Homeowners who ‘strategically default’ on loans a growing problem

[kicksavedave]

Well some people are doing the right thing. I have a buddy who is hopelessly upside down on a townhouse in San Marcos, he’s locked into a 9 % fixed rate, paying about $4500/mo for a 2 BR townhouse, and he now has two kids. But he refuses to “strategically walk away” like these people in the article. I have another friend who had to put $45K on her credit cards to get out of an upside down flip in Florida. She’s making her payments despite great inconvenience, because she feels is the only moral thing to do.

So not everyone is a deadbeat these days, but the percentage who are, is clearly growing and effecting the overall market somewhat.

[trex]

If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income.

I don’t blame anyone for walking, the sad part is how some people are unwilling/unable to see the writing on the wall.

For the poor, one could argue that credit cards are actually more important than mortgages. You can buy food with a credit card. Anyone ever try to eat drywall?

[trex]

If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income.

I don’t blame anyone for walking, the sad part is how some people are unwilling/unable to see the writing on the wall.

For the poor, one could argue that credit cards are actually more important than mortgages. You can buy food with a credit card. Anyone ever try to eat drywall?

[trex]

If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income.

I don’t blame anyone for walking, the sad part is how some people are unwilling/unable to see the writing on the wall.

For the poor, one could argue that credit cards are actually more important than mortgages. You can buy food with a credit card. Anyone ever try to eat drywall?

[trex]

If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income.

I don’t blame anyone for walking, the sad part is how some people are unwilling/unable to see the writing on the wall.

For the poor, one could argue that credit cards are actually more important than mortgages. You can buy food with a credit card. Anyone ever try to eat drywall?

[trex]

If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income.

I don’t blame anyone for walking, the sad part is how some people are unwilling/unable to see the writing on the wall.

For the poor, one could argue that credit cards are actually more important than mortgages. You can buy food with a credit card. Anyone ever try to eat drywall?

[patientrenter]

[quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]

Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.

When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.

[patientrenter]

[quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]

Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.

When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.

[patientrenter]

[quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]

Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.

When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.

[patientrenter]

[quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]

Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.

When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.

[patientrenter]

[quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]

Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.

When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.

[scaredyclassic]

it wouldnt take that many people to come over to the dark side of rational defaulting every year to keep the amrket down a long time though, would it. if things stay flat a while, couldnt this keep it flat for a decade or so?

[scaredyclassic]

it wouldnt take that many people to come over to the dark side of rational defaulting every year to keep the amrket down a long time though, would it. if things stay flat a while, couldnt this keep it flat for a decade or so?

[scaredyclassic]

it wouldnt take that many people to come over to the dark side of rational defaulting every year to keep the amrket down a long time though, would it. if things stay flat a while, couldnt this keep it flat for a decade or so?

[scaredyclassic]

it wouldnt take that many people to come over to the dark side of rational defaulting every year to keep the amrket down a long time though, would it. if things stay flat a while, couldnt this keep it flat for a decade or so?

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