- This topic has 65 replies, 12 voices, and was last updated 11 years, 2 months ago by
spdrun.
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August 9, 2013 at 8:34 AM #20733August 9, 2013 at 9:18 AM #764251
bearishgurl
Participantnew to SD, there are probably a few lenders out there to serve you but you wouldn’t want the terms.
You won’t get much sympathy here. Obviously, you could have afforded to “hang on” until the value of your property in SM “righted itself.”
It is the thousands of “solvent” homedebtors like yourself who were the direct cause of severely plummeting home values in recent years for your more prudent homeowner-counterpart who kept their noses to the grindstone and didn’t overbuy and/or overborrow.
I think you would be much better off continuing to rent for another 2-4 years than to find a “shark” to finance your next home purchase.
Every action has a consequence as you now realize.
August 9, 2013 at 12:17 PM #764254FlyerInHi
GuestYou sound harsh, BG.
The op sounds reasonable to me. He’s probably a good candidate for a mortgage now but current underwriting standards don’t take this status under account.
He did us all a favor by teaching the banks a lesson. Plus another family is getting to enjoy the house at lower cost.
August 9, 2013 at 12:28 PM #764255new to SD
ParticipantThank you for the feedback
August 9, 2013 at 12:34 PM #764256evolusd
Participant[quote=FlyerInHi]You sound harsh, BG.
The op sounds reasonable to me. He’s probably a good candidate for a mortgage now but current underwriting standards don’t take this status under account.
He did us all a favor by teaching the banks a lesson. Plus another family is getting to enjoy the house at lower cost.[/quote]
Yea – it was all those evil banks fault!!!
August 9, 2013 at 12:44 PM #764257GuestThe banks took the risk and guess what? Sometimes risk can turn to bad… The banks thought that they were so smart that they could securitize the risk away.
The OP did nothing less than abide by the mortgage contract. The bank approved the short sale.
The op actually sounds very reponisible and I’m sure he would not miss a payment if he were given a mortgage today. But how do you measure and quantify his credit worthiness? The banks should put all the quants to work to figure it out.
Not lending to people like our poster is a missed business opportunity, and missed potential growth for the economy.
August 9, 2013 at 2:37 PM #764262ParticipantI will tell you my logic when I followed my loan contract and avoid the moral decision
My past mortgage was 6% fixed and I could not get a refinance because it was underwater.
Today with my bad credit I will pay 10% or 11%. This is 4% over my old loan. This will cost me an extra $20,000 to $25,000 a year but it is tax deductible.
After a 40% tax benefit that cost me $12,000 to $15,000 after tax more per year. It would take 8 -10 years of a 4% higher interest rate to make up for the $120,000 negative equity
I feel I will be able to refinance in two years for another 6% mortgage.
I can get 11% today but hoping for 9% or 10%.
August 9, 2013 at 3:07 PM #764274Participant[quote=new to SD]I will tell you my logic when I followed my loan contract and avoid the moral decision
My past mortgage was 6% fixed and I could not get a refinance because it was underwater.
Today with my bad credit I will pay 10% or 11%. This is 4% over my old loan. This will cost me an extra $20,000 to $25,000 a year but it is tax deductible.
After a 40% tax benefit that cost me $12,000 to $15,000 after tax more per year. It would take 8 -10 years to make up for the $120,000 negative equity
I feel I will be able to refinance in two years for another 6% mortgage.
I can get 11% today but hoping for 9% or 10%.[/quote]
new to SD, you stated your former SM home has already risen in value $80K in the 11 months (September 2012) since you claim you closed your “voluntary short sale.”
Why do you think it would take another 8-10 years to regain another $120K in value?
Either your former neighborhood is “booming” right now or you sold your former home at a huge (artificial) discount (far below build-cost since SEH is relatively new). This makes one wonder if your agent even marketed your home on the MLS over the mandatory one minute at midnight, while they printed out the listing for your lender to show that they “marketed it” and then subsequently slid a relative’s ultra-low offer through to your (out-of-state?) lender with fraudulent “recent sold comps” from a (lower-priced) adjacent area in order to get them to accept it.
I suspect a little of both has taken place here.
In the MEANTIME, you’ve apparently managed to save $175K – $300K? for a new downpayment for a home with a purchase price of up to $1M after a SS of just 11 months ago and expect to now find a lender who is willing to loan you a jumbo or jumbo-conforming mortgage.
new to SD, I’m just wondering here how much of your new downpayment was saved while you were “squatting” mortgage-free to “qualify” yourself for a “voluntary” deeply-discounted short sale … on the backs of your neighbor’s values, of course.
You state here you “strategically defaulted” because you could not refinance out of 6% mortgage because you were underwater. Now you have no problem with taking on a higher mortgage at 9-11% (if offered to you, likely with I/O and a balloon pymt, a hefty and lengthy prepayment penalty, 4-5 pts up front and a host of garbage charges). Let us examine why you now want to borrow MORE money than the amount you defaulted on in SM? Could it be because you think you now deserve to “upgrade” your lifestyle to a “better” community?
[quote=new to SD]We also have been waiting to buy and are new to SD. We are looking but there is not much available.
Are there any areas in Encinitas, Rancho sante fe or Carmel Valley that have 1 acre that you would recommend?[/quote]
http://piggington.com/bought_after_waiting_8_years#comment-220517
Do I have this correct, new to SD?
I’m curious as to how long you thought it would take to raise your FICO score up past 600 after your “strategic” SS?
[quote=new to SD]Will this lender lend to a FICO score below 600? I had a short sale and it is taking longer than planned to get my score up[/quote]
http://piggington.com/please_help_refi_question#comment-231896
****
This is the just the type of “entitlement mentality” that gets the many thousands of successful longtime homeowners’ blood boiling.
August 9, 2013 at 3:38 PM #764277ParticipantThank you for the feedback and I am sorry you feel a business decision with my bank should be a moral decision.
I completely own that I followed the loan agreement and own the fact that I deserve a drop in my FICO
August 9, 2013 at 4:15 PM #764282Participant[quote=new to SD] . . . I completely own that I followed the loan agreement and own the fact that I deserve a drop in my FICO[/quote]
You’re damned straight you do.
new to SD, you seem to be able to save money these days at a pretty rapid clip. Why don’t you just wait another 3-4 years until you have the funds to make all-cash offers instead of trying to borrow someone else’s (very expensive to you) money.
In doing so, your odds will increase exponentially that you will actually be able to consummate a successful deal, given that your three “choice” areas you aspire to shop in are among the highest-priced and most coveted areas to live in SD County 🙂
GOOD LUCK!
August 9, 2013 at 4:33 PM #764283SK in CV
Participant[quote=bearishgurl]
This is the just the type of “entitlement mentality” that gets the many thousands of successful longtime homeowners’ blood boiling.[/quote]Just for a different perspective, I’m also a long time homeowner and I don’t have much of a problem with short sales or strategic defaults. On a blood-boiling scale, it’s nothing compared to:
lenders and their agents who abandoned underwriting standards, approved loans for borrowers ill qualified to repay, enabled and sometimes participated approving fraudulent applications.
builders, and their agents who participated in the loan failures by buying down interest rates, and similarly participated in preparing fraudulent applications.
wall street banks who bought and packaged these loans into mortgage backed securities, selling them to investors (including public employee pension plans, thereby costing taxpayers) as safe investments.
bond rating services, who gave these MBS high ratings by abandoning their own standard of care, in exchange for fees paid by wall street banks who sponsored the securities.
August 9, 2013 at 5:43 PM #764285Participant[quote=SK in CV][quote=bearishgurl]
This is the just the type of “entitlement mentality” that gets the many thousands of successful longtime homeowners’ blood boiling.[/quote]Just for a different perspective, I’m also a long time homeowner and I don’t have much of a problem with short sales or strategic defaults. On a blood-boiling scale, it’s nothing compared to:
lenders and their agents who abandoned underwriting standards, approved loans for borrowers ill qualified to repay, enabled and sometimes participated approving fraudulent applications.
builders, and their agents who participated in the loan failures by buying down interest rates, and similarly participated in preparing fraudulent applications.
wall street banks who bought and packaged these loans into mortgage backed securities, selling them to investors (including public employee pension plans, thereby costing taxpayers) as safe investments.
bond rating services, who gave these MBS high ratings by abandoning their own standard of care, in exchange for fees paid by wall street banks who sponsored the securities.[/quote]
SK, I understand all of this and agree with you on these points but new to SD was apparently “well-qualified” to purchase his (new construction?) home in SEH (SM). At the time of purchase, he likely wasn’t “taken advantage of” by an unscrupulous mortgage broker-poser peddling subprime products (and believe me, I know a few people that WERE … some with language barriers). In new to SD’s own words, it was his “business decision” to “strategically default” in attempt to force his lender’s hand into foreclosure or SS and it WORKED! He did this because he stated he couldn’t refinance his 6% mtg due to being underwater. In my mind (I’m old … like you … lol … or even OLDer), he could have hung on and recovered his “lost equity” in SEH by 2014 or 2015 and possibly retained his previous credit score but he decided instead to “strategically default” even though (apparently) well-employed before, during and after the default. As you know, historically, 6% is not a particularly high mortgage interest rate. It is clear that he doesn’t understand how long it takes a credit score to “recover” from this little maneuver because he posted here in August 2013, ~10+ months after presumably closing his SS that he didn’t realize that his credit score would still be affected (in so many words).
[quote=new to SD on August 7, 2013 – 5:51pm.]Will this lender lend to a FICO score below 600? I had a short sale and it is taking longer than planned to get my score up[/quote]
http://piggington.com/please_help_refi_question#comment-231896
[quote=new to SD on August 8, 2013 – 5:51pm.]Thanks for the reply. I can put 20% – 25% down. I need to borrow $500k to $700k and my Short sale was finalized in September last year.[/quote]
http://piggington.com/please_help_refi_question#comment-231967
It seems he likely thought he could pull this coup and then just whisk the flies away from his starched cuffs and turn around ONE MONTH LATER and successfully buy another home in SD County’s finest communities!
[quote=new to SD on October 31, 2012 – 11:16am.]We also have been waiting to buy and are new to SD. We are looking but there is not much available.
Are there any areas in Encinitas, Rancho sante fe or Carmel Valley that have 1 acre that you would recommend?[/quote]
http://piggington.com/bought_after_waiting_8_years#comment-220517
Not only that, he now wants a 1 AC lot! ROTFALMYO!
Given his high 500’s FICO score, it is instructive to all that he won’t be able to achieve his “dreams” anytime soon unless he accepts some very unpalatable mortgage terms.
new to SD, did your RE agent ever explain to you during your short-sale process how long it will take for your credit score to recover from this debacle?
August 9, 2013 at 8:42 PM #764289ParticipantLike I said BG, I don’t have much of a problem with a strategic default. Bad borrowers didn’t cause the problem. Bad lenders did. Lenders take risks. Strategic defaults is one of them.
August 9, 2013 at 9:11 PM #764293njtosd
Participant[quote=SK in CV]Like I said BG, I don’t have much of a problem with a strategic default. Bad borrowers didn’t cause the problem. Bad lenders did. Lenders take risks. Strategic defaults is one of them.[/quote]
Let’s not be ridiculous here. Without the “bad borrowers” there wouldn’t have been a problem. They were not the only source of the problem, but they were indispensable, just as the banks, etc. were.
August 9, 2013 at 9:33 PM #764294GuestExactly as SK said. strategic default is a risk that was already priced into the loans we got.
Maybe the OP should have bought a house before the strategic default.
BG, banks require hardship packages to be submitted. They do not have to approve short sales. It’s a business decision on their part.
It makes no economic sense to deny the OP credit. It he puts 20% down on a purchase now, he will be unlikely to default unless his income stream stops. He will lose his substantial down-payment if he walks.
If banks are good business people, they eventually figure it out. Max Levchin cofounder of PayPal talked about Fico not being an accurate measure of credit risk.
Remember, the deal is “either I pay the mortgage or you take my house”.
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