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Are you an idiot to keep paying your mortgage?
SF Gate ^ | 16 Nov 2008 | Kathleen Pender

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 ...


TOPICS: Business/Economy; Editorial; Government
KEYWORDS: credit; economy; loan; mortgage
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To: nicola_tesla

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


51 posted on 11/16/2008 11:42:25 AM PST by cajungirl (no)
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To: mylife
Penalize the hardworking and reward the slackers

And then wonder why it all collapses.

52 posted on 11/16/2008 11:42:42 AM PST by Gondring (Paul Revere would have been flamed as a naysayer troll and told to go back to Boston.)
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To: mylife

“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.


53 posted on 11/16/2008 11:44:18 AM PST by astounded (The democrat party is a clear and present danger to America)
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To: BGHater

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.


54 posted on 11/16/2008 11:51:32 AM PST by RipSawyer (Great Grandpa was a Confederate soldier from the cradle of secession.)
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To: mylife
Penalize the hardworking and reward the slackers, wins elections. The power of pull.
55 posted on 11/16/2008 11:51:39 AM PST by fella (.He that followeth after vain persons shall have poverty enough." Pv.28:19')
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To: jwalsh07

******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.


56 posted on 11/16/2008 11:51:42 AM PST by Ruy Dias de Bivar
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To: nicola_tesla
You believe that the price of houses have not bottomed. You say save money for some years and buy when they bottomed out.

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.

57 posted on 11/16/2008 11:55:59 AM PST by nufsed
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To: Ruy Dias de Bivar

FYI # 37


58 posted on 11/16/2008 11:57:25 AM PST by nufsed
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To: whitedog57
But if a homeowner tries to restructure their debt, Freepers and others make them seem like pedophiles.

What, no one cares if you restructure you debt. They just don't want to pay for it!

59 posted on 11/16/2008 11:57:55 AM PST by org.whodat (Conservatives don't vote for Bailouts! Republicans do!)
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To: jwalsh07

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...


60 posted on 11/16/2008 12:01:10 PM PST by Tennessee Nana
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To: Tennessee Nana

FYI #37


61 posted on 11/16/2008 12:02:52 PM PST by nufsed
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To: nufsed
If that happens, then the bottom is very near because the reduction will turn the market around.

No it will not, you have the same problem the stupid lenders were trying to over come with their interest only loans. Not enough people with enough income to make the payments on over priced homes.

The last figure I saw was over ten million unsold new homes, more are added everyday and tens of thousands of subdivisions started with millions of lots. The bottom is probably 12 to 14 months are more away.

62 posted on 11/16/2008 12:05:09 PM PST by org.whodat (Conservatives don't vote for Bailouts! Republicans do!)
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To: org.whodat
If the bottom is 12 months away, I'll stay with my houses.

I'm selling to people in a market where the number of new listings and the sales have equaled. We're seeing 10-12 offers on some listings. First time buyers and investors are all over the place.

My rentals are in that area. I'll keep this hand if you don't mind.

63 posted on 11/16/2008 12:07:31 PM PST by nufsed
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To: org.whodat
In Cal we have had Citibank put a 3 month moratorium on foreclosing. Countrywide(BofA), the largest mortgage holder in Cal, just settled with the state to put $5.3 billion in foreclosure reductions.

I think it may take a year or more for demand to exceed supply, but the word is already out.

64 posted on 11/16/2008 12:10:22 PM PST by nufsed
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To: Tennessee Nana

I fogot to ping you!http://freerepublic.com/focus/f-news/2133073/posts


65 posted on 11/16/2008 12:10:34 PM PST by org.whodat (Conservatives don't vote for Bailouts! Republicans do!)
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To: BGHater
The government is favoring leeches over producers.

Who is John Galt?

66 posted on 11/16/2008 12:12:42 PM PST by TigersEye (It has been over a week now. Where is my pie?)
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To: Tennessee Nana
I believe the moral obligation to pay off your debts is something that is taught in the home. Some kids are raised to pay their bills like there parents do and others are raised to scam the system like their parents do.
67 posted on 11/16/2008 12:13:51 PM PST by BBell
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To: jwalsh07

We are almost paid off...did the same as you. Husband worked on our cars that had so many miles on them it was unbelievable. STILL own a 72 Ford pick up! No credit card debt either.
Stayed on a strict budget so I could stay home with the five kids.
Neighbor’s all have toys. Boats, four-wheelers,yada,yada,yada. Kids would complain about us not having those things. Well three are on their own now and are financially responsible. They tell me that some of their friends just live off the credit cards and have no clue of finances or personal responsibility.

By the way,I love real men that can fix things! I’ve always told my girls..” Marry a guy that can fix things”.


68 posted on 11/16/2008 12:21:05 PM PST by ladyvet (WOLVERINES!!!!!)
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To: BBell

But there was a time when the schools and society backed up the parents who felt obliged to teach virtues to their children ...

Parents who felt that obligation usually followed through with it...

And their children prospered in their own lives..

many of todays “parents” have no sense of obligation or feel overwhelmed by the crumbling of society’s past foundations..


69 posted on 11/16/2008 12:22:54 PM PST by Tennessee Nana
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To: BGHater
I will continue to operate the way my parents bought me up, to hell with what the government and others are doing.
70 posted on 11/16/2008 12:25:44 PM PST by BallyBill (Serial Hit-N-Run poster)
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To: Richard Kimball

I think we are in the same county. They tried that with me and I successfully appealed it. I went in armed with facts, was polite, but firm. Have you given that a try?


71 posted on 11/16/2008 12:25:49 PM PST by McLynnan
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To: nufsed
invested it in a safe liquid IUL program at 8% tax free.

In your dreams.

72 posted on 11/16/2008 12:28:42 PM PST by Doe Eyes
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To: Doe Eyes
I get this all the time. If you don't know what you're talking about then just ask.

I'm doing it, not dreaming about it.

Old Mutual. Out ran the S&P for 10 and 25 years. Was at 9.61 for 25 years. Just dropped to 8.29. No loss of principle.

You have your dreams, I'll live mine.

73 posted on 11/16/2008 12:31:26 PM PST by nufsed
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To: ladyvet

FYI #37


74 posted on 11/16/2008 12:32:03 PM PST by nufsed
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To: BGHater; All

There is a difference between a “credit union” and a “bank”. Credit Unions, afaik, do not sell your mortgage down the river. And the money they receive in interest payments is used locally to fund other local growth. A credit union is a good thing, and I do not believe you are a fool when paying your mortgage through a credit union. If you use a bank, and you are able to do so, *move your loan* to a local credit union. Send a message of “no confidence” to the banking industry. Even if you lose a percentage point on the interest, take heart in that this benefits your neighbors. Look for CU’s (credit unions) in your area!


75 posted on 11/16/2008 12:35:48 PM PST by so_real
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To: so_real

Credit Unions Rock, I saved 5 pts on my car loan,3 pts on my HELOC I could go on and on, I moved all my stuff over to the CU


76 posted on 11/16/2008 12:41:10 PM PST by cmsgop
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To: org.whodat
Never default, have an attorney write a deed to the lender first, and move out. That is payment in full in most cases.

As a matter of FR etiquette, you should include a derogatory statement about lawyers.

77 posted on 11/16/2008 12:44:29 PM PST by Doe Eyes
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To: nufsed
You have your dreams, I'll live mine.

You didn't even provide an example of your investments.

78 posted on 11/16/2008 12:47:37 PM PST by Doe Eyes
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To: Doe Eyes
Never default, have an ambulance chasing attorney write a deed to the lender first, and move out. That is payment in full in most cases.

As a matter of FR etiquette, you should include a derogatory statement about lawyers.Hope that repairs my immage!

79 posted on 11/16/2008 12:52:39 PM PST by org.whodat (Conservatives don't vote for Bailouts! Republicans do!)
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To: Doe Eyes
I mentioned Indexed Universal Life from Old Mutual. There is an assured growth of 1% They did 9.61 average from 1983-2007. Now saying 8.29.

No tax on the premium going in. No tax on the growth. No tax on the pay out. No tax on the death benefit.

If you defer 75,000 through 35 years of work, you will pay 7-11 times in tax during roll out and 35 years of retirement. If you don't defer and pay the tax, you can have twice as much net income in the IUL paying tax on the seed rather than the harvest.

If you read #37, you can also use equity to accelerate your retirement and become your own bank.

80 posted on 11/16/2008 12:53:13 PM PST by nufsed
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To: BGHater
But what about the moral obligation to pay off a debt?

That is exactly the problem - this country has no morals anymore!

81 posted on 11/16/2008 12:59:54 PM PST by Chili Girl
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To: Kozak; nufsed; ozark hilljilly

Might just consider that, but I wasn’t raised that way. If you can’t pay for, you don’t need it.

Oh well.


82 posted on 11/16/2008 1:00:54 PM PST by SouthTexas (Remember, it took a Jimmy Carter to bring us a Ronald Reagan!)
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To: SouthTexas
I was raised to pay off my house. My parents never paid one off, except when they sold. They learned to pay it off because in my grandparent's generation banks would foreclose to get cash. So people lived with the fear of the loan being called.

In the 1960s some people who paid off their loans actually had mortgage burning parties.

The reality is that there is no rate of return on equity. When you get in a bind, you can't always borrow, and equity diminishes with the market.

If you pur equity in a safe, liquid investment, you can alwyas pay it off if you can't sleep knowing you're making more than it costs you to borrow. Or you can let it grow, sleep well, knowing you're compounding your investment while the interest is the same every year.

Here's the scenario: I offer you $20 for every $10 you give me. You say, I don't have $10. I paid off all my debts. You decide to borrow it from someone who wants 12 back. I take 10 and give you 20. How much would you borrow from your lender to get the $20?

This is what banks do. They pay you 3-4% and loan for 6-7% or evn more on credit cards etc. It's called arbitrage and you can do it for yourself and teach it to your children.

83 posted on 11/16/2008 1:10:20 PM PST by nufsed
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To: nufsed
teach it to your children.

Both kids are building houses at the moment. :)

84 posted on 11/16/2008 1:23:23 PM PST by SouthTexas (Remember, it took a Jimmy Carter to bring us a Ronald Reagan!)
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To: SouthTexas

Good for them. I hate those tract cracker boxes. Your children may be interested in reading Millionaire By Thirty.


85 posted on 11/16/2008 1:26:10 PM PST by nufsed
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To: org.whodat
Hope that repairs my immage!

Its image, and you're doing just fine.

86 posted on 11/16/2008 1:30:06 PM PST by Doe Eyes
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To: mylife

Stories like this only serve to support what I’ve always suspected-

I am BETTER than a lot of people (cause I have a conscience about paying my bills and paying them on time)

I DO have a right to JUDGE these slackers


87 posted on 11/16/2008 2:04:44 PM PST by a real Sheila (Obama's presidency will cause Americans to have FOND memories of G.W. Bush.)
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To: a real Sheila
Have you no heart? ☺
88 posted on 11/16/2008 2:06:12 PM PST by mylife (The Roar Of The Masses Could Be Farts)
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To: BGHater

“...but only if they are at least 90 days delinquent.”

Reminder to self -— STOP PAYING MORTGAGE ASAP!!!


89 posted on 11/16/2008 2:13:44 PM PST by aquila48
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To: BGHater

If we are betting the farm on the ethics of people who have likely already made the decision to default on the mortgage and appeal to DelanObama for a personal bailout, then we are more thoroughly screwed than even I had thought...


90 posted on 11/16/2008 2:19:18 PM PST by Bean Counter (Stout Hearts.....)
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To: BGHater

I wonder if the government will tax as income any forgiveness of debt/ principle or interest. Hmm.


91 posted on 11/16/2008 2:20:51 PM PST by murphE ("It is terrible to contemplate how few politicians are hanged." - GK Chesterton)
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To: BGHater
Ha! What a upside-down world we live in when a crises made because some borrowers are not honoring their contracts, is blamed on predatory lenders. What about flakey borrowers?
92 posted on 11/16/2008 2:43:00 PM PST by LowCountryJoe (Do class-warfare and disdain of laissez-faire have their places in today's GOP?)
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To: murphE
The government is giving a grace period on primary residences. There is no tax on debt forgiveness before January 2010.

However, the debt forgiveness tax exposure continues on investment/rental properties.

93 posted on 11/16/2008 2:43:02 PM PST by nufsed
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To: BGHater

If they must do a subsidy, they should make it clear on the application that the effort will trigger a detailed audit of the loan origination, and that any violations of federal law will be prosecuted. This includes the brokers.

That should calm down the rate of applications.


94 posted on 11/16/2008 2:46:33 PM PST by Atlas Sneezed (Politicians, like diapers, should be changed often. And for the same reason.)
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To: murphE

http://www.irs.gov/newsroom/article/0,,id=174034,00.html


95 posted on 11/16/2008 2:48:30 PM PST by nufsed
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To: Doe Eyes

Almost went to law school myself but as you see I cannot type worth a damn.


96 posted on 11/16/2008 2:51:33 PM PST by org.whodat (Conservatives don't vote for Bailouts! Republicans do!)
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To: mylife

The last 3 or 4 months have turned me into a bitter, cynical person with a RACIST tinge.
I’m FED up with our media, our congress, our POTUS, and definitely our POTUS elect!
This is a scandal/bailout that keeps on TAKING from the taxpayers and GIVING to the slacka$$es.
I especially just cannot believe the part about the loan officers will be given an incentive to solicit customers for this mortgage restructure.
What in the HELL is happening to this country?
Can we do ANYTHING about it?


97 posted on 11/16/2008 3:00:20 PM PST by a real Sheila (Obama's presidency will cause Americans to have FOND memories of G.W. Bush.)
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To: jwalsh07

I’m with you. Peace of mind is SO worth it. I’m currently scrambling to pay off some CC debt from a business we started last year. I cannot WAIT to be out from under that.

Then, it’s all extra cash towards mortgage principle. :)

(1994 Nissan w/103K on her...just put a new computer chip in her that we found at a scrap yard for $100. She runs like a top now.)


98 posted on 11/16/2008 3:01:39 PM PST by Diana in Wisconsin ('Taking the moderate path of appeasement leads to abysmal defeat.' - Rush on 11/05/08)
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To: whitedog57
I am in the RE business. The repo's we are getting from the banks are way less than the purchase price. We have pleaded with the lenders to not adjust to the higher interest rates on these buyers, they refuse to listen. We encourage a Notice of Default homeowner to call and renegotiate, the banks will not do it. So they get the property back after 6 months of no payments, then it sits for another three months while they push papers around and finally list it. It is always thousands less than the purchase price, and all they had to do is re negotiate the loan with a smaller interest rate and the homeowner could stay.

I haven't met one homeowner or agent yet who even has heard of a bank re negotiating an interest rate.

99 posted on 11/16/2008 3:37:36 PM PST by thirst4truth
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To: org.whodat
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. Is that a Deed in lieu of foreclosure? You go to the title co and sign the deed over to the bank. That doesn't necessarily mean they won't come after you for the balance of the debt after they sell it, but they are pretty busy right now and maybe they won't.
100 posted on 11/16/2008 3:43:55 PM PST by thirst4truth
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