bail out math, WTF?

[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.

[jonnycsd]

My understanding is that (in California) if you borrow money to purchase a home then default the lender can only take back the property.

However, if you borrow money for other things (furniture, paying off other debt, spending sprees, etc.) then, even if the home is the collateral, the lender can get a judgement against you in civil court and place liens on your other property, garnish wages, and attach (drain) your bank and savings accounts.

Also, the updated bankruptcy laws (as of 2005) make it much harder to discharge such debts.

You might want to speak with an attorney before maxing out your HELOC.

[jonnycsd]

My understanding is that (in California) if you borrow money to purchase a home then default the lender can only take back the property.

However, if you borrow money for other things (furniture, paying off other debt, spending sprees, etc.) then, even if the home is the collateral, the lender can get a judgement against you in civil court and place liens on your other property, garnish wages, and attach (drain) your bank and savings accounts.

Also, the updated bankruptcy laws (as of 2005) make it much harder to discharge such debts.

You might want to speak with an attorney before maxing out your HELOC.

[jonnycsd]

My understanding is that (in California) if you borrow money to purchase a home then default the lender can only take back the property.

However, if you borrow money for other things (furniture, paying off other debt, spending sprees, etc.) then, even if the home is the collateral, the lender can get a judgement against you in civil court and place liens on your other property, garnish wages, and attach (drain) your bank and savings accounts.

Also, the updated bankruptcy laws (as of 2005) make it much harder to discharge such debts.

You might want to speak with an attorney before maxing out your HELOC.

[jonnycsd]

My understanding is that (in California) if you borrow money to purchase a home then default the lender can only take back the property.

However, if you borrow money for other things (furniture, paying off other debt, spending sprees, etc.) then, even if the home is the collateral, the lender can get a judgement against you in civil court and place liens on your other property, garnish wages, and attach (drain) your bank and savings accounts.

Also, the updated bankruptcy laws (as of 2005) make it much harder to discharge such debts.

You might want to speak with an attorney before maxing out your HELOC.

[jonnycsd]

My understanding is that (in California) if you borrow money to purchase a home then default the lender can only take back the property.

However, if you borrow money for other things (furniture, paying off other debt, spending sprees, etc.) then, even if the home is the collateral, the lender can get a judgement against you in civil court and place liens on your other property, garnish wages, and attach (drain) your bank and savings accounts.

Also, the updated bankruptcy laws (as of 2005) make it much harder to discharge such debts.

You might want to speak with an attorney before maxing out your HELOC.

[TheBreeze]

If this bill passes, it will introduce a tremendous incentive for those who are current on their payments to ether stop paying or fall behind. Why keep paying on a mortgage when you can stop paying and possibly get the bank to reduce your principal by at least 10%? And, if the appraisals are honest, then there is a potential that your principal amount could get reduced by up to 50% or more.

No way I would keep current on an underwater mortgage if this bill were to pass.

[TheBreeze]

If this bill passes, it will introduce a tremendous incentive for those who are current on their payments to ether stop paying or fall behind. Why keep paying on a mortgage when you can stop paying and possibly get the bank to reduce your principal by at least 10%? And, if the appraisals are honest, then there is a potential that your principal amount could get reduced by up to 50% or more.

No way I would keep current on an underwater mortgage if this bill were to pass.

[TheBreeze]

If this bill passes, it will introduce a tremendous incentive for those who are current on their payments to ether stop paying or fall behind. Why keep paying on a mortgage when you can stop paying and possibly get the bank to reduce your principal by at least 10%? And, if the appraisals are honest, then there is a potential that your principal amount could get reduced by up to 50% or more.

No way I would keep current on an underwater mortgage if this bill were to pass.

[TheBreeze]

If this bill passes, it will introduce a tremendous incentive for those who are current on their payments to ether stop paying or fall behind. Why keep paying on a mortgage when you can stop paying and possibly get the bank to reduce your principal by at least 10%? And, if the appraisals are honest, then there is a potential that your principal amount could get reduced by up to 50% or more.

No way I would keep current on an underwater mortgage if this bill were to pass.

[TheBreeze]

If this bill passes, it will introduce a tremendous incentive for those who are current on their payments to ether stop paying or fall behind. Why keep paying on a mortgage when you can stop paying and possibly get the bank to reduce your principal by at least 10%? And, if the appraisals are honest, then there is a potential that your principal amount could get reduced by up to 50% or more.

No way I would keep current on an underwater mortgage if this bill were to pass.

[Anonymous]

TheBreeze,

My thoughts exactly, which is why I want to make sure I understand how this new bill would work.

With respect to buying things using the HELOC, I called my lender and asked them about that and was told it’s a nonrecourse loan tied to the house. Of course the people speak to are wrong all the time. Before I do anything I’ll speak with a Real Estate attorney, but the main point of my post was to illustrate how bailing people out is basically wrong because no matter what program they come up with it will be “unfair” to others and in some cases provide an incentive to default.

[Anonymous]

TheBreeze,

My thoughts exactly, which is why I want to make sure I understand how this new bill would work.

With respect to buying things using the HELOC, I called my lender and asked them about that and was told it’s a nonrecourse loan tied to the house. Of course the people speak to are wrong all the time. Before I do anything I’ll speak with a Real Estate attorney, but the main point of my post was to illustrate how bailing people out is basically wrong because no matter what program they come up with it will be “unfair” to others and in some cases provide an incentive to default.

[Anonymous]

TheBreeze,

My thoughts exactly, which is why I want to make sure I understand how this new bill would work.

With respect to buying things using the HELOC, I called my lender and asked them about that and was told it’s a nonrecourse loan tied to the house. Of course the people speak to are wrong all the time. Before I do anything I’ll speak with a Real Estate attorney, but the main point of my post was to illustrate how bailing people out is basically wrong because no matter what program they come up with it will be “unfair” to others and in some cases provide an incentive to default.

[Anonymous]

TheBreeze,

My thoughts exactly, which is why I want to make sure I understand how this new bill would work.

With respect to buying things using the HELOC, I called my lender and asked them about that and was told it’s a nonrecourse loan tied to the house. Of course the people speak to are wrong all the time. Before I do anything I’ll speak with a Real Estate attorney, but the main point of my post was to illustrate how bailing people out is basically wrong because no matter what program they come up with it will be “unfair” to others and in some cases provide an incentive to default.

[Author]

Posts