10 Million Homeowners Have Incentives to Walk

[peterb]

Ahh, moral hazard everywhere one looks. I guess if they can do it on Wall Street, they can do it on main street. What about the car loans? Credit cards? Well, may need to live on the cc, so better pay those. Park the car 3 blocks away so the repo man cant find it. Or repo cant find you when you walk away with no forwarding address and a different job, or no job.

It’s coming.

[DaCounselor]

I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.

[DaCounselor]

I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.

[DaCounselor]

I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.

[DaCounselor]

I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.

[DaCounselor]

I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.

[mike92104]

[quote=DaCounselor]I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.[/quote]

Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?

[mike92104]

[quote=DaCounselor]I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.[/quote]

Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?

[mike92104]

[quote=DaCounselor]I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.[/quote]

Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?

[mike92104]

[quote=DaCounselor]I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.[/quote]

Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?

[mike92104]

[quote=DaCounselor]I think the only way to stop the walk-aways is to modify the loans into very good fixed rates and write down the principal balances. I understand the moral hazard argument but at this point in time my response is “so what?” Even if a homeowner has the ability to pay the existing mortgage, it’s going to come down to WILL he pay, not CAN he pay. If he ruthlessly defaults, the end result is the same. Who cares at this point?

I cannot imagine that it will be more cost-effective to go through the foreclosure process just to end up selling the house as a discounted REO for the same price that you could have written down the balance to and kept the homeowner in the home. It’s a bad business decision to forego the mod. I understand the complications due to the securitization of these loans, but the govt’s purchase of this paper may resolve the issues. They do give a nod to this in Sections 109 & 110 of the new bill. We’ll see I guess.[/quote]

Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?

[DaCounselor]

“Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?”
______________________________

I certainly don’t have the numbers at my fingertips but my best guess is that nowhere near every loan made since 2000 is upside down in relation to the home value. Not even close. So there’s that.

As for what is fair for you, trust me that is the furthest thing from anyone’s mind but your own. Addressing what is fair for you is not going to solve the problem. If you feel like it is unfair that other people are going to get bailed out and you are going to get a big fat 0 my advice is to get used to it because life is just not fair.

What we have here is a truly global economic crisis that has been triggered by defaulting loans. There is plenty of blame to go around but make no mistake, if the powers that be do not address the coming wave of future defaults then things are get to get much much worse. I continue to maintain the mindset that the best solution is to stop the defaults to the greatest extent possible via mods. What’s “fair” to everyone is really out the window at this point.

[DaCounselor]

“Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?”
______________________________

I certainly don’t have the numbers at my fingertips but my best guess is that nowhere near every loan made since 2000 is upside down in relation to the home value. Not even close. So there’s that.

As for what is fair for you, trust me that is the furthest thing from anyone’s mind but your own. Addressing what is fair for you is not going to solve the problem. If you feel like it is unfair that other people are going to get bailed out and you are going to get a big fat 0 my advice is to get used to it because life is just not fair.

What we have here is a truly global economic crisis that has been triggered by defaulting loans. There is plenty of blame to go around but make no mistake, if the powers that be do not address the coming wave of future defaults then things are get to get much much worse. I continue to maintain the mindset that the best solution is to stop the defaults to the greatest extent possible via mods. What’s “fair” to everyone is really out the window at this point.

[DaCounselor]

“Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?”
______________________________

I certainly don’t have the numbers at my fingertips but my best guess is that nowhere near every loan made since 2000 is upside down in relation to the home value. Not even close. So there’s that.

As for what is fair for you, trust me that is the furthest thing from anyone’s mind but your own. Addressing what is fair for you is not going to solve the problem. If you feel like it is unfair that other people are going to get bailed out and you are going to get a big fat 0 my advice is to get used to it because life is just not fair.

What we have here is a truly global economic crisis that has been triggered by defaulting loans. There is plenty of blame to go around but make no mistake, if the powers that be do not address the coming wave of future defaults then things are get to get much much worse. I continue to maintain the mindset that the best solution is to stop the defaults to the greatest extent possible via mods. What’s “fair” to everyone is really out the window at this point.

[DaCounselor]

“Banks would essentially be forced to write down every loan made between 2000 and now for it to be fair, and that still doesn’t address the fact that I knew I couldn’t afford a house, so I didn’t buy. What compensation should I get to make it fair? Should I get $100,000 check from the government?”
______________________________

I certainly don’t have the numbers at my fingertips but my best guess is that nowhere near every loan made since 2000 is upside down in relation to the home value. Not even close. So there’s that.

As for what is fair for you, trust me that is the furthest thing from anyone’s mind but your own. Addressing what is fair for you is not going to solve the problem. If you feel like it is unfair that other people are going to get bailed out and you are going to get a big fat 0 my advice is to get used to it because life is just not fair.

What we have here is a truly global economic crisis that has been triggered by defaulting loans. There is plenty of blame to go around but make no mistake, if the powers that be do not address the coming wave of future defaults then things are get to get much much worse. I continue to maintain the mindset that the best solution is to stop the defaults to the greatest extent possible via mods. What’s “fair” to everyone is really out the window at this point.

[Author]

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