Free bank living – the HELOC replacement

[scaredyclassic]

this isn’t about who is smarter or whether being smarter will pay off in the long run. I happen to be really really smart (testing-wise) but it definitely hasn’t paid off for me and so I put little value on whether we think we’re “smarter” than people who took wild chances

This should only be a financial accounting issue, assuming zero stress, since the stresses and uncertainty are going to vary and be unique for everyone.

Clearly, I think we’d all agree that if you got to live in the house 25 years rent free, then had a minor ding on your credit, it would definitely be a good financial move to have defaulted. Maybe immoral, ok, but financially rational, and I would personally be envious of anyone who got 25 years free rent.

Probably 15, 10 and 7, years too.

My point is, there’s a number of free months rent that makes it worth it for everyone on this board to default. It’s just a question of what your number is. And regardless of your morality of sticking the tab on the taxpayer, if it were a life estate, you’d probably take it, even if you say you wouldn’t. People generally don’t turn down free stuff of significant value.

Getting down to the 2-3 year range of free rent, it’s a little sketchier. If at the end of the free rent period, you personally come to the conclusion that the game is rigged and that owning a house is overrated, you probably don’t care about your credit anymore and have a good nest egg built up compared to the frugal renter. you win!

Fot the guy who is judgment proof, who heloc’ed and lived it up, well, who else was lining up to finance a few extra hundred thousand in lifestyle for him, plus a free rental at the tail end of his spending binge, other than mortgage lenders? hard to say he’s a loser either. Say he got 400,000 in heloc money and 100000 in free rent. even if it’s unwitting, it’s difficult to say he was an idiot.

You can save like crazy your whole life but you may never accrue a cash pile of the half million or so of “extra consumption” he got. Sure the timing of the consumption may be different, but are you “better” off? probably not mathematically.

Sure he may have done it unwittingly, or in an ‘unsophisticated” manner, but in some sense, he’s “ahead” in terms of wealth, at least to the current date.

If neither he nor you ever make any money on a house in the future, he wins, kind of, assuming the goal is consumption (which is kinda what money’s all about, isn’t it, since you cannot take it with you). I mean, who wants to be smart or sophisticated? People want to come out ahead financially, within their ethical boundaries.

personally, the stress and uncertainty would ahve bene overwhelming for me, and I couldn’t play this game.

but…it seems dumb for davelj to say “well why not do it now?”. D’uh!!!! — it’s too late to get scads of free heloc money, and the free rent train will likely be ending, given that prices are lower and your ability to hold the bank hostage decrease in proportion to the ridiculousness of the price you paid for your house.

The advantages of running with the herd in the thick of the speculative madness are probably running out now as the herd gets thinner.

But is it unreasonable to think that, had one known the future outcome back in 2003 say, that you might not have partied like crazy for 3 years and left the tab on the taxpayer? depending on your life options, tolerance for risk, need for future credit, not irrational…

[davelj]

[quote=scaredycat]and it seems dumb for davelj to say “well why not do it now”. D’uh — it’s too late to get scads of free heloc money, and the free rent train may be ending. [/quote]

Most “free heloc money” is recourse, scaredy. Even here in CA. You do understand that, don’t you?

(First mortgages associated with Purchase Loans are non-recourse in CA, but most HELOCs – although not all – result from re-fi’s. I read in a mortgage analyst’s report that most HELOC money in CA is, in fact, recourse due to the re-fi issue.)

[davelj]

[quote=scaredycat]and it seems dumb for davelj to say “well why not do it now”. D’uh — it’s too late to get scads of free heloc money, and the free rent train may be ending. [/quote]

Most “free heloc money” is recourse, scaredy. Even here in CA. You do understand that, don’t you?

(First mortgages associated with Purchase Loans are non-recourse in CA, but most HELOCs – although not all – result from re-fi’s. I read in a mortgage analyst’s report that most HELOC money in CA is, in fact, recourse due to the re-fi issue.)

[davelj]

[quote=scaredycat]and it seems dumb for davelj to say “well why not do it now”. D’uh — it’s too late to get scads of free heloc money, and the free rent train may be ending. [/quote]

Most “free heloc money” is recourse, scaredy. Even here in CA. You do understand that, don’t you?

(First mortgages associated with Purchase Loans are non-recourse in CA, but most HELOCs – although not all – result from re-fi’s. I read in a mortgage analyst’s report that most HELOC money in CA is, in fact, recourse due to the re-fi issue.)

[davelj]

[quote=scaredycat]and it seems dumb for davelj to say “well why not do it now”. D’uh — it’s too late to get scads of free heloc money, and the free rent train may be ending. [/quote]

Most “free heloc money” is recourse, scaredy. Even here in CA. You do understand that, don’t you?

(First mortgages associated with Purchase Loans are non-recourse in CA, but most HELOCs – although not all – result from re-fi’s. I read in a mortgage analyst’s report that most HELOC money in CA is, in fact, recourse due to the re-fi issue.)

[davelj]

[quote=scaredycat]and it seems dumb for davelj to say “well why not do it now”. D’uh — it’s too late to get scads of free heloc money, and the free rent train may be ending. [/quote]

Most “free heloc money” is recourse, scaredy. Even here in CA. You do understand that, don’t you?

(First mortgages associated with Purchase Loans are non-recourse in CA, but most HELOCs – although not all – result from re-fi’s. I read in a mortgage analyst’s report that most HELOC money in CA is, in fact, recourse due to the re-fi issue.)

[scaredyclassic]

yeah, i said (admittedly buried in the body of my tirade) that this heloc’ing was for a guy who is judgment proof. a guy who no one is suing anyway. that’s why i’d be nervous. because im in the damned system…

for a guy with minimal future economic prospects, rolling the dice on the house is kinda like rolling the dice on huge student loans. when you’re borrowing the money you think, well, hell, no one else is giving me lots of money ona chance for something better in the future. it’ll either work out or it won’t, but how much worse off can i get? i got nothing now. Maybe the degree will pay off, maybe it won’t but you cannot get blood from a stone.

at least, that was what i was thinking when I signed my student loan documents…

[scaredyclassic]

yeah, i said (admittedly buried in the body of my tirade) that this heloc’ing was for a guy who is judgment proof. a guy who no one is suing anyway. that’s why i’d be nervous. because im in the damned system…

for a guy with minimal future economic prospects, rolling the dice on the house is kinda like rolling the dice on huge student loans. when you’re borrowing the money you think, well, hell, no one else is giving me lots of money ona chance for something better in the future. it’ll either work out or it won’t, but how much worse off can i get? i got nothing now. Maybe the degree will pay off, maybe it won’t but you cannot get blood from a stone.

at least, that was what i was thinking when I signed my student loan documents…

[scaredyclassic]

yeah, i said (admittedly buried in the body of my tirade) that this heloc’ing was for a guy who is judgment proof. a guy who no one is suing anyway. that’s why i’d be nervous. because im in the damned system…

for a guy with minimal future economic prospects, rolling the dice on the house is kinda like rolling the dice on huge student loans. when you’re borrowing the money you think, well, hell, no one else is giving me lots of money ona chance for something better in the future. it’ll either work out or it won’t, but how much worse off can i get? i got nothing now. Maybe the degree will pay off, maybe it won’t but you cannot get blood from a stone.

at least, that was what i was thinking when I signed my student loan documents…

[scaredyclassic]

yeah, i said (admittedly buried in the body of my tirade) that this heloc’ing was for a guy who is judgment proof. a guy who no one is suing anyway. that’s why i’d be nervous. because im in the damned system…

for a guy with minimal future economic prospects, rolling the dice on the house is kinda like rolling the dice on huge student loans. when you’re borrowing the money you think, well, hell, no one else is giving me lots of money ona chance for something better in the future. it’ll either work out or it won’t, but how much worse off can i get? i got nothing now. Maybe the degree will pay off, maybe it won’t but you cannot get blood from a stone.

at least, that was what i was thinking when I signed my student loan documents…

[scaredyclassic]

yeah, i said (admittedly buried in the body of my tirade) that this heloc’ing was for a guy who is judgment proof. a guy who no one is suing anyway. that’s why i’d be nervous. because im in the damned system…

for a guy with minimal future economic prospects, rolling the dice on the house is kinda like rolling the dice on huge student loans. when you’re borrowing the money you think, well, hell, no one else is giving me lots of money ona chance for something better in the future. it’ll either work out or it won’t, but how much worse off can i get? i got nothing now. Maybe the degree will pay off, maybe it won’t but you cannot get blood from a stone.

at least, that was what i was thinking when I signed my student loan documents…

[jpinpb]

Just keeps getting better. Bank of America Introduces Earned Principal Forgiveness Among Enhancements to Its National Homeownership Retention Program.

So people were dumb enough to buy during the bubble homes they couldn’t afford. Then they live for free for over a year. Then the bank forgives/reduces debt.

Yep. Feeling like a chump.

[jpinpb]

Just keeps getting better. Bank of America Introduces Earned Principal Forgiveness Among Enhancements to Its National Homeownership Retention Program.

So people were dumb enough to buy during the bubble homes they couldn’t afford. Then they live for free for over a year. Then the bank forgives/reduces debt.

Yep. Feeling like a chump.

[jpinpb]

Just keeps getting better. Bank of America Introduces Earned Principal Forgiveness Among Enhancements to Its National Homeownership Retention Program.

So people were dumb enough to buy during the bubble homes they couldn’t afford. Then they live for free for over a year. Then the bank forgives/reduces debt.

Yep. Feeling like a chump.

[jpinpb]

Just keeps getting better. Bank of America Introduces Earned Principal Forgiveness Among Enhancements to Its National Homeownership Retention Program.

So people were dumb enough to buy during the bubble homes they couldn’t afford. Then they live for free for over a year. Then the bank forgives/reduces debt.

Yep. Feeling like a chump.

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