The new smart financial move is walking away

[davelj]

[quote=CA renter][quote=davelj][quote=CA renter] Who in their right mind wouldn’t take that offer? [/quote]

So tell us your story. I’m assuming you feel that you’re in your “right mind,” so tell us about how you took advantage of this giveaway. Enquiring minds want to know.[/quote]

No, I’m not a RE investor, and never really wanted to be one (my family was in RE, so have seen what a pain it can be).

Still, we did benefit from the bubble because we sold our (primary) house into the strength and rented, effectively shorting the housing market. We also shorted homebuilders, banks/ lenders, certain retailers, etc. Believe it or not, I’m very risk-averse, so have no desire to get into flipping houses or chasing bubbles. I do short them, however. 🙂

I’m not talking so much about myself as I’m talking about the general population out there. We saw many, many people who gave up useful jobs so they could speculate in real estate during the bubble years. It was amazing to watch what some people were willing to do.[/quote]

I’m stuck on this “right mind” issue. You make it sound as though a person would have been stupid not to have bought at the peak with no money down because there was no downside. And my point was that if that were the case, then why didn’t you do it. And your response is that you’re not a real estate investor? And that this behavior was the “right” financial decision for the general population but not for yourself? That makes no sense at all.

Which brings me to a related, but separate, point. I read a lot of posts here that say, in so many words, “I feel so stupid for paying my mortgage when all these other deadbeats aren’t paying theirs.” My response to this is: Then stop paying your mortgage. If it’s “stupid” and you perceive the upside to be greater than the downside, then by all means default. But, you see, for most folks that’s not going to happen. Why? Because at the end of the day, most responsible folks with jobs who can afford their mortgages (regardless of how much they may or may not be underwater) don’t REALLY want to end up in the same sad predicament as most of these folks who are in default. Otherwise, they wouldn’t bitch and moan about how “stupid” they feel… they’d just default and join the folks they feel are “smart.”

So… in the same vein, I don’t really believe that YOU believe that all of these specu-vestor morons were in their “right mind.” Because you know that most of these idiots didn’t really understand the optionality inherent in their mortgages. On the contrary, the vast majority of these folks REALLY believed that RE prices would only go up and, in fact, were SHOCKED when they started going down. Very few of these folks sat back and thought, “Hey, so what if things go south – it’s not my money.” Although clearly that’s exactly how things turned out. Nope, I bet you that 90% of these defaulters honestly planned on living up to the terms of their mortgages… aided by rising prices, of course. The optionality was an accident recognized after the fact that merely reduced the pain of walking away. These folks were not in their “right mind”; they were courting disaster and didn’t realize it. And I think you know that.

[sdrealtor]

Great insightful post dlj. You show up on Sunday and I’ll buy you a beer (or whatever) for that one.

[sdrealtor]

Great insightful post dlj. You show up on Sunday and I’ll buy you a beer (or whatever) for that one.

[sdrealtor]

Great insightful post dlj. You show up on Sunday and I’ll buy you a beer (or whatever) for that one.

[sdrealtor]

Great insightful post dlj. You show up on Sunday and I’ll buy you a beer (or whatever) for that one.

[sdrealtor]

Great insightful post dlj. You show up on Sunday and I’ll buy you a beer (or whatever) for that one.

[scaredyclassic]

previously someone said HE WHO SIGNED THE LOAN DOCS IS AND WAS RESPONSIBLE.

I don’t know. My wife tries to use that style of argument on me concerning the 3rd kid. I think it was kind of not really my decision. it’s difficult to explain. But it was a combination of pressures. I don’t blame the government per se. But I bet they had something to dow ith it. Sure, he’s great, lot of fun, but me, responsible? Please…i was just a pawn in a much bigger game

[scaredyclassic]

previously someone said HE WHO SIGNED THE LOAN DOCS IS AND WAS RESPONSIBLE.

I don’t know. My wife tries to use that style of argument on me concerning the 3rd kid. I think it was kind of not really my decision. it’s difficult to explain. But it was a combination of pressures. I don’t blame the government per se. But I bet they had something to dow ith it. Sure, he’s great, lot of fun, but me, responsible? Please…i was just a pawn in a much bigger game

[scaredyclassic]

previously someone said HE WHO SIGNED THE LOAN DOCS IS AND WAS RESPONSIBLE.

I don’t know. My wife tries to use that style of argument on me concerning the 3rd kid. I think it was kind of not really my decision. it’s difficult to explain. But it was a combination of pressures. I don’t blame the government per se. But I bet they had something to dow ith it. Sure, he’s great, lot of fun, but me, responsible? Please…i was just a pawn in a much bigger game

[scaredyclassic]

previously someone said HE WHO SIGNED THE LOAN DOCS IS AND WAS RESPONSIBLE.

I don’t know. My wife tries to use that style of argument on me concerning the 3rd kid. I think it was kind of not really my decision. it’s difficult to explain. But it was a combination of pressures. I don’t blame the government per se. But I bet they had something to dow ith it. Sure, he’s great, lot of fun, but me, responsible? Please…i was just a pawn in a much bigger game

[scaredyclassic]

previously someone said HE WHO SIGNED THE LOAN DOCS IS AND WAS RESPONSIBLE.

I don’t know. My wife tries to use that style of argument on me concerning the 3rd kid. I think it was kind of not really my decision. it’s difficult to explain. But it was a combination of pressures. I don’t blame the government per se. But I bet they had something to dow ith it. Sure, he’s great, lot of fun, but me, responsible? Please…i was just a pawn in a much bigger game

[jpinpb]

Okay. So at one time it was unheard of and looked down upon to walk. That was crazy talk. Now it seems acceptable, in fact, encouraged and crazy if you don’t. So my question would be: how many are going to? Are we looking pretty much at everyone who bought during the bubble that is upside-down? I mean, you know, I think it’s safe to say that every purchase during the bubble has seen minimum and conservatively 15-20% off peak price, even in nicer areas. Can we expect that they’re all going to walk?

I look, for example, at some condo conversions in UTC during the bubble and the NODs and foreclosures continue unrelentlessly – and that’s only what banks are bothering to file paperwork on. It would not shock me if eventually every single unit that sold during the bubble turns over.

[jpinpb]

Okay. So at one time it was unheard of and looked down upon to walk. That was crazy talk. Now it seems acceptable, in fact, encouraged and crazy if you don’t. So my question would be: how many are going to? Are we looking pretty much at everyone who bought during the bubble that is upside-down? I mean, you know, I think it’s safe to say that every purchase during the bubble has seen minimum and conservatively 15-20% off peak price, even in nicer areas. Can we expect that they’re all going to walk?

I look, for example, at some condo conversions in UTC during the bubble and the NODs and foreclosures continue unrelentlessly – and that’s only what banks are bothering to file paperwork on. It would not shock me if eventually every single unit that sold during the bubble turns over.

[jpinpb]

Okay. So at one time it was unheard of and looked down upon to walk. That was crazy talk. Now it seems acceptable, in fact, encouraged and crazy if you don’t. So my question would be: how many are going to? Are we looking pretty much at everyone who bought during the bubble that is upside-down? I mean, you know, I think it’s safe to say that every purchase during the bubble has seen minimum and conservatively 15-20% off peak price, even in nicer areas. Can we expect that they’re all going to walk?

I look, for example, at some condo conversions in UTC during the bubble and the NODs and foreclosures continue unrelentlessly – and that’s only what banks are bothering to file paperwork on. It would not shock me if eventually every single unit that sold during the bubble turns over.

[jpinpb]

Okay. So at one time it was unheard of and looked down upon to walk. That was crazy talk. Now it seems acceptable, in fact, encouraged and crazy if you don’t. So my question would be: how many are going to? Are we looking pretty much at everyone who bought during the bubble that is upside-down? I mean, you know, I think it’s safe to say that every purchase during the bubble has seen minimum and conservatively 15-20% off peak price, even in nicer areas. Can we expect that they’re all going to walk?

I look, for example, at some condo conversions in UTC during the bubble and the NODs and foreclosures continue unrelentlessly – and that’s only what banks are bothering to file paperwork on. It would not shock me if eventually every single unit that sold during the bubble turns over.

[Author]

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