bail out math, WTF?

[temeculaguy]

This is all noise, almost nobody will be saved, not the market, not those distressed, it will pass just before the elections, make people feel warm and fuzzy, get their votes and then it wont work for them.

Think of a real person that you know is in distress and use their numbers, I’ll give a conservative scenario.

Someone buys a zero down home for 500k on 100k income and gets a payment in the neighborhood of 2500 with a reset closer to 3500 to 4000 and cant float it any longer. Somehow they managed to not go into any cc debt, have a $400 car payment and never missed a payment. Their value is down to 400k so the FHA will let them refi into an 80% LTV so all they can borrow is 320k and they can just about qualify for 320k with those numbers. So if they can find 180k under a rock, they can get in on this new lifesaving program. If the bank wants to eat 180k they can let them out. But why would the bank let them is the true value is 400k, even with repo fees they stand to do better than 80k in the hole, this person has still not missed a payment and they are still profiting from the loan.

Apply the real world scenario of less income, greater loss in value, missed payments, higher car payments, credit cards debt, etc., etc. and the feasablity declines even more. So even in a goldilocks scenario it doesn’t pencil out, add some spices and it really doesn’t work. Oh Yeah, i forgot, by the time this things even passes the interest rate will be higher and values will be lower, nobody actually is helped but it looks like they tried and they cared. It’s all noise, it has never been anything but noise, stop worrying, the invisible hand is on it’s way.

[mixxalot]

Yep it will not solve the problem and the bleeding will continue.

I cant wait until Del Mar and Carmel Valley homes drop by 40% then I can buy in my favorite area close to the tech center in San Diego.

[mixxalot]

Yep it will not solve the problem and the bleeding will continue.

I cant wait until Del Mar and Carmel Valley homes drop by 40% then I can buy in my favorite area close to the tech center in San Diego.

[mixxalot]

Yep it will not solve the problem and the bleeding will continue.

I cant wait until Del Mar and Carmel Valley homes drop by 40% then I can buy in my favorite area close to the tech center in San Diego.

[mixxalot]

Yep it will not solve the problem and the bleeding will continue.

I cant wait until Del Mar and Carmel Valley homes drop by 40% then I can buy in my favorite area close to the tech center in San Diego.

[mixxalot]

Yep it will not solve the problem and the bleeding will continue.

I cant wait until Del Mar and Carmel Valley homes drop by 40% then I can buy in my favorite area close to the tech center in San Diego.

[Anonymous]

Allow me to give you a real life scenario…MINE..lol.

I purchased my 1st home in March 2005. The purchace price was 550,000. I have a Alt-A 5 year ARM for 80% and a HELOC 5 yr.fixed for the remaining 20%. I’m currently paying interest only. I took out more money on the equity line and currently owe a total of 606,000 (440,000 mtg. 166,000 home equity). 110,000 was for the purchase of the home and the remaining 66,000 was used to pay off all existing debt. cars, credit cards with the balance used to put in the cheapest backyard available, window coverings and furniture.

By the time the loan resets I will have no debt., other than the house payment, I have no children, and I should have about 70,000 cash in the bank. The household income is 185,000.

In essence I made sure I could pay off any equity I took out for furniture, window coverings, backyard and preexisting debt. I should also be able to pay some of the principle so in essence I didn’t use any equity irresponsibly. Before purchasing the home I looked at historical data for 1 yrs Treasury note (Mtg. is 2.75 + 1 yr. Treasury note with a ceiling of 9.75) and prime (home equity line is -.25 prime). I calculated what my payments would be if I hit the ceiling and if prime were at 9.5%. I can make the payments in a worse case scenario but would be living incredibly tight.

My big dilema is given the massive loss in equity and considering I don’t have any children what possible reason would I have for simply not walking away. The bank who loaned me the money still has my HELOC open with available funds to me in the amount of 45,000. That’s right…..my home is probably worth 450,000 to 480,000 and I believe is still dropping and they have an equity line open for my use. They are lucky I’m not unscrupulous. I’ve even called them and pointed it out to them.

If I had happened upon this site before I purchased the house I would have never bought it. I educated myself on the types of loans, but I just didn’t have enough life experience, or knowledge to understand the bubble at the time of purchase. I thought I was being responsible by calculating worse case scenarios, paying off existing debt. and then saving so I could sell or refi to a fixed. At the time of purchase my wife and I didn’t make as much as we do now. At the time of purchase I was aware both her salary and mine would increase about 40,000 or more and they did.

I’m going off about this because it seems as if all the “programs” I read about actually encourage me to pile up more debt. and fall behind in my payments in order to qualify for their help. Personally, I’m against bailing out banks or individuals or who got in over their head and that includes me. However, if programs are introduced that help individuals who were more irresponsible than me, and/or banks who were incredibly irresponsible (they certainly understood lending standards and bubbles) why should I feel guilty about walking away and why should I not use all the money on my credit line before defaulting?

If you crunch the number, tax write off on interest only loans at small rates, use of equity line, 9 months free rent if I default, I could actually walk away making money on the deal. I would have bad credit, but who needs credit when you have cash. I could take the money I saved and will make using the credit line and living free for 9 months, invest it for 10 years, rent and save cash and buy a home with a large down payment once my credit is repaired.

This whole thing is a mess. I’d be willing to give the bank all the money I save and eat the loss in equity if they would give me a fixed loan at a good rate, but I have a feeling they will look at me with a blank stare and explain my LTV doesn’t qualify me for a fixed rate. That’s when I’ll most likely hand them my keys and head out on a shopping spree using the home equity line….lol.

[Anonymous]

Allow me to give you a real life scenario…MINE..lol.

I purchased my 1st home in March 2005. The purchace price was 550,000. I have a Alt-A 5 year ARM for 80% and a HELOC 5 yr.fixed for the remaining 20%. I’m currently paying interest only. I took out more money on the equity line and currently owe a total of 606,000 (440,000 mtg. 166,000 home equity). 110,000 was for the purchase of the home and the remaining 66,000 was used to pay off all existing debt. cars, credit cards with the balance used to put in the cheapest backyard available, window coverings and furniture.

By the time the loan resets I will have no debt., other than the house payment, I have no children, and I should have about 70,000 cash in the bank. The household income is 185,000.

In essence I made sure I could pay off any equity I took out for furniture, window coverings, backyard and preexisting debt. I should also be able to pay some of the principle so in essence I didn’t use any equity irresponsibly. Before purchasing the home I looked at historical data for 1 yrs Treasury note (Mtg. is 2.75 + 1 yr. Treasury note with a ceiling of 9.75) and prime (home equity line is -.25 prime). I calculated what my payments would be if I hit the ceiling and if prime were at 9.5%. I can make the payments in a worse case scenario but would be living incredibly tight.

My big dilema is given the massive loss in equity and considering I don’t have any children what possible reason would I have for simply not walking away. The bank who loaned me the money still has my HELOC open with available funds to me in the amount of 45,000. That’s right…..my home is probably worth 450,000 to 480,000 and I believe is still dropping and they have an equity line open for my use. They are lucky I’m not unscrupulous. I’ve even called them and pointed it out to them.

If I had happened upon this site before I purchased the house I would have never bought it. I educated myself on the types of loans, but I just didn’t have enough life experience, or knowledge to understand the bubble at the time of purchase. I thought I was being responsible by calculating worse case scenarios, paying off existing debt. and then saving so I could sell or refi to a fixed. At the time of purchase my wife and I didn’t make as much as we do now. At the time of purchase I was aware both her salary and mine would increase about 40,000 or more and they did.

I’m going off about this because it seems as if all the “programs” I read about actually encourage me to pile up more debt. and fall behind in my payments in order to qualify for their help. Personally, I’m against bailing out banks or individuals or who got in over their head and that includes me. However, if programs are introduced that help individuals who were more irresponsible than me, and/or banks who were incredibly irresponsible (they certainly understood lending standards and bubbles) why should I feel guilty about walking away and why should I not use all the money on my credit line before defaulting?

If you crunch the number, tax write off on interest only loans at small rates, use of equity line, 9 months free rent if I default, I could actually walk away making money on the deal. I would have bad credit, but who needs credit when you have cash. I could take the money I saved and will make using the credit line and living free for 9 months, invest it for 10 years, rent and save cash and buy a home with a large down payment once my credit is repaired.

This whole thing is a mess. I’d be willing to give the bank all the money I save and eat the loss in equity if they would give me a fixed loan at a good rate, but I have a feeling they will look at me with a blank stare and explain my LTV doesn’t qualify me for a fixed rate. That’s when I’ll most likely hand them my keys and head out on a shopping spree using the home equity line….lol.

[Anonymous]

Allow me to give you a real life scenario…MINE..lol.

I purchased my 1st home in March 2005. The purchace price was 550,000. I have a Alt-A 5 year ARM for 80% and a HELOC 5 yr.fixed for the remaining 20%. I’m currently paying interest only. I took out more money on the equity line and currently owe a total of 606,000 (440,000 mtg. 166,000 home equity). 110,000 was for the purchase of the home and the remaining 66,000 was used to pay off all existing debt. cars, credit cards with the balance used to put in the cheapest backyard available, window coverings and furniture.

By the time the loan resets I will have no debt., other than the house payment, I have no children, and I should have about 70,000 cash in the bank. The household income is 185,000.

In essence I made sure I could pay off any equity I took out for furniture, window coverings, backyard and preexisting debt. I should also be able to pay some of the principle so in essence I didn’t use any equity irresponsibly. Before purchasing the home I looked at historical data for 1 yrs Treasury note (Mtg. is 2.75 + 1 yr. Treasury note with a ceiling of 9.75) and prime (home equity line is -.25 prime). I calculated what my payments would be if I hit the ceiling and if prime were at 9.5%. I can make the payments in a worse case scenario but would be living incredibly tight.

My big dilema is given the massive loss in equity and considering I don’t have any children what possible reason would I have for simply not walking away. The bank who loaned me the money still has my HELOC open with available funds to me in the amount of 45,000. That’s right…..my home is probably worth 450,000 to 480,000 and I believe is still dropping and they have an equity line open for my use. They are lucky I’m not unscrupulous. I’ve even called them and pointed it out to them.

If I had happened upon this site before I purchased the house I would have never bought it. I educated myself on the types of loans, but I just didn’t have enough life experience, or knowledge to understand the bubble at the time of purchase. I thought I was being responsible by calculating worse case scenarios, paying off existing debt. and then saving so I could sell or refi to a fixed. At the time of purchase my wife and I didn’t make as much as we do now. At the time of purchase I was aware both her salary and mine would increase about 40,000 or more and they did.

I’m going off about this because it seems as if all the “programs” I read about actually encourage me to pile up more debt. and fall behind in my payments in order to qualify for their help. Personally, I’m against bailing out banks or individuals or who got in over their head and that includes me. However, if programs are introduced that help individuals who were more irresponsible than me, and/or banks who were incredibly irresponsible (they certainly understood lending standards and bubbles) why should I feel guilty about walking away and why should I not use all the money on my credit line before defaulting?

If you crunch the number, tax write off on interest only loans at small rates, use of equity line, 9 months free rent if I default, I could actually walk away making money on the deal. I would have bad credit, but who needs credit when you have cash. I could take the money I saved and will make using the credit line and living free for 9 months, invest it for 10 years, rent and save cash and buy a home with a large down payment once my credit is repaired.

This whole thing is a mess. I’d be willing to give the bank all the money I save and eat the loss in equity if they would give me a fixed loan at a good rate, but I have a feeling they will look at me with a blank stare and explain my LTV doesn’t qualify me for a fixed rate. That’s when I’ll most likely hand them my keys and head out on a shopping spree using the home equity line….lol.

[Anonymous]

Allow me to give you a real life scenario…MINE..lol.

I purchased my 1st home in March 2005. The purchace price was 550,000. I have a Alt-A 5 year ARM for 80% and a HELOC 5 yr.fixed for the remaining 20%. I’m currently paying interest only. I took out more money on the equity line and currently owe a total of 606,000 (440,000 mtg. 166,000 home equity). 110,000 was for the purchase of the home and the remaining 66,000 was used to pay off all existing debt. cars, credit cards with the balance used to put in the cheapest backyard available, window coverings and furniture.

By the time the loan resets I will have no debt., other than the house payment, I have no children, and I should have about 70,000 cash in the bank. The household income is 185,000.

In essence I made sure I could pay off any equity I took out for furniture, window coverings, backyard and preexisting debt. I should also be able to pay some of the principle so in essence I didn’t use any equity irresponsibly. Before purchasing the home I looked at historical data for 1 yrs Treasury note (Mtg. is 2.75 + 1 yr. Treasury note with a ceiling of 9.75) and prime (home equity line is -.25 prime). I calculated what my payments would be if I hit the ceiling and if prime were at 9.5%. I can make the payments in a worse case scenario but would be living incredibly tight.

My big dilema is given the massive loss in equity and considering I don’t have any children what possible reason would I have for simply not walking away. The bank who loaned me the money still has my HELOC open with available funds to me in the amount of 45,000. That’s right…..my home is probably worth 450,000 to 480,000 and I believe is still dropping and they have an equity line open for my use. They are lucky I’m not unscrupulous. I’ve even called them and pointed it out to them.

If I had happened upon this site before I purchased the house I would have never bought it. I educated myself on the types of loans, but I just didn’t have enough life experience, or knowledge to understand the bubble at the time of purchase. I thought I was being responsible by calculating worse case scenarios, paying off existing debt. and then saving so I could sell or refi to a fixed. At the time of purchase my wife and I didn’t make as much as we do now. At the time of purchase I was aware both her salary and mine would increase about 40,000 or more and they did.

I’m going off about this because it seems as if all the “programs” I read about actually encourage me to pile up more debt. and fall behind in my payments in order to qualify for their help. Personally, I’m against bailing out banks or individuals or who got in over their head and that includes me. However, if programs are introduced that help individuals who were more irresponsible than me, and/or banks who were incredibly irresponsible (they certainly understood lending standards and bubbles) why should I feel guilty about walking away and why should I not use all the money on my credit line before defaulting?

If you crunch the number, tax write off on interest only loans at small rates, use of equity line, 9 months free rent if I default, I could actually walk away making money on the deal. I would have bad credit, but who needs credit when you have cash. I could take the money I saved and will make using the credit line and living free for 9 months, invest it for 10 years, rent and save cash and buy a home with a large down payment once my credit is repaired.

This whole thing is a mess. I’d be willing to give the bank all the money I save and eat the loss in equity if they would give me a fixed loan at a good rate, but I have a feeling they will look at me with a blank stare and explain my LTV doesn’t qualify me for a fixed rate. That’s when I’ll most likely hand them my keys and head out on a shopping spree using the home equity line….lol.

[Anonymous]

Allow me to give you a real life scenario…MINE..lol.

I purchased my 1st home in March 2005. The purchace price was 550,000. I have a Alt-A 5 year ARM for 80% and a HELOC 5 yr.fixed for the remaining 20%. I’m currently paying interest only. I took out more money on the equity line and currently owe a total of 606,000 (440,000 mtg. 166,000 home equity). 110,000 was for the purchase of the home and the remaining 66,000 was used to pay off all existing debt. cars, credit cards with the balance used to put in the cheapest backyard available, window coverings and furniture.

By the time the loan resets I will have no debt., other than the house payment, I have no children, and I should have about 70,000 cash in the bank. The household income is 185,000.

In essence I made sure I could pay off any equity I took out for furniture, window coverings, backyard and preexisting debt. I should also be able to pay some of the principle so in essence I didn’t use any equity irresponsibly. Before purchasing the home I looked at historical data for 1 yrs Treasury note (Mtg. is 2.75 + 1 yr. Treasury note with a ceiling of 9.75) and prime (home equity line is -.25 prime). I calculated what my payments would be if I hit the ceiling and if prime were at 9.5%. I can make the payments in a worse case scenario but would be living incredibly tight.

My big dilema is given the massive loss in equity and considering I don’t have any children what possible reason would I have for simply not walking away. The bank who loaned me the money still has my HELOC open with available funds to me in the amount of 45,000. That’s right…..my home is probably worth 450,000 to 480,000 and I believe is still dropping and they have an equity line open for my use. They are lucky I’m not unscrupulous. I’ve even called them and pointed it out to them.

If I had happened upon this site before I purchased the house I would have never bought it. I educated myself on the types of loans, but I just didn’t have enough life experience, or knowledge to understand the bubble at the time of purchase. I thought I was being responsible by calculating worse case scenarios, paying off existing debt. and then saving so I could sell or refi to a fixed. At the time of purchase my wife and I didn’t make as much as we do now. At the time of purchase I was aware both her salary and mine would increase about 40,000 or more and they did.

I’m going off about this because it seems as if all the “programs” I read about actually encourage me to pile up more debt. and fall behind in my payments in order to qualify for their help. Personally, I’m against bailing out banks or individuals or who got in over their head and that includes me. However, if programs are introduced that help individuals who were more irresponsible than me, and/or banks who were incredibly irresponsible (they certainly understood lending standards and bubbles) why should I feel guilty about walking away and why should I not use all the money on my credit line before defaulting?

If you crunch the number, tax write off on interest only loans at small rates, use of equity line, 9 months free rent if I default, I could actually walk away making money on the deal. I would have bad credit, but who needs credit when you have cash. I could take the money I saved and will make using the credit line and living free for 9 months, invest it for 10 years, rent and save cash and buy a home with a large down payment once my credit is repaired.

This whole thing is a mess. I’d be willing to give the bank all the money I save and eat the loss in equity if they would give me a fixed loan at a good rate, but I have a feeling they will look at me with a blank stare and explain my LTV doesn’t qualify me for a fixed rate. That’s when I’ll most likely hand them my keys and head out on a shopping spree using the home equity line….lol.

[EconProf]

Wattuppp, thanks for the complete description of your position and your dilemna. How many millions of homeowners are or soon will be in the same situation? Many will crunch the numbers and understandably feel they should not keep paying on an underwater house while the government is bailing out their arguably more irresponsible neighbors.
Once many walk away, that will feed the downward spiral of price declines, making it worse than it otherwise would be. That’s why no one really knows how far it will go and when it will end. The price collapse is taking on a life of its own and feeding on itself.

[EconProf]

Wattuppp, thanks for the complete description of your position and your dilemna. How many millions of homeowners are or soon will be in the same situation? Many will crunch the numbers and understandably feel they should not keep paying on an underwater house while the government is bailing out their arguably more irresponsible neighbors.
Once many walk away, that will feed the downward spiral of price declines, making it worse than it otherwise would be. That’s why no one really knows how far it will go and when it will end. The price collapse is taking on a life of its own and feeding on itself.

[EconProf]

Wattuppp, thanks for the complete description of your position and your dilemna. How many millions of homeowners are or soon will be in the same situation? Many will crunch the numbers and understandably feel they should not keep paying on an underwater house while the government is bailing out their arguably more irresponsible neighbors.
Once many walk away, that will feed the downward spiral of price declines, making it worse than it otherwise would be. That’s why no one really knows how far it will go and when it will end. The price collapse is taking on a life of its own and feeding on itself.

[EconProf]

Wattuppp, thanks for the complete description of your position and your dilemna. How many millions of homeowners are or soon will be in the same situation? Many will crunch the numbers and understandably feel they should not keep paying on an underwater house while the government is bailing out their arguably more irresponsible neighbors.
Once many walk away, that will feed the downward spiral of price declines, making it worse than it otherwise would be. That’s why no one really knows how far it will go and when it will end. The price collapse is taking on a life of its own and feeding on itself.

[Author]

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