I am one of the people who CAN afford their home, yet are underwater. I’m in the middle of a loan mod and have intentionally NOT paid my mortgage for several months.
To the “whiners” who were claiming to intentionally stop paying is “wrong” and “naughty” – I disagree.
You can call it whatever you want – but the bottom line is that both parties – the borrower and the bank entered into a contract. the contract has rules for what happens in the event of a breach. the borrower has the right to stop paying – it doen’s tmatter why you stop paying. you can stop paying b/c you lost your job, or you can stop paying because you feel like it. that’s irrelevant.
the bank, however, has a remedy. when you quit payign them they can take the house. foreclosure is happening all over the place. just look outside your front door, look left and look right, if you live in temecula you are pretty much assured someone on your street is in foreclosure..
The loan I signed was a contract – not some personal guarantee signed in blood. If I am going to back out – the bank then has a choice – they can exercise their right to foreclose or they can deal with me and mod the loan to new terms I want.
If I stop paying – are the banks going to run over and start the foreclosure process? take my house and sell it? no way!!! myhouse is worth about $100-150k less than the note. the banks would rather renegotiate with me, hoping to restructure somethign that keeps $$$ coming in. if they take it back, not only do they instantly take on an asset worth $100k less than the loan, but they also have to go though the hassle of kicking me out, listing, selling, etc etc… add those costs up and it jsut gets ugly for them…
The people who are sitting on houses which are VERY upside down – and keep paying because they feel like they “should” are suckers. they will pay and pay and pay for the next 10-15-20 years and maye still just break even???? those are expensive morals…
why not mod your loan?? – or just walk from your house altogether. it just depends on your personal situation.
depending on the individual situation you could VASTLY reduce your montly housing expenses by intentionally going into foreclosure and intentionally dumping a house you COULD afford to keep.
WHAT IF THE ROLES WERE REVERSED??? if the market conditions were STiLL BOOMING – and the table where turned. Suppose I was having financial problems and went to the bank and said I needed more time? and my house was worth TWICE what I owed them – they’d start the foreclosure process. All my sob stories about my kids needing a home to live in, my medical problems that caused me to lose my job – they wouldn’t even want to hear it. they would say “pay up or get out”. so now that the tables are the way they are and the banks are the ones that are screwed – why should people suddenly be so “nice” and “honorable”.
so if you can get out of your house – either by doing a loan mod – or just stop paying them and live in it for free as long as you can before they kick you out – i say go for it. you will suffer issues with your credit, you will eventually lose the house, and any improvements you made to it – but that is the deal you signed and they deal that THEY SIGNED.
THE BANK ENTERED INTO THIS DEAL TOO. it’s a business deal – and you need to play it to your benefit.
I know I may sound bitter or angry – but I’m not. I bought my house – in fact a bunch of you guys here all said “don’t do it” and I did it anyway. I admit I made a mistake to buy. I still like my house – i love it..it’s great – it’s just worth a lot less than I paid – and when I bought I actually got a VERY good price for the time – it’s just that a lot of you here knew what was coming…and I didn’t believe it would fall as bad as it did.
in terms of the contract i”m in now though – I just see it more as a business deal. I don’t like my terms – so I’m pursuing my own loan mod. if they give me a good deal, i can stay and figure that what I work out is acceptable. if i dont like it, i can leave, the bank can take it, and I can go rent something. in the end, i would wind up in a bigger / better house for less money.
I tried to imagine a hypo where there was some clause in home contracts that said if your home tripled in value from the orignal sales price, the bank had a right to a portion of the profits and could demand payment in the form of a sale or a refi/cash out or increased payments. then imagine we had our RE boom – the banks would have been gladly forcing that clause and taking people’s money…. they wouldn’t be “honorable” and say well this is unexpected this RE bubble and we won’t take your money.. no – they would exercise their rights and take it. every cent.
this is no different. non-payment / breach is an option in every contract. the smart people enter into contracts with all the breach aspects covered. that is partly why the escrow docs are so involved. you buy a car and it’s a once page or two page contract. you buy a house and the contract is the size of a book…
it’s just kind of sad that our housing market/ economy has come to a point where people like me – those with good jobs, the ability to pay – are saying ‘i’m not going to pay”… the only reason ME or anyone like me can do this is because of how bad the situation is and the fact that the banks are literally over a barrell…. it’s legal, it’s business..but the banks have no choice to deal. they are in a lose-lose game the only choices they are making now are how much do they want to lose.
we as upside down homeowners are in the drivers seat. deal with me, lower my balance, lower my rate, lower my payments or i will walk. they lose a little or they lose a lot.
