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TemekuT.
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August 15, 2007 at 7:59 PM #76010August 15, 2007 at 8:41 PM #76013
hipmatt
Participant4runner, thats an excellent point, I can see that theory making sense, and I can see how so many up here would practice it. after all, no one here wants to look desperate, and before you know it they have bailed out of the neighborhood when the home goes into foreclosure and they don’t have to face as much shame.
One of the guys I know that is going into foreclosure told me his story. He and the wife make about 100k per year combined income. Bought his home for around 250k-300k new.. as it appreciated he refied the heck out of it, and HELOC’ed it, bought and sold a number of cars/suvs, then bought a big dually diesel truck (60+k) and a big toybox(60+k), then bought quads, dirtbikes/riding gear for the whole family(25+k). A year or two later and he realizes that he can’t afford all these payments. He decides to try to sell the house. He moves his family out to a rental. The house has been listed for about 6 months… no takers. Three wimpy price reductions later and no dice.. he has now stopped paying the mortgage, and has come to terms with foreclosure. In fact, it doesn’t even seem to bother him in the least..
he puts it like this.. “the worst part of it is that I will have a ding on my credit, oh well, the cool part is that we love our rental, and I get to keep all the toys.” I told him, yeah, in this country, your credit will be good enough to allow you to do the same thing again in a few years.
Point of my story.. banks and lenders are so stupid to allow these crazy loans and HELOCs up to 100%LTV. There is no way that they know if the home owner is going to put the money into the home. In this case, they have no rights to anything that he purchased with the home equity line. The only collateral they have is the home, which is now worth much less than the total of all the loans. I suspect there are many more like this guy.
August 15, 2007 at 8:41 PM #76133Participant4runner, thats an excellent point, I can see that theory making sense, and I can see how so many up here would practice it. after all, no one here wants to look desperate, and before you know it they have bailed out of the neighborhood when the home goes into foreclosure and they don’t have to face as much shame.
One of the guys I know that is going into foreclosure told me his story. He and the wife make about 100k per year combined income. Bought his home for around 250k-300k new.. as it appreciated he refied the heck out of it, and HELOC’ed it, bought and sold a number of cars/suvs, then bought a big dually diesel truck (60+k) and a big toybox(60+k), then bought quads, dirtbikes/riding gear for the whole family(25+k). A year or two later and he realizes that he can’t afford all these payments. He decides to try to sell the house. He moves his family out to a rental. The house has been listed for about 6 months… no takers. Three wimpy price reductions later and no dice.. he has now stopped paying the mortgage, and has come to terms with foreclosure. In fact, it doesn’t even seem to bother him in the least..
he puts it like this.. “the worst part of it is that I will have a ding on my credit, oh well, the cool part is that we love our rental, and I get to keep all the toys.” I told him, yeah, in this country, your credit will be good enough to allow you to do the same thing again in a few years.
Point of my story.. banks and lenders are so stupid to allow these crazy loans and HELOCs up to 100%LTV. There is no way that they know if the home owner is going to put the money into the home. In this case, they have no rights to anything that he purchased with the home equity line. The only collateral they have is the home, which is now worth much less than the total of all the loans. I suspect there are many more like this guy.
August 15, 2007 at 8:41 PM #76135Participant4runner, thats an excellent point, I can see that theory making sense, and I can see how so many up here would practice it. after all, no one here wants to look desperate, and before you know it they have bailed out of the neighborhood when the home goes into foreclosure and they don’t have to face as much shame.
One of the guys I know that is going into foreclosure told me his story. He and the wife make about 100k per year combined income. Bought his home for around 250k-300k new.. as it appreciated he refied the heck out of it, and HELOC’ed it, bought and sold a number of cars/suvs, then bought a big dually diesel truck (60+k) and a big toybox(60+k), then bought quads, dirtbikes/riding gear for the whole family(25+k). A year or two later and he realizes that he can’t afford all these payments. He decides to try to sell the house. He moves his family out to a rental. The house has been listed for about 6 months… no takers. Three wimpy price reductions later and no dice.. he has now stopped paying the mortgage, and has come to terms with foreclosure. In fact, it doesn’t even seem to bother him in the least..
he puts it like this.. “the worst part of it is that I will have a ding on my credit, oh well, the cool part is that we love our rental, and I get to keep all the toys.” I told him, yeah, in this country, your credit will be good enough to allow you to do the same thing again in a few years.
Point of my story.. banks and lenders are so stupid to allow these crazy loans and HELOCs up to 100%LTV. There is no way that they know if the home owner is going to put the money into the home. In this case, they have no rights to anything that he purchased with the home equity line. The only collateral they have is the home, which is now worth much less than the total of all the loans. I suspect there are many more like this guy.
August 15, 2007 at 9:38 PM #76047GoUSC
ParticipantHow does he get to keep the toys? Does the debt on them just vanish? If you use a HELOC to buy a bunch of crap and you default on the HELOC I would think the lender would take the toys? But maybe not….
August 15, 2007 at 9:38 PM #76166ParticipantHow does he get to keep the toys? Does the debt on them just vanish? If you use a HELOC to buy a bunch of crap and you default on the HELOC I would think the lender would take the toys? But maybe not….
August 15, 2007 at 9:38 PM #76168ParticipantHow does he get to keep the toys? Does the debt on them just vanish? If you use a HELOC to buy a bunch of crap and you default on the HELOC I would think the lender would take the toys? But maybe not….
August 15, 2007 at 9:42 PM #760504runner
ParticipantTaking the toys is expensive and most likely not worth the trouble.
August 15, 2007 at 9:42 PM #76171ParticipantTaking the toys is expensive and most likely not worth the trouble.
August 15, 2007 at 9:42 PM #76169ParticipantTaking the toys is expensive and most likely not worth the trouble.
August 15, 2007 at 9:48 PM #76189capeman
ParticipantDon’t worry about that. Once the REO is sold short he will get a nice little bill from the IRS. Then he will be selling his toys in short order or they dock 50% of his paycheck to get get their take.
August 15, 2007 at 9:48 PM #76187ParticipantDon’t worry about that. Once the REO is sold short he will get a nice little bill from the IRS. Then he will be selling his toys in short order or they dock 50% of his paycheck to get get their take.
August 15, 2007 at 9:48 PM #76068ParticipantDon’t worry about that. Once the REO is sold short he will get a nice little bill from the IRS. Then he will be selling his toys in short order or they dock 50% of his paycheck to get get their take.
August 15, 2007 at 10:07 PM #76211TemekuT
ParticipantWell, I can’t comment on the REO’s, but have you considered that perhaps not all those MLS listings need to sell? Perhaps they’re just fishing.
My neighborhood (Morgan Hill) has been the target of posts for brown lawns and to an extent it is true…but mostly with the younger families. I am representative of my street…empty nesters that could pay off our houses tomorrow if necessary…just transfer some funds. (NO, I did not inherit from my parents, they are still alive and 80, and the last time I visited, their WAMU statement with >$1,000,000 was sitting out, but that’s another problem if WAMU goes down, and yes, the most combined money they ever made was < 70 K annually, they just didn't spend money buying crap). We're here because of family (younger generation) that purchased in the IE due to affordability issues and although we hate the values downturn and we feel like losers because we put down substantial amounts or even paid cash, and paid for builder and other upgrades with cash cash, we're planted here for now and will not sell until the upturn, even if that is ten years from now. Why? Because we don't need to, and we like living by our families. We (my street's empty nesters) as a group live below our means, drive older paid-for cars, don't take expensive vacations on credit cards, buy clothes on sale, don't eat out very often, hold significant investment portfolios, and wouldn't dream of spending > $2 for a Starbucks drink. (I personally carry filtered water from my house everywhere I go). I recently went to Promenade Mall, was starving, got in line at both Wetzel’s and Auntie Annies, and walked away from both lines…I couldn’t bring myself to spend $2.69 for a few cents worth of dough. I went to Trader Joes’s, bought a bag of Honey Whole Wheat pretzels, ate some, and took the rest of the large bag home.
Perhaps we’re a statistically insignificant microcosm of Temecula stratification, but we do represent the majority on my street.
When we bought this house the McMillan sales agent I had know since our first meeting in 1997 told me she was shocked by all the younger people buying with 100% financing suicide loans. We must have sounded like old biddies; she and I knew that the chickens would come home to roost and it would be 1992 again here in the IE.
P.S. for temeculaguy and everyone else on that post about Chick’s…one of the first things I did upon hitting Temecula was to dye my hair brown, drinks lots of red wine and coffee, have the implants removed, gain 25 pounds, and buy a Subaru :))
August 15, 2007 at 10:07 PM #76213ParticipantWell, I can’t comment on the REO’s, but have you considered that perhaps not all those MLS listings need to sell? Perhaps they’re just fishing.
My neighborhood (Morgan Hill) has been the target of posts for brown lawns and to an extent it is true…but mostly with the younger families. I am representative of my street…empty nesters that could pay off our houses tomorrow if necessary…just transfer some funds. (NO, I did not inherit from my parents, they are still alive and 80, and the last time I visited, their WAMU statement with >$1,000,000 was sitting out, but that’s another problem if WAMU goes down, and yes, the most combined money they ever made was < 70 K annually, they just didn't spend money buying crap). We're here because of family (younger generation) that purchased in the IE due to affordability issues and although we hate the values downturn and we feel like losers because we put down substantial amounts or even paid cash, and paid for builder and other upgrades with cash cash, we're planted here for now and will not sell until the upturn, even if that is ten years from now. Why? Because we don't need to, and we like living by our families. We (my street's empty nesters) as a group live below our means, drive older paid-for cars, don't take expensive vacations on credit cards, buy clothes on sale, don't eat out very often, hold significant investment portfolios, and wouldn't dream of spending > $2 for a Starbucks drink. (I personally carry filtered water from my house everywhere I go). I recently went to Promenade Mall, was starving, got in line at both Wetzel’s and Auntie Annies, and walked away from both lines…I couldn’t bring myself to spend $2.69 for a few cents worth of dough. I went to Trader Joes’s, bought a bag of Honey Whole Wheat pretzels, ate some, and took the rest of the large bag home.
Perhaps we’re a statistically insignificant microcosm of Temecula stratification, but we do represent the majority on my street.
When we bought this house the McMillan sales agent I had know since our first meeting in 1997 told me she was shocked by all the younger people buying with 100% financing suicide loans. We must have sounded like old biddies; she and I knew that the chickens would come home to roost and it would be 1992 again here in the IE.
P.S. for temeculaguy and everyone else on that post about Chick’s…one of the first things I did upon hitting Temecula was to dye my hair brown, drinks lots of red wine and coffee, have the implants removed, gain 25 pounds, and buy a Subaru :))
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