Anonymous wrote:Let me guess. You bought your house for under $250,000 and its now worth $700,000 or your sold it and now sit on the pile of money wondering why everyone complains about real estate these days because, I mean, let's face it you did your research and bought at the best possible moment anticipating 300% increase in prices over a decade or two. So anyone that bought in 2006 was a complete moron because clearly the markets would crash in 2008 from predatory lending practices bundled as AAA-grade loans. Clearly the professionals at Lehman Brothers, Countrywide, etc saw that coming too but decided to let their companies go belly up.

Since you've been living under a rock, I'll clue you in. Mortgages in 2006 and there 'bouts were given 1) for >40% of HHI 2) no money down and 3) ARMs were pushed or the only offer. So people took out insane loans, had no equity because the housing prices were increasing so fast it would build automatically, and ARMs that reset in 5 years. The best ARMs could potentially price you out in a year, the worse would do that immediately. The only reason why the housing market hasn't absolutely plummeted is because the Fed is holding interest rates a 0%. Guess what happens when that rises? All of the underwater homes with ARMs begin defaulting if they haven't already because they can't refinance or sell and probably can barely afford the mortgage while underemployed much less when the interest rates start increasing again.

with no lack of sympathy for those in that boat...

the people who got those mortages are responsible for their own actions. no one held a gun to their head.

we bought in '07 after selling and realizing a nice gain after 19 yrs.... we had offers for $1 MILLION mortgages, which I thought was so frickin' insane that I knew then the bubble would burst with the ensuing pain ... we said, no thanks, we'll take less than $300k and keep our mortgage payment under $2k/mo. (had good equity) ... so ...

yes, circs. can be unfortunate but people have to live with the consequences of their choices and actions....

The bank underwriters cannot add
Just think of the way they were handing out half a mil. loans to anyone who had a job and some income

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But come on -- it doesn't take a PhD in economics to know that you shouldn't be buying a house if you have to pay more than 40% of your gross income on interest alone in the hope that the house will appreciate enough so you can refinance.

I agree the banks deceived people. But you were awfully willing to be deceived if it meant you could live in your dream house.

Actually, cutting edge research from the fed (think its Chicago, could be Atlanta) has been finding that innumeracy was a significant contributor to the housing crisis. In effect, a lot of Americans can't add and DID NOT know that their budgets could not support their loans. I've been really surprised that this issue has not received more interest from policy makers and the press. (sorry for iPhone typos)

At first I thought you meant idiocy. I see you don't, but it really works just as well.

Are you suggesting "I can't add" (and apparently, its corollary, "I'm to effin' stupid to use a calculator") she constitute a reason for mortgage modification? I just can't accept that. No.

No, no, not at all. Though, I do think that now that we know "I can't add" is the problem, that whatever we do to try and help get people better information during the loan application process should address this issue. Lots of the financial literacy stuff focuses on helping people understand the ins-and-outs of ARMs, etc., when the problem is so much more basic.

I also think we ought to seriously look at what's going on with math education in this country if the math illiterate are taking down the economy. (more apologies for iPhone typos)

Anonymous wrote:

Anonymous wrote:But come on -- it doesn't take a PhD in economics to know that you shouldn't be buying a house if you have to pay more than 40% of your gross income on interest alone in the hope that the house will appreciate enough so you can refinance.

I agree the banks deceived people. But you were awfully willing to be deceived if it meant you could live in your dream house.

Actually, cutting edge research from the fed (think its Chicago, could be Atlanta) has been finding that innumeracy was a significant contributor to the housing crisis. In effect, a lot of Americans can't add and DID NOT know that their budgets could not support their loans. I've been really surprised that this issue has not received more interest from policy makers and the press. (sorry for iPhone typos)

At first I thought you meant idiocy. I see you don't, but it really works just as well.

Are you suggesting "I can't add" (and apparently, its corollary, "I'm to effin' stupid to use a calculator") she constitute a reason for mortgage modification? I just can't accept that. No.

Anonymous wrote:But come on -- it doesn't take a PhD in economics to know that you shouldn't be buying a house if you have to pay more than 40% of your gross income on interest alone in the hope that the house will appreciate enough so you can refinance.

I agree the banks deceived people. But you were awfully willing to be deceived if it meant you could live in your dream house.

Actually, cutting edge research from the fed (think its Chicago, could be Atlanta) has been finding that innumeracy was a significant contributor to the housing crisis. In effect, a lot of Americans can't add and DID NOT know that their budgets could not support their loans. I've been really surprised that this issue has not received more interest from policy makers and the press. (sorry for iPhone typos)

Anonymous wrote:
But to all you people who are underwater, but can make (and are current on) your payments, why should the bank allow you to short-sell? Take any morality, righteous indignation, or ideas about the proper allocatin of risk out of it - what incentive do they have to let you short sell? None.

The typical reasons for agreeing to a short sale include loss of income (such as job loss or substantial pay cut), family crisis including family illness, or other similar type extenuating circumstances. If you can provide proof that you are paying the mortgage through assistance (such as temporary family assistance) or from limited savings (as in, the savings will be depleted in X months at the rate that you are paying) or other similar type justification, then even if you are making the payments, the bank will consider all such evidence. I knew of one friend who reported that her mother was at a home with in-home care, but they couldn't afford the in-home care so the daughter was moving to her mother's house (mother not able to be moved out) to care for her. She gave documentation of the medical expenses, what they had been paying the nurse, and the location of her move plus the fact that she would lose her current job to move to her mother's home. The bank took a few months, but approved her short sale. If you can prove that the current payments are contingent and will definitely fail in the short term, then they will consider and may approve the short sale even when you are current on your payments.

Anonymous wrote:
But to all you people who are underwater, but can make (and are current on) your payments, why should the bank allow you to short-sell? Take any morality, righteous indignation, or ideas about the proper allocatin of risk out of it - what incentive do they have to let you short sell? None.

bailout

No, the point of a short sale is that the bank agrees to accept less than the amount of the mortgage note for the sale of the property. So they've accepted the loss. At that point, you are only responsible for capital gains taxes on the difference between the sale price of the home and the balance of the mortgage at the time of sale. The amount that the bank forgives is considered profit for you.

This is accurate, but make sure to get an explicit agreement, in writing, from the bank that your obligation has been satisfied. It's not a problem so much now, but early on in the financial crisis, there were instances of banks agreeing to a short sale in recourse states without an explicit agreement of satisfaction, and then going after the former homeowner for the difference. (And that, buy the way, is, or should be, fraud.)

But to all you people who are underwater, but can make (and are current on) your payments, why should the bank allow you to short-sell? Take any morality, righteous indignation, or ideas about the proper allocatin of risk out of it - what incentive do they have to let you short sell? None.

Anonymous wrote:What you are not getting is that people are greedy they bought expecting that their house would go up very quickly and now that it hasn't they want the government to step in and help them. .

Wow
Banks were gready
Sellers were gready
It was diffucult to buy
Buying a home is what an American is supposed to do.
The banks are greedy by keeping all the pay out money to themselves and not giving the consmers who need it access to the help that the government has made available

And how do you know exactly the circumstances and reasons why somebody bought their home?

Anonymous wrote:People who're ready to upgrade but are $50-$100k under on a TH they've been paying on dutifully and were otherwise responsible about buying - sort of, but mostly yes.

This is us. We bought in 2004, expected to be here 5 years tops, sell and use that money for a downpayment on a new home. Ha! Now we have 3 kids in a small 3 bedroom TH (and kid 3 was due to failed birth control, before you chastise me for having kid 3) and its either stay, rent it out and come up short on our mortgage or short sell. We tried to refinance through HAMP first and the bank denied it. It makes no sense to remain in this house, financially or otherwise.

Anonymous wrote:
What about if one does a short sale on their house, in VA? Are you still responsible for the difference? I am in a position where we are upside down in our mortgage and need to move due to family issues. Dont know what we are going to do.

No, the point of a short sale is that the bank agrees to accept less than the amount of the mortgage note for the sale of the property. So they've accepted the loss. At that point, you are only responsible for capital gains taxes on the difference between the sale price of the home and the balance of the mortgage at the time of sale. The amount that the bank forgives is considered profit for you. If you strategically default on the loan and they foreclose, first you will be taxed on the capital gains of the difference between the foreclosure sale price and the amount of your note (that is capital gains for you). Then if the mortgage company chooses, they can sue you for the loss, i.e. the difference between the foreclosure sale price and the balance on the mortgage note. I don't know for certain, but I've heard that banks generally won't bother for less than $100K loss, but suits for strategic default are becoming more common as loan holders have to come up with a way to recover a lot of lost money due to the sheer volume of foreclosures in the housing crisis. Especially as they are being lambasted by some of the more creative ways of making up income (e.g. BoA fees), where states allow, they are becoming more common.

I would definitely try to work on a short sale if at all possible. And do not believe a realtor that you should list as a short sale before clearing with the bank. I can tell you that realtors experienced with short sales will ask FIRST if a short sale has been approved by the bank and if not, they generally don't bother bidding. However, short sales that have been cleared by the loan holder get bids. I tried to bid on a home like this but was told that bids were closed because there were already six bids on the property...and that was PG County. So, you need to write a letter to your bank about the need, and beg their mercy to approve a short sale. For this, you want to get a listing agent who has successfully SOLD more than one short sale property as they will be able to provide you experience with how to apply and then appeal (if necessary) the bank's decision to approve a short sale. Good luck. Do this as soon as possible as the first reply from the bank will take months.

What you are not getting is that people are greedy they bought expecting that their house would go up very quickly and now that it hasn't they want the government to step in and help them.

Ironically, and no one remembers this, the first program offered by the government was we will lower your loan balance to allow you to refinance IF you will share your profit with the government when you sell. For those that don't remember, only about 100 people in the whole country took advantage of this.

People want to be bailed out when they make a bad financial decision, but they don't want to share with the same parties when they make a good one. Pure greed.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:PP do you understand that people are NOT being bailed out, but that banks are?

What do you call HARP?

We've tried it all - HARP, HAMP, BoA, you name it. BoA wanted us to bring $20k+ to the table and our payments would actually go UP several hundred dollars each month, which we can't afford.

80% of the responders on this thread can jump on me all they want - Anyone out there have any advice regarding strategic default in Virginia? They can have my near-perfect credit score.

Virginia is a recourse state. So you're personally liable for the amount of the mortgage, regardless of what the house brings in foreclosure. Not really a good option.

Successful attempts to collect from defaulters are extremely rare. Recourse or non-recourse is all well and good in theory, but in practice it makes no difference. Unless you have significant assets, they are not going to come after you, and even then their chance of attaching assets is very low.

We have been renting our old home out for a few years (for much less than the mortgage) and we live in our primary residence. We bring in much less than we used to. Our condo fees are going up again next month so we will be even farther in the hole each month. What kind of lawyer do we even contact to start the default/short sale process? We've always assumed they could hit us with a $120k deficiency judgement (although, the only thing we have is our current house - no savings, cars are paid for, minimal credit card debt - although that's rising with each month that we can't pay all of our bills).

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:PP do you understand that people are NOT being bailed out, but that banks are?

What do you call HARP?

We've tried it all - HARP, HAMP, BoA, you name it. BoA wanted us to bring $20k+ to the table and our payments would actually go UP several hundred dollars each month, which we can't afford.

80% of the responders on this thread can jump on me all they want - Anyone out there have any advice regarding strategic default in Virginia? They can have my near-perfect credit score.

Virginia is a recourse state. So you're personally liable for the amount of the mortgage, regardless of what the house brings in foreclosure. Not really a good option.

Successful attempts to collect from defaulters are extremely rare. Recourse or non-recourse is all well and good in theory, but in practice it makes no difference. Unless you have significant assets, they are not going to come after you, and even then their chance of attaching assets is very low.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:PP do you understand that people are NOT being bailed out, but that banks are?

What do you call HARP?

We've tried it all - HARP, HAMP, BoA, you name it. BoA wanted us to bring $20k+ to the table and our payments would actually go UP several hundred dollars each month, which we can't afford.

80% of the responders on this thread can jump on me all they want - Anyone out there have any advice regarding strategic default in Virginia? They can have my near-perfect credit score.

Virginia is a recourse state. So you're personally liable for the amount of the mortgage, regardless of what the house brings in foreclosure. Not really a good option.

What about if one does a short sale on their house, in VA? Are you still responsible for the difference? I am in a position where we are upside down in our mortgage and need to move due to family issues. Dont know what we are going to do.