Homeowners who ‘strategically default’ on loans a growing problem

[blahblahblah]

I have a friend in Arizona that walked from his home (which had a renter in it paying him rent) as well as his wife’s home. Nothing happened other than angry letters and phone calls from the banks for over a year in both cases, meanwhile they pocketed all of their mortgage payments as well as rent from the renter. They just purchased a brand-new house with cash and jingle mailed the keys to the other two homes back to the bank. They are living mortgage-free now (he is only about 32 or so).

[scaredyclassic]

man i am dumb.

[scaredyclassic]

man i am dumb.

[scaredyclassic]

man i am dumb.

[scaredyclassic]

man i am dumb.

[scaredyclassic]

man i am dumb.

[UCGal]

If the circumstances stay the same – employment/income continue… then I can see arguing that the home-debtors should honor their commitment regardless.

That said – I’ve watched friends face the loss of his job, her bonuses/pay raises eliminated. They bought in 2004 and could easily make thier payments. They put a big chunk down (more than 10%). With his income down AND being 200k underwater – they tried to short sell. Bank ended up rejecting the deal – and forclose last month. It was actually one of the faster NOD to Trustee sales I’ve seen – June got the NOD, Sept the house went back to the bank.

If he hadn’t lost his job – they’d be riding it out. And these aren’t deadbeat types.

[UCGal]

If the circumstances stay the same – employment/income continue… then I can see arguing that the home-debtors should honor their commitment regardless.

That said – I’ve watched friends face the loss of his job, her bonuses/pay raises eliminated. They bought in 2004 and could easily make thier payments. They put a big chunk down (more than 10%). With his income down AND being 200k underwater – they tried to short sell. Bank ended up rejecting the deal – and forclose last month. It was actually one of the faster NOD to Trustee sales I’ve seen – June got the NOD, Sept the house went back to the bank.

If he hadn’t lost his job – they’d be riding it out. And these aren’t deadbeat types.

[UCGal]

If the circumstances stay the same – employment/income continue… then I can see arguing that the home-debtors should honor their commitment regardless.

That said – I’ve watched friends face the loss of his job, her bonuses/pay raises eliminated. They bought in 2004 and could easily make thier payments. They put a big chunk down (more than 10%). With his income down AND being 200k underwater – they tried to short sell. Bank ended up rejecting the deal – and forclose last month. It was actually one of the faster NOD to Trustee sales I’ve seen – June got the NOD, Sept the house went back to the bank.

If he hadn’t lost his job – they’d be riding it out. And these aren’t deadbeat types.

[UCGal]

If the circumstances stay the same – employment/income continue… then I can see arguing that the home-debtors should honor their commitment regardless.

That said – I’ve watched friends face the loss of his job, her bonuses/pay raises eliminated. They bought in 2004 and could easily make thier payments. They put a big chunk down (more than 10%). With his income down AND being 200k underwater – they tried to short sell. Bank ended up rejecting the deal – and forclose last month. It was actually one of the faster NOD to Trustee sales I’ve seen – June got the NOD, Sept the house went back to the bank.

If he hadn’t lost his job – they’d be riding it out. And these aren’t deadbeat types.

[UCGal]

If the circumstances stay the same – employment/income continue… then I can see arguing that the home-debtors should honor their commitment regardless.

That said – I’ve watched friends face the loss of his job, her bonuses/pay raises eliminated. They bought in 2004 and could easily make thier payments. They put a big chunk down (more than 10%). With his income down AND being 200k underwater – they tried to short sell. Bank ended up rejecting the deal – and forclose last month. It was actually one of the faster NOD to Trustee sales I’ve seen – June got the NOD, Sept the house went back to the bank.

If he hadn’t lost his job – they’d be riding it out. And these aren’t deadbeat types.

[GoUSC]

I can understand SOME of these strategic defaulters. My friend is a perfect example. She owns a condo as an investment property. It has a variable rate loan (that goes variable in ~2 years) with a HELOC. The property is not underwater. She doesn’t want anything for free. She is not looking for below-market interest rates, she is not looking for debt forgiveness. She just wants the bank to roll her 1st and 2nd into a market-rate 30 year fixed loan. But the bank won’t even talk to her. Why shouldn’t see say screw you and walk away. She feels like she is throwing money down the drain because in 2 years when her rate goes through the roof she won’t be able to afford it anymore… the bank is not willing to work with her now. It’s completely stupid.

[GoUSC]

I can understand SOME of these strategic defaulters. My friend is a perfect example. She owns a condo as an investment property. It has a variable rate loan (that goes variable in ~2 years) with a HELOC. The property is not underwater. She doesn’t want anything for free. She is not looking for below-market interest rates, she is not looking for debt forgiveness. She just wants the bank to roll her 1st and 2nd into a market-rate 30 year fixed loan. But the bank won’t even talk to her. Why shouldn’t see say screw you and walk away. She feels like she is throwing money down the drain because in 2 years when her rate goes through the roof she won’t be able to afford it anymore… the bank is not willing to work with her now. It’s completely stupid.

[GoUSC]

I can understand SOME of these strategic defaulters. My friend is a perfect example. She owns a condo as an investment property. It has a variable rate loan (that goes variable in ~2 years) with a HELOC. The property is not underwater. She doesn’t want anything for free. She is not looking for below-market interest rates, she is not looking for debt forgiveness. She just wants the bank to roll her 1st and 2nd into a market-rate 30 year fixed loan. But the bank won’t even talk to her. Why shouldn’t see say screw you and walk away. She feels like she is throwing money down the drain because in 2 years when her rate goes through the roof she won’t be able to afford it anymore… the bank is not willing to work with her now. It’s completely stupid.

[GoUSC]

I can understand SOME of these strategic defaulters. My friend is a perfect example. She owns a condo as an investment property. It has a variable rate loan (that goes variable in ~2 years) with a HELOC. The property is not underwater. She doesn’t want anything for free. She is not looking for below-market interest rates, she is not looking for debt forgiveness. She just wants the bank to roll her 1st and 2nd into a market-rate 30 year fixed loan. But the bank won’t even talk to her. Why shouldn’t see say screw you and walk away. She feels like she is throwing money down the drain because in 2 years when her rate goes through the roof she won’t be able to afford it anymore… the bank is not willing to work with her now. It’s completely stupid.

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