Reply to What I don't get: When people complain that they are drowning because their house is underwater

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Because people look at underwater properties as a chunk of money they have lost.   Regardless whether you still have mtg on it or have managed to even pay it off, it is still money lost should you attempt to sell it.  You cannot get your money out of it unless you wait and this wait may take many years just to get what you paid for it.  Not any appreciation, not to keep up with inflation, just to get dollar to dollar what you put into it, you must wait years.  This is why people are upset.  don't see how it is so difficult to understand.  Mtg amount and whether you can afford it today has not much to do with it.  It's the feeling of loss of your hard earned dollars.

Some people are walking away from their underwater homes as they simply don't want to continue paying into the hole regardless whether they can afford their mtg or not, especially if they have put very little equity into the house.  They just want to cut their losses.  Others, like my friends in CA were able to negotiate a lower pmt with their bank on their home that's lost half of its value.  The bank have agreed to make an arrangement for some sort of refinancing to keep them in this house when they prepared to walk away from it. [/quote]

But the buyers [b]gambled[/b] and lost.  And now they want to blame the mortgage brokers and banks?  So, if you buy stocks and the market goes down, is that the fault of your stock broker?  Everyone takes advice from stock brokers, but everyone also knows that they don't have a crystal ball.  They can only tell you what the market trends suggest, not what the market itself will do.  If you go to Las Vegas and bet at the blackjack table, if the dealer says that most people hit on 16 and stand on 17, and you lose the hand, is that the dealer's fault?

As the PP mentioned, the buyers are ultimately responsible.  They asked for advice, were given advice based on the then-current market conditions which changed.  So, now it is the brokers and banks fault that they recommended what had been working for several years, but changed very soon after?   No, the buyers took the risk.  They were gambling that the market would go up and they would make money as had been the case for years.  But it didn't.  They are still responsible.

As someone who planned around this eventuality, I resent that my tax money is going to bail out homeowners who were less responsible.  We bought in 2006 around the height of the market...put 20% down and that's all gone and we're still 50K underwater.  But we knew that could happen and we planned to be in this house until we're ready to downsize, so for the long term.  We have about 16 years more to pay off our loan and then we'll have whatever the house is worth.  It may be less than we purchased, but we'll have had over 20 years of enjoyment of the house and whatever the house is worth.   Other than people who were truly defrauded (not the majority), people who suffered calamity such as family illness or involuntary job loss, I am resentful of the irresponsible folks getting bailed out for making bad decisions and not living up to the commitments that they made when they thought they were going to make money on real estate, but lost instead.[/quote]
This is where you are wrong.  You assume everyone but you *gambled* in the RE market and that is the reason they purchased their homes.  Are you the only one who just bought the house to live in during the times of the bubble?  Some people did speculate, wanting to flip properties and they got their butts handed to them when they joined the party a bit too late.  This perhaps is more comparable to making risky decisions in the stock market, these people after all put their money to make quick cash.  But for every one of such people there are those that just bought homes they intended to live in for many years.  Some bought places they could not afford and were struggling with payments from the start go.  Others bought homes they could afford, made conservative long term decisions, put 20% down and got 30 year loans.  But are now underwater and cannot help the feeling that they are *trapped*.

This is exactly what it is, when you are living in a home that has lost its value, you cannot sell it and move when you need to unless you lose a good chunk of your hard earned money.  This is not gambling or in any way comparable to putting your money into the stock market.  These people did not intend to flip and get rich fast, they just wanted to do what people did for generations here and keep even, but they are not.   Actually in the stock market you are much more liquid and don’t need to go through the drawn out process of selling your property, which is both expensive and emotionally and physically draining.  People who lost in the market can at least get out what is *left* without nearly as much work and cost as eliminating RE. 
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This is a distinction without a difference.  If all you wanted was a place to live, you'd rent.  But everyone wants to build equity, and not "throw money away" renting.  So whatever the ancillary benefits,buying a house IS an investment, with all the risks that an investment entails.  
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