Fannie Mae noted in a recent press release that “Nearly Twice as Many Underwater Borrowers Think It Is Okay to Default Due to Financial Distress.” Has strategic default reached a tipping point in America?
Irvine Home Address … 53 CARVER Irvine, CA 92620
Resale Home Price …… $650,000
It's these changes in latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn't laugh we would all go insane
Jimmy Buffett — Changes in Latitudes, Changes in Attitudes
Attitudes toward strategic default are changing. Last December I flatly stated, Strategic mortgage default will become common and accepted in 2011.
Many of those who chose not to strategically default make this choice because they believe making the payment is a moral obligation — an obligation above and beyond what is written in the contract. Banks are relying on those borrowers motivated by their perceived morality to keep making payments. Unfortunately, there is no longer a moral stigma associated with strategic default (accelerated default is a more accurate term).
Banks need a moral stigma to be associated with loan repayment. If the transaction were viewed by borrowers as a simple business transaction — which it is — then issues of morality are not effective at cajoling debtors into repayment, particularly when default is in the best interest of the debtor. Banks have long relied on borrower morality to get repaid.
Due to the events of the Great Housing Bubble, borrowers no longer feel a moral obligation to repay their mortgage debts. Borrowers view the system as corrupt. Many borrowers believe greedy lenders inflated prices with oversized loans to pad their own profit margins. Those borrowers are correct in their views and beliefs, and based on that view, many borrowers no longer feel compelled by morality to repay their mortgage debt.
Fannie Mae in it's most recent press release confirmed my prediction. Strategic default is rapidly becoming accepted by Americans.
May 11, 2011
Fannie Mae's National Housing Survey Shows Uptick in Consumer Attitudes Since December, But Rising Household Expenses May Be Cause for Concern
Though Perceptions of Investment Safety Have Been Declining, 57 Percent of Americans Believe That Homeownership Has a Lot of Potential as an Investment, Ranking Higher Than Other Investments
Feeling Less Financially Secure, Nearly Twice as Many Underwater Borrowers Think It Is Okay to Default Due to Financial Distress
One of my former co-workers is a deeply moral man. He views life rather simply, and most issues to him are either black or white. I watched him deal with the struggles of our declining incomes as the real estate bust dragged on, yet he remained committed to paying his mortgage on a house in Riverside County that declined about 50% in value. He was paying $3,200 per month for a property he could rent for $1,800.
Late in 2008, the pain became unbearable, and in a sudden change of heart, he moved out of his house to a rental in the same neighborhood and stopped paying his mortgage. In fact, he simply stopped everything. He left the house, stopped communicating with the bank, and moved on with his life. His was a purchase-money, non-recourse loan, so there wasn't much the bank could do.
I never questioned him about his decision. It was none of my business. But knowing the kind of man he is, it must have pained him deeply. I know he was concerned about the standard of behavior he was setting for his children, and he was worried his family and his community would lose respect for him.
As it turned out, he was one of the last on his street to strategically default. All his neighbors he was worrying about had already bailed on their homes. He was the last holdout who fought acceptance of strategic default as an option. It cost him $20,000 more than it would have if he had made his move a year earlier when the situation was already hopeless.
WASHINGTON, DC — Fannie Mae's latest national housing survey finds that Americans expressed more cautious optimism during the first quarter of 2011 than in the fourth quarter of 2010, but they continue to lack confidence in the overall strength of the housing market and economic recovery. The First-Quarter 2011 Fannie Mae National Housing Survey polled homeowners and renters between January 2011 and March 2011. Findings were compared to similar surveys conducted throughout 2010 and December 2003.
Survey results show that Americans' newfound optimism about home prices, the economy, and personal finances is balanced by concerns about rising household expenses, which may require Americans to remain cautions about the recovery. Despite consumer caution, 57 percent of Americans still believe that buying a home has a lot of potential as an investment – ranking higher than other investments, such as buying stocks and putting money into and IRA or 401(k) plan.
Since March of 2009, real estate has been one of the poorest performing asset classes in the country. The stock market has more than doubled. Ben Bernanke's printing press is causing commodities to rise, and most other asset classes have been going up as well. The real estate kool aid is more powerful than reality.
“Despite moderate signs of improvement in the housing market and the overall economy, consumer attitudes continue to be shaped by ongoing concerns about the recovery and their own financial situations,” said Doug Duncan, Vice President and Chief Economist of Fannie Mae. “Uncertainty regarding the improving labor market, expectations of little home price and interest rate movement, and rising household expenses has left consumers feeling less financially secure and translates into weak mortgage demand. While we have seen indications of improving economic activity in recent months, especially the strengthening of private sector employment, consumers' attitudes improved only marginally, and in some areas not at all, from a year ago, reflecting the continued unevenness and uncertainty of this recovery.”
- Only 33 percent of Americans said they believe the economy is on the right track, up four percentage points from the fourth quarter of 2010, but virtually unchanged from January 2010 (31%).
- Forty-two percent of respondents said they expect their personal finances to improve over the next year (up by 2 percentage points from the fourth quarter of 2010), compared with 44 percent in January 2010.
- Forty percent say that their current monthly household expenses are significantly higher than twelve months ago, up from 34 percent in the previous quarter and 31 percent in January 2010.
Does anyone believe the government statistics on inflation? The cost of everything is going up — except real estate.
- While the number of Americans who perceive homeownership as a safe investment has been declining (from 83% in 2003 to 66% in first quarter of 2011), 57 percent still believe that buying a home has a lot of potential as an investment, more than any other investment tested.
- Nearly twice as many Underwater Borrowers (27%) think it is okay to walk away from a mortgage if they face financial distress than in January 2010.
They don't devote much text to what is really the only important finding in their study. Of course, this particular fact doesn't bode well for their massive underwater loan portfolio, so they probably aren't going to make it a headline like I did. 
Consumer attitudes don't change that fast or that often. For twice as many borrowers to accept strategic default as acceptable behavior is an alarming trend for banks.
As is the case with any change in attitude, it takes a few pioneers to take a bold step forward. When the timid see the success of the bold, they emulate them. If their are significant rewards for the behavior — which there are for strategic default — then the behavior spreads rapidly, and all resistance to the idea is washed away.
Strategic default is part of the downward spiral that crushes house prices. The cycle above can only be broken if negative equity does not prompt strategic default. Since the debt relief is so substantial, the benefits quickly outweigh the negatives. Without a compunction against strategic default, the cycle continues unabated until house price graph looks like Las Vegas's.
That is what strategic default does to a housing market. Lenders are rightfully frightened this outcome will repeat in every housing market in America.
The Fannie Mae First-Quarter 2011 National Housing Survey polled homeowners and renters to assess their attitudes toward owning and renting a home, confidence in homeownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.
The cognitive dissonance revealed in some of these survey results is truly remarkable. Read on.
Other Survey Highlights
Forty-four percent of homeowners believe that the value of their home today is worth 20 percent or more than what they originally paid for it, declining from 46 percent in June 2010 and 51 percent in January 2010.
One in three Americans (30%) expect home prices to strengthen over the next year, up four percentage points from the fourth quarter of 2010, but virtually unchanged from a year ago.
Most people live in a house seven years or less. Since every market in the county is trading below its 2004 price levels, it is highly unlikely that 44% of homeowners have homes worth 20% more than they paid for it.
Most people don't have a clue about what makes house prices go up and down, so perhaps it isn't too surprising that 30% believe house prices will go up. House prices in nearly every market will decline this year.
Fifty-nine percent of Generation Y Americans (ages 18-34) expect their personal financial situation to improve over the next year, compared to 49 percent among Generation X (ages 35-44) and 37 percent among Baby Boomers (ages 45-64).
Fewer African-Americans think the economy is on the right track (44% in the first quarter of 2011 versus 51% in the previous quarter), and they are less optimistic about their personal finances (61% expect their finances to get better over the next year compared to 67% in the fourth quarter of 2010).
Only 13 percent of Pre-Baby Boomers (age 65+) think it will be easier for the next generation to purchase a home than it was for them, compared with 28 percent of Generation Y Americans.
Does the generation that manages to price-out the subsequent generation feel guilty about their actions? If buyers really are priced out forever, how would homeowners feel about that?
Nearly one in four (23%) Mortgage Borrowers say they are underwater, compared with 30 percent in January 2010.
Only 31 percent of Underwater Borrowers think they have sufficient savings (compared to 42% in June 2010, and 43% of all Mortgage Borrowers).
Forty-six percent of Underwater Borrowers say they are stressed about their ability to make payments on their debt (versus 35% in June 2010, and 33% of all Mortgage Borrowers).
For more detailed findings from the survey, click here.
If nearly half of borrowers are feeling mortgage distress, strategic default will continue to grow in popularity.
Back on the market
Some properties get caught up in the mortgage morass and take years to emerge in the hands of a family who will make it their own. Today's featured property is one such problem child.
I first profiled this property on August 10, 2009 in the post, Power Poker. It appeared again in the April 7, 2010, post, The Debt Star Has Cleared the Planet.
- This property was purchased for $800,000 on 9/14/2004. The owners used a $640,000 first mortgage and a $160,000 down payment.
- On 11/18/2005 they refinanced with a $714,750 first mortgage and a $142,950 stand-alone second.
- The total property debt is $857,700 plus accumulated missed payments.
- Total mortgage equity withdrawal is $57,700 plus four years of free rent worth approximately $120,000.
Four full years of squatting with no end in sight
There is a reason we have a foreclosure process: when people stop paying, we need to get them out of the property and recycle it to someone who will pay for it. Now, after over four years, she is still there.
Foreclosure Record
Recording Date: 10/15/2009
Document Type: Notice of Sale
Foreclosure Record
Recording Date: 07/09/2009
Document Type: Notice of Default
Document #: 2009000364972
Foreclosure Record
Recording Date: 11/12/2008
Document Type: Notice of Rescission
Document #: 2008000530065
Foreclosure Record
Recording Date: 01/04/2008
Document Type: Notice of Sale
Document #: 2008000006033
Foreclosure Record
Recording Date: 10/01/2007
Document Type: Notice of Rescission
Document #: 2007000592079
Foreclosure Record
Recording Date: 09/27/2007
Document Type: Notice of Default
Document #: 2007000586776
Foreclosure Record
Recording Date: 05/23/2007
Document Type: Notice of Default
Document #: 2007000334839
This house has been in default as long as I have been writing for the IHB. It looks as if they have received two loan modifications, and they still can't make the payments. Obviously, the lender was in no hurry to take this one back. The owners are now working on four years without a consistent mortgage payment, so they are also happy with the status quo.
With owners getting upwards of four years of free housing, strategic default is quite appealing, particularly if the alternative is to stress over payments the borrower cannot afford.
Irvine House Address … 53 CARVER Irvine, CA 92620 
Resale House Price …… $650,000
House Purchase Price … $105,000
House Purchase Date …. 7/24/1998
Net Gain (Loss) ………. $506,000
Percent Change ………. 481.9%
Annual Appreciation … 14.3%
Cost of House Ownership
————————————————-
$650,000 ………. Asking Price
$130,000 ………. 20% Down Conventional
4.59% …………… Mortgage Interest Rate
$520,000 ………. 30-Year Mortgage
$114,113 ………. Income Requirement
$2,663 ………. Monthly Mortgage Payment
$563 ………. Property Tax (@1.04%)
$0 ………. Special Taxes and Levies (Mello Roos)
$135 ………. Homeowners Insurance (@ 0.25%)
$0 ………. Private Mortgage Insurance
$0 ………. Homeowners Association Fees
============================================ .jpg)
$3,361 ………. Monthly Cash Outlays
-$447 ………. Tax Savings (% of Interest and Property Tax)
-$674 ………. Equity Hidden in Payment (Amortization)
$223 ………. Lost Income to Down Payment (net of taxes)
$182 ………. Maintenance and Replacement Reserves
============================================
$2,647 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$6,500 ………. Furnishing and Move In @1%
$6,500 ………. Closing Costs @1%
$5,200 ………… Interest Points @1% of Loan
$130,000 ………. Down Payment
============================================
$148,200 ………. Total Cash Costs
$40,500 ………… Emergency Cash Reserves
============================================
$188,700 ………. Total Savings Needed
Property Details for 53 CARVER Irvine, CA 92620
——————————————————————————
Beds: 6
Baths: 4
Sq. Ft.: 2770
$235/SF
Property Type: Residential, Single Family
Style: Two Level, Modern
Year Built: 1979
Community: 0
County: Orange
MLS#: P780607
Source: SoCalMLS
Status: Active
On Redfin: 4 days
——————————————————————————
Irvine home with a little work. Paint, carpet and misc repairs. .. .will go a long way with some TLC.
To get strategic defaults you need (1) homes well underwater, generally 25-50% under, (2) lots of local foreclosures, (3) rents cheaper than the higher mortgage payments. Those 3 criteria are not present everywhere, and where they are present, they’ve been present for at least 2 years. Maybe there are people holding on now, but I think those that would strategically default have done so.
I don’t think your dealings with mostly multi-national, government sponsored corporations should attach the same moral code as your dealings with people. I wonder if people have a loan with their small local bank or a community credit union if they view strategic default differently?
Your friend’s situation is different than many strategic defaulters who choose to stay as long as possible and pursue legal means to prolong their stay.
Those three factors sound about right.
I think low rates are “saving” people from foreclosure right now. People who chose an option-ARM or an ARM with no gimmicks have been rewarded with lower payments.
e.g. I have a coworker who bought a $1M home in Orange in 2007 that’s probably worth ~$800K today. She used a 5/1 ARM and the fixed period just ended last month. Her new payment? Well, it’s just $1,300 less than the old payment…
Yep, I have relatives in the exact same position. If the Fed blows a bubble with printed money and holds the Fed funds rate at less then 1% for the next few years, the 5/1 OARM may work out for them. I will have some egg on my face because I have been saying the OARM bubble buy will end badly.
I finally gave up and got a short sale at 15% under market with a 4.8 30 year fixed. My cost is less then rent. I am not comfortable with the down I have been saving up sitting in cash with helicopter Ben running the show.
LOL so true, cue the devastating ARM curve update.
Look out for the tsunami of rates continuing to reset lower.
The ones that are tied to the LIBOR are resetting hysterically low: yielding payments cheaper than rent for bubble buyers.
Oh the devastation, it’s funny how so many of the bubble prediction have been so very wrong. The monster tsunami reset charts are the epitome of this comedy.
The funny one that has been going around the past year or 2 is how inflation will impact everything except housing. Good luck with that.
Excellent point, meanwhile the 10-Year continues to move even lower.
It was not the ARM part of an option-arm that was a problem, it was the option. Some reality on option arms, and why the wave of recasts won’t be a tsunami. Still, nearly 20% of option-arm loans are in foreclosure…if that’s an OK number.
Where option-arms fit into this post is how the amortized interest puts a borrower further underwater. The likelihood of strategic default is highly dependent on % underwater, so a 4-10% increase in amount underwater makes a big difference.
A big takeaway from the CR link is that many of the op-arms that would default already have and many have already been through the foreclosure grinder.
Before we get too happy with the OARM bubble buyers, they are still screwed compared to the deal I got.
I got a much better house, at a much lower price, with a 30 yr fixed. My payment stays low, while theirs will surely go up.
The difference the Fed is making is they if they struggle, they can keep the house. Without the Fed’s help, they would be snuffed out soon.
I agree.
I’m simply pointing out what should have been obvious a few years ago when the fed lowered rates: resets would be much lower. The LIBOR based resets are practically free money. Recast? Does anyone still think th banks want the houses in depressed areas?
If you had a 5-1 arm and bought in 2006, you’re going variable this year. To benefit from the lower rate, you would have had to afford the higher rate for the 5 years to now. You’d also have units nearby renting for about the same or slightly lower. You’ll also be at possibly 50% negative equity, realistically, no short-term cash at closing and probably would need a short-sale. So, do you pay a couple hundred more per month to ‘own’, or do you give up, get 12-18 months free rent, and then go from there?
1-2% movement in LIBOR doesn’t significantly impact people in those situations, and those are the situations most likely to lead to strategic default. 1y-LIBOR going up a point would make a $400k LIBOR+2.25% p&i go from $1700-1900. Do people make a decision on $200k in liabilities based on $200/mo?
gloating in the short term. enjoy it.
are we completely ignoring the interest rate subsidy via Fed purchase of treasuries?
PR – inflation is impacting housing, prices are falling less quickly due to multiple subsidies.
The Upward Slope of Real House Prices
“Does anyone believe the government statistics on inflation? The cost of everything is going up — except real estate.”
I believe the statistics in that they are purposefully designed to disguise inflation as growth. Everything is going up and it will impact housing cost starting with rents.
Rents are going up in desirable and average areas of southern California. I would expect rents to increase further in the next few years as inflation takes hold. The Irvine company will start cranking on the 3% increases or more when they take out origination incentives. This definitely impacts rental parity.
Whether that is true for the Irvine company, it is not the case in all OC markets. In CDM I’m still paying the same rent that I started with in 2005. I’ve been going month to month with that arrangement since 2006.
Like it or not, what an Irvine Co. 2 BR rents for in the second year of a lease impacts the Irvine housing market.
Irvine Co can raise rents until they cant. Rising food and energy prices will put downward pressure on rent.
Can you define ‘further’ and provide some data on the “increasing rents” in SoCal (you did say SoCal, not Irvine)? Because I have done quite a bit of looking around L.A. for a 1-2 bd, and prices have actually gone DOWN since I last looked back around 2005-06. Yes, 5 years later and the places that were renting for $2000 back then are now $1600-1700. I was quite surprised at the findings. Any insight on that PR?
PR assumes we are in a robust recovery.
There is downward pressure on rents. We are in economic contraction combined with rising prices in food, energy, and other goods. this aenemic(sp?) situation is not conducive to rising rents, maybe in utopian Irvine, but not marketwide.
I am convinced that there was a “tipping point” for strategic default. This was the default by the buyers of the Cooper-Stuyvesant Village in NYC, which took place in late 2009 or perhaps early 2010 (I should have looked it up). It was very widely publicized. The defaulting buyers had planned to shift one of NYC’s last decent middle-income housing developments into condos at grossly inflated prices, a really dirty scheme that had also gotten a lot of attention. When those buyers bailed on a few billion bucks — an entirely legitimate “business decision”, according to the coverage –, I think a lot of folks looked up from the morning paper or the Today Show and said, gee. No stigma there. Why can’t I do that too???
Winston:
the comments in your linked CR article were very good.
many people take CR to task for ignoring wages and location of the remaining jobs.
Personally, I”m not buying CR’s argument that the downturn is arresting…
~0% fed funds rate and fed is juicing the demand for treasuries thus suppressing interest rates. this has nationwide repercussions, what looks positive in the short term and very negative in the medium and longer term.
This is cheap money illusion.
Of COURSE strategic defaults will become more commonplace. I defaulted and started squatting 22 months ago. While I understand the notion of squatters living for free is offensive, what difference does it make?
It has been well documented here, that banks are trying to keep home prices artificially inflated by not releasing the homes to be sold on the open market. When neigborhoods don’t show foreclosures, home values can remain high. An added benefit is that by not foreclosures, banks don’t have to recognize the losses on their books.
Squatters can stabilize communities and guard against vadalism, thus help maintain homes. The argument that others are paying for squatters is null and void, since the bailout has already been disbursed.
Squatters have been largely responsible for spending their savings, thus helping support the larger economy.
Just like a large amphibious mammal, and the scavenger-like fish that feed of it’s parasites, squatters and banks have a mutually beneficial relationship. This relationship WILL eventually end, but for now it’s working.
I say, horaay for squatters.
Just curious … since you stopped paying, what level of interaction have you had with the bank? Did they file a NOD, have they filed (or threatened to file) a Notice of Foreclosure? Do they periodically try to reach out to you about loan mod programs or short sales? Or is it just radio silence for the last 22 months?
I tried unsuccessfully to get a load modification. The bank told me to miss several payments, after I did they told me to pay up or they would foreclosure.
No way was I going to pay them over 9K only to have them foreclose on me anyway.
The bank and I have been doing the funky foreclosure dance, which ended with the judge quashing their notice of foreslosure after he caught their attorney lying in court.
Every 4 months the bank sends me a loan mod packet, but it always has an expiration date that expires before the postmark. LOL
If the bank wanted me out, I would be out. Well, maybe not, but they don’t want me out anyways.
When it’s all said and done, after I move into my new rent-free digs, I’ll be sure to file a motion to compel the bank to foreclose. My response will be that I was harmed after the bank took way too long to foreclose.
They may come after me in a deficiency. Until then, I’ll ride this out into the sunset using only cash in order to suppress my credit score.
In the end, I’ll file bankruptcy. I really don’t want this hanging over me………….
Chicago:
Thanks for sharing. Love the pre-expired mod packs. 🙂
If you plan a walkaway, the best advice is to talk to both a RE lawyer and tax accountant who understand the nuances in your state.
Here is a link to the current IRS rules (note the 2012 expiration):
Do You Owe the IRS for the Difference After a Short Sale?
Your article says that Obama signed the mortgage debt relief act in Dec 2007. He must have a magic time-travelling pen or was a very powerful Senator.
There is a disconnect for many with regards to bailout or assistance programs crafted and signed by Bush vs. Obama. Who bailed out Fannie/Freddie? Not Obama.
what new rent-free digs??
ChicagoWalkaway is the unintended consequence of “saving the housing market”
the word mutiny comes to mind
Every time I hear a justification for squatting I get very angry because when you buy something for a set price you should not get a chance to get a cheaper price because it totally upsets the balance of pricing. And I’ll explain you buy stocks and they drop down in value do you get to go back to the company and say I bought it for 10 grand now I want it for less. What we loose is our balance of free markets when we want to set a value for everyone based on new value. Do we want to support Communism where all the prices are the same? If we lose our job and can’t afford our home we should rent or sale our home.
Banks can give a lower interest rate but to re- modifying the price lower because of forced squatting does not mean the property is taken care of. The one I view recently stopped cleaning the pool, cutting the grass and allowed the rest of the house to decay naturally and after 2 years of doing nothing to the home shows need of plaster repairs, rusting fences, over growth in plants, leaking sinks and in need of painting.
The banks allowed the owner to live for free even paid their taxes only to have them tell me they will declare bankruptcy and live there a few more years for free.
What does this do to the entire neighborhood? What they should be doing is forcing the banks to reduce their interest so they can keep their home and their loaned amount so the real value does not drop so low.
But this is the biggest mistake the bankers have made instead of doing the right thing they are being forced to lose more and thus take larger losses off their taxes that we the consumer pays for. They have shifted their loss to us the American Government who has picked up the losses by reducing interest paid on money market accounts and all outstanding cash.
They have taken income money out of the hands of those with cash the largest sector being retires. Those folks living off of interest are the one losing their homes as well as the trickle of those that overpaid seep into every crack and crevice of every homeowner. Thus reducing all home values.
Hitting a bubble in home prices should not have caused a depression for everyone and thus mistakes of those who overpaid and for bankers who wanted more income with mortgage backed securities being forced upon with free/no doc loans to entice those to overpay was doomed for failure for all of us.
Regulations are needed to correct this massive failure in greed.
The newest way to collect profit tax liens—
http://huffpostfund.org/stories/2010/12/wall-street-quietly-creates-new-way-profit-homeowner-distress
When Florida retiree Gladys Walker fell behind in paying taxes on her modest Pompano Beach home, she had no idea one of America’s biggest banks and a major Wall Street hedge fund engaged in frenzied bidding for the right to collect her debt—all $768.25 of it.
“I just couldn’t come up with the money,” said Walker, 67, a former hotel worker who makes do on a monthly Social Security check.
Barely more than a year after a taxpayer bailout of major financial institutions, Bank of America and the hedge fund, Fortress Investment Group, spotted a fresh money-making opportunity – collecting the tax debts of tens of thousands of people like Walker. The bank and hedge fund can add interest charges and fees, and they bundled the debts as securities for investors.
http://huffpostfund.org/stories/2010/05/other-foreclosure-menace
more owners forced out of free and clear mortgages over taxes–
You’re right……………..
So what.
We do not live in a world of what “should” happen. THIS is happening. As long as prices fall people will walk away in droves. Homes are places to live as well as assets.
Banks should not engage in deceptive practices to get people to stop paying their mortgages, only to find out is has problems with the very same mortgage origination documents it wanted to use as evidence to evict homeowners. This is laughable at best.
If we as Americans were not so stupid, we would have rioted in the streets against politicians and corprations that act against, and lie to us to vote against our own self interests.
Trust me, if home values drop to zero, the government will find a new way to extract money through real estate maintenance taxes, or some other made up crap.
The home is loan is secured by the property itself. If the bank wanted to kick out squatters, they would. This is all part of the albiet corrupt, maket.
By the way, regulations allowed this to happen, and this is why no one has been prosecuted in the greatest criminal destruction of wealth in history.
Just sayin’
so you didn’t sign these loan origination documents then, yet they still gave you the keys? Is that what I’m supposed to be hearing? You must be very convincing!
Jesus here we go with regulation debate. Good point Chicago.
I just watched Inside Job and the first 5 min about Iceland they harp on “this was all caused because the banks were privatized” and continued banging the “deregulation caused this” drum.
Fucking propaganda never blames prior to privatization as being a problem. nobody every blames the moron investor at one end, or the moron borrower at the other. who both need to lose big. oh no, they fail to mention the effect of keynesian policy and manipulation of interest rates. oh and conveniently fail to mention the effect of a socialized mortgage market. Just keep repeating “deregulation” and “down with wall st” while simultaneously justifying keeping them afloat and justify continued central economic planning. I expect nothing more from those that feel the gov can protect us from our own stupidity.
I feel like picketing the squatters at their “homes.” I wonder how long it would take for people to move out if the neighborhood got together and showed the squatters how much they stunk.
That is a great idea.
Too bay most of your picketing buddies are underwater, and many of them are thinking of defaulting and squatting too.
Besides, when the squatters, leave, ________________ will come. (Just fill in the blank with whatever unsavory thing that you don’t want in the home next to you.)
Then after picketing them away cupcake, you’ll wish your former neighbors, you know the ones that looked out for each other still lived next to you.
The problem isn’t the squatters, it is the banks for not following through and foreclosing.
Until the bank takes title to the property the “owner of record”, even if they are not paying the mortgage, are still responsible for the property. For instance, if someone is injured on the property they hold title to, they are liable. if the city fines the property for being unkempt, they are liable. The squatter is protecting themselves by staying until the ownership transfers.
I agree that once banks take title, the squatters should move immediately, but until then, not.
You are absolutely right, it’s not only the squatters playing the game. Irvine Renter has talked about the issues of moral hazard before and in the bigger picture, that’s what I’m railing about.
Back in the day I chose NOT to buy, because I was prudent and realized I couldn’t afford what I wanted. If someone had told me I could purchase with zero down, then stop paying and live rent free while continuing to build my own nest egg — I might have said no anyway. Why? Because it was wrong. It goes against all the principles I was taught as a child.
But, here I am, the one paying rent while others live for free. Heck, this activity is getting easier and easier to justify as I see people (yes, corporations too) getting away with egregious behavior. There are absolutely no consequences to those that bought and are now squatting irresponsibly and no consequences to those that lent irresponsibly. Never, in a million years, would I have EVER thought this would happen in America. What a disillusion.
And I confess, I have no moral high ground to stand on, because even in my anger, I can say that if an opportunity presented itself to me again in a different form – I might go against what I was taught and simply benefit myself with little thought to what is morally right. What’s the difference anyway? That Chicagowalkaway-DB doesn’t care, the bankers paper-pushing loan mods they know aren’t going to close don’t care, so why should I?
–on a tangent: after the tsunami in Japan, when people were standing in long lines to get food at the grocery store, there were no restrictions. The only requests made from employees was that you should take what you need and leave some for your neighbor. That is a culture known for returning CASH to lost and found, for crying outloud. I used to think America was that way, but I guess I’m growing up, because this country is not living up to my expectations.
And Chicago-mud-pie: I do live in Irvine, which thankfully has plenty of families chomping at the bit wanting to buy a reasonably priced home, so I don’t fear a lot of riffraff at the moment. But those families can’t buy because squatters haven’t been forcibly removed by the banks. So, you #win. Feel smug all you want about walking away from your debt and living rent free –cheers to you.
this loser can’t pay a $108,000(!) mortgage on a 6(!)BR in Irvine after 13 years, and now all these years later somehow owes more than it’s worth?
no wonder it’s been featured on this blog 3 times. F indeed.
> House Purchase Price … $105,000
> House Purchase Date …. 7/24/1998
IR:
Nice pad for $105k in 1998 …
I’m not sure that price is right … $250,000 would make more sense for 1998?
Anybody know?