely.
If you don't, it's getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.
Last week, the government announced a program that will substantially lower payments for many homeowners who have little or no equity, but only if they are at least 90 days delinquent.
Critics say the plan, which applies to loans owned or guaranteed by government wards Fannie Mae and Freddie Mac among others, could encourage people to suspend payments.
But what about the moral obligation to pay off a debt?
Elected officials have been chipping away at that by blaming the foreclosure crisis largely on predatory lenders. In a campaign fact sheet, President-elect Barack Obama says he "recognizes that the real victims in the subprime mortgage crisis are not the lenders, but the millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told them they could afford."
Last year, Congress started removing some financial hazards of default when it passed a bill that temporarily waives the income tax on mortgage debt that is canceled when a homeowner is foreclosed upon, sells a home for less than the remaining debt (a short sale) or gets a loan modification that reduces the principal balance.
The tax waiver originally applied only to debt on a primary residence canceled in 2007, 2008 or 2009. Last month, in the bailout bill, Congress extended the waiver until 2013.
(Excerpt) Read more at sfgate.com ...
Why bother with the gov bailout ? Think like the pigmen Wall Street criminals.
If you’re underwater and can’t afford the payments, let the bank take the house. Why pay mortgage payments on a house worth far less than the mortgage ?
Stop paying and live free. By the time the bank gets around to foreclosing, you’ll have anywhere from 6-12 months or even more in some hard-hit areas to save what you would have paid for your mortgage, which you will then be able to use to rent an equivalent house for much less than a mortgage+prop taxes payment.
After some years, when housing prices have bottomed, take your saved money and buy the same house for a whole lot cheaper.
Folks, a mortgage is a contract, a business proposition between you and the bank. It’s not a moral transgression to use efficient breech - the bank agreed to its remedies when they signed the mortgage with you. You don’t pay, they take the house, your credit takes a hit. They thought that was fair when they signed the contract, and so did you. I just don’t get why some think it’s immoral to not pay - it’s why we have contract law.
A default and being behind on the mortgage is not the same thing. Never default, have an attorney write a deed to the lender first, and move out. That is payment in full in most cases.
Having said that, when Barack bails out Detroit, my car buying philosophy is going to change. I see no reason to keep enriching the UAW at my expense.
Unless you’re in serious financial trouble, probably not.
Even if you bought near the peak of the market and you owe more than your house is currently worth, if you’re making good money, paying your bills with money left over every month, your job seems moderately secure, and you have some savings, you’d be an idiot not to keep paying your mortgage.
But if you’re near the verge of financial collapse, then...
FYI #37
At least you have figured out you have one home and three rentals. Now you can file those taxes correctly.
Exactly ! Efficient breech - it’s a business decision, not a moral judgment on you.
None of us have control over future circumstances. It’s why you sign a contract, and why there’s contract law to enforce remedies.
It’s a business decision, and your household is a business.
:-} Funny you should say that. Me, my wife my two kids and our dog lived in a tent for 8 months when I got out of the Army. Long enough to make a deal on a house. Sadly though neither of us came from wealthy families though I would characterize my family life as “rich”.
When someone says they own a home, it doesn't mean they live in it. Perhaps the residents consider it a home.
How far do you wnat to take today's non-lesson?
Excellent post.
Disagree. I think it is morally wrong to not pay a debt you incurred when you are able to pay it. Even if it is effecient not to pay it.
Honorable people do not do this.
It is stealing from someone.
Just my opinion. I wonder what others think
And then wonder why it all collapses.
“Penalize the hardworking and reward the slackers.”
This is what happens when you allow democrats to run things. We are so fuc*** in this country...
I despise democrats, period.
Last year, Congress started removing some financial hazards of default when it passed a bill that temporarily waives the income tax on mortgage debt that is canceled when a homeowner is foreclosed upon, sells a home for less than the remaining debt (a short sale) or gets a loan modification that reduces the principal balance.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Only the third one, the loan modification, would seem to represent actual income to the homeowner and the other two never should have incurred income tax in the first place. I think this was hashed out here a while back.
******No, I’m the idiot who paid off his mortgage early by busting my ass and driving cars with hundreds of thousands of miles on them which I keep running by working on them in my garage. I’m also the idiot who has no credit card debt or who’s kids have no student loan debt. Why? Because I pay as I go.******
Same here for the last 19 years. I wonder if I could get a government refund for all the payments I do not have to make.
There's a lot of pressure now to subsidize the mortgage market and reduce the number of foreclosures. If that happens, then the bottom is very near because the reduction will turn the market around. Also in places in soCal we have reached the level between new listings and purchases (example Temecula area).
Two of my rentals are close. One mortgage is about even with the market value and the other is 30,000 below. I will hang on to them until the market turns. I don't want to do the down payment and loan costs again. I would rather eat the 3,000 a year for five years and keep the houses (in good locations) than take my chances on buying and re-qualifying with my DTI ratio.
Giving advise is often not a simple thing. Each person has to consider their own situation and crunch their numbers.
Insteresting comments, but maybe not for everybody; as mine weren't earlier.
FYI # 37
What, no one cares if you restructure you debt. They just don't want to pay for it!
Same here...
My house is just about paid for because I have paid double and sometimes triple the mortage for the last few years..
For the past 10 years I have paid cash for my vehicles...and everything else...
I havent had a credit card for about 20 years...
If I couldnt afford it I didnt need it...
I practicly own my house, I own every stick of furniture, clothes etc in it..etc
Sorry I cannot tell you why...
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