- This topic has 65 replies, 12 voices, and was last updated 10 years, 10 months ago by
spdrun.
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August 9, 2013 at 9:34 PM #764295August 10, 2013 at 11:59 AM #764309
new to SD
ParticipantI was hoping there may be a reader who has access to financing terms below 11% with 20% to 25% down?
Answer to questions:
-It was a business decision(like any other uninsured event*) and Wells Fargo signed the same contract I signed
-I knew the default would take three years to fix my FICO.
-I save 30% of what I make, donate 5% and and work 6-7 days a week* Ask your self if you would you hand the bank the property if you had a mud slide, sink hole or uninsured catastrophic earthquake
August 10, 2013 at 12:46 PM #764310bearishgurl
Participant[quote=new to SD] . . . * Ask your self if you would you hand the bank the property if you had a mud slide, sink hole or uninsured catastrophic earthquake[/quote]
new to SD, a victim of a natural disaster is a true victim (unless he/she repeatedly rebuilds in the same spot after receiving ins claim/FEMA proceeds, such as on the bank of the Mississippi River). You can’t compare your (former) “situation” to that. YOU created your own problem and are not a victim.
Given your posts, I still feel that you would have been better off to hang onto your old property with your 6% mortgage and might very well have been right-side up by 2014. In addition, you would have still been able to save 30% (or more, depending on how much your current rent is) of your salary for a future downpayment on your “dream” home after you successfully sold your own house “cleanly” and got out above water.
The severe dip in values in recent years was ALL artificial, 75% caused from “short sales” (like yours, many of them fraudulently sold for land value or less) and 25% from REO sales owned by lenders who did not properly manage their inventories to get top dollar.
You claimed here that you strategically defaulted because you couldn’t refi out of your 6% mortgage. But that (IMHO) is a smokescreen, since you are now willing to take a 9-11% mortgage for a higher amount.
I came away from your posts with the feeling that you very deliberately calculated that you could somehow “trade in” your SM home for a home in a much better locale without so much as a bump. And I know I am not alone.
new to SD, why did you post here that you had were new to SD and were shopping in those (premium) areas on October 31, 2012 after losing your local house in September 2012 if you “knew” it would take at least three years to right your credit score? Did you have more cash then (immed after your SS) than you do now? Has your income doubled or tripled since your SS?
I’m sorry to have to relay the bad news but the areas you “aspire to” and the area you lost your home in last year (yes, SS has the same result as foreclosure) are night and day from each other.
With the resources you are describing here, I don’t see your “dream” as being feasible for several more years … if then.
August 10, 2013 at 1:43 PM #764311njtosd
Participant[quote=SK in CV][quote=njtosd]
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.[/quote]The bad lenders knew they were making bad loans. If they don’t make those loans, there are no borrowers, only denied applications. And there is no bubble.[/quote]
And many borrowers knew that they were overextending themselves. The banks (or bars or bakeries or casinos) are not there to save us from our bad decisions. I believe all businesses should act ethically and that there is a lot of accurate criticism of the financial industry. But we’d all be better off if everyone made careful decisions and honored obligations.
August 10, 2013 at 4:29 PM #764312flyer
Participant+1 BG and NJ. Very tired of hearing the “victim” stories. IMO, other than for catastrophic reasons, I believe there are very few ethically justifiable reasons to walk on any financial obligation, including a home. I realize it’s legal, and that some consider it very clever, but I still don’t agree.
We’ve seen a few “strategic defaults” over the years, and, in every case, they could have been avoided if the buyer had been more realistic about their true borrowing status from the beginning.
IMO, buying a million dollar home or any home, when you know (and most people do know on the day they sign the documents) that you are unprepared if anything unforseen happens, or things don’t go your way with appreciation, etc., etc., is just plain idiotic.
These are, most likely, the same people who will be whining about not having enough money to retire. With a huge percentage of the country in this category, in the very near future, I fully expect to start hearing more brilliant reasoning like “I didn’t know I was going to get old,” as an excuse for little, if any, retirement planning. Sad.
August 10, 2013 at 4:53 PM #764313spdrun
Participant. IMO, other than for catastrophic reasons, I believe there are very few ethically justifiable reasons to walk on any financial obligation, including a home.
Walking itself isn’t unethical. Walking and attempting to keep the house is — you signed a deal, pay the bank or give the house back.
August 10, 2013 at 7:31 PM #764314ParticipantUnderstand, SP, but, although I’m far from perfect, I’m still glad I was able to acquire my wealth without compromising what I consider to be ethical. IMO, with regard to some “strategic defaults,” playing the system just because one CAN is pretty lame.
August 10, 2013 at 8:47 PM #764316FlyerInHi
GuestThink of it this way.
Isn’t our whole capitalist system designed on individuals being selfish so the whole may benefit?
There needs to be defaults of different nature so that the banks, in the aggregate, learn and price the risks accordingly and fine tune their systems of underwriting. That’s the trial and error of the free market. There is collateral damage and there are winners and losers.
In the housing market, realtors and lenders pretty much tell buyers what they can afford. Didn’t you see the ads of people jumping for joy when they find they can “afford” more? So don’t be surprised when lenders oversell and buyers over borrow.
It doesn’t matter that most people on here are responsible. The aggregate market is what it is and we need to look at it objectively. Even on piggington, I’ve seen posts of people getting upset when their appraisals don’t come back at the value they want. Then they blame the banks.
We should know by now that low down payments and resetting mortgages result in people walking when prices drop. The banks knew that but they thought that they could securitize away the risks. And of course the managers didn’t care about the longer run because their incentives is to generate volume so they can earn bonuses month by month and quarter by quarter.
I think that proportionately the banks are 80% responsible for what people borrow.
August 10, 2013 at 9:00 PM #764318Participant[quote=new to SD]I was hoping there may be a reader who has access to financing terms below 11% with 20% to 25% down?
Answer to questions:
-It was a business decision(like any other uninsured event*) and Wells Fargo signed the same contract I signed
-I knew the default would take three years to fix my FICO.
-I save 30% of what I make, donate 5% and and work 6-7 days a week* Ask your self if you would you hand the bank the property if you had a mud slide, sink hole or uninsured catastrophic earthquake[/quote]
1. Just for the record, simply deciding to take a step and suffer the consequences does not make the original decision ethical.
2. A business decision is not an uninsured event. Most of the businesses you deal with have business or malpractice insurance. You can insure against mudslides, sink holes and earthquakes (see California Earthquake Authority – to whom I just wrote a check).
I would not have contributed to this discussion based on your original post. The resulting discussion, though, just became too ridiculous for me to remain silent.
August 10, 2013 at 9:13 PM #764319evolusd
ParticipantGreat story related to this topic…
Had a friend who bought during the peak in Murrieta – a $600k house with 100% financing. Market crashes and house declines in value to $300k. They ‘strategically default’ and somehow partake in one of the mortgage modification programs and the bank reduces their balance to $300k and lowers their interest rate.
Low and behold, the market recovers and they just sold their house for $500k, rolling over $120k into a new and improved $600k home and…wait for it…cashing out $80k into the bank! All while driving Bimmers and taking Hawaii vacations.
Never put a penny down.
August 10, 2013 at 9:15 PM #764321Participant[quote=FlyerInHi]
There needs to be defaults of different nature so that the banks, in the aggregate, learn and price the risks accordingly and fine tune their systems of underwriting. That’s the trial and error of the free market. There is collateral damage and there are winners and losers.
[/quote]
Wait – are you saying that anything that effects the economy is necessary? The free market was dramatically influenced by the 9/11 attacks (we got a fantastic deal on a house for that reason). By your reasoning we need attacks like 9/11 for the economy to work. Frankly I’d prefer the “trials and the errors” that you mention to be a bit less dramatic.
Finally, as PT Barnum said: You can’t cheat an honest man.
August 10, 2013 at 11:45 PM #764323GuestI’m not talking about dramatic events like 911.
But rational decisions that people may make because of the profit motive are perfectly ok by me. No different than seeking tax shelters and taking advantage of loopholes.
That’s playing by the rules.
August 10, 2013 at 11:50 PM #764324GuestGood for your friend, evolusd. Be happy for him.
He asked the bank and they made a private business decision to modify his loan. You don’t get if you don’t ask. Riverside county was hit pretty hard, so I can see why the bank accommodated him.
August 11, 2013 at 12:36 AM #764325ParticipantThe ones who seem to be gaming the system to their advantage, may or may not last through retirement–only time will tell. A 50+ year old with negative or no net worth is not a pretty picture.
August 11, 2013 at 1:26 AM #764326Guest[quote=flyer]The ones who seem to be gaming the system to their advantage, may or may not last through retirement–only time will tell. A 50+ year old with negative or no net worth is not a pretty picture.[/quote]
Yes we will see.. But I don’t think there is a correlation between networth and ethics. The 2 might be inversely correlated.
is seeking tax shelters to build your networth considered gaming the system or is it good money management. It seems like the bigger the amount the smarter you are.
It seems to me like gaming the system in dramatic ways would make you a genius. The bankers who crashed the economy are right now patting themselves of the back and living high on the hog. they fought to keep their salaries and bonuses and fought back regulations.
People like to say that you can’t legislate morality. You need sticks and carrots to incentivize people to behave ethically. When the incentives get out of whack you have a systemic problem. I don’t necessarily believe in this system, but it’s the system we have, so I deal with it.
Having said all that, I do get your point that living cleanly is the best way to win. By clean, I mean not overextending yourself financially or otherwise. If you smoke, drink, do drugs, or stress your body, you’ll need to “game the system” to get free drugs and surgery in old age and you’ll suffer pain in payment for the “enjoyment” of the younger years.
The losing in the end is not a function of gaming the system, but a function of overextending yourself to the point you need to game the system in a corrective action. All that could have been avoided had you not overextended.
But then again the overextension is the “enjoyment” people would have otherwise missed had they lived clean.
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