- This topic has 70 replies, 22 voices, and was last updated 17 years, 4 months ago by
DaCounselor.
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July 11, 2007 at 12:00 PM #65297July 11, 2007 at 12:00 PM #65234
SD Realtor
ParticipantFSD good points but I still side with nsr. Now yes it would be more insightful for me to walk in this guys shoes but from what I see, based on his salary and the few facts that ljr stated, this guy had no business at all in purchasing this home.
I am crossing all my fingers that the escrow I have downtown will close… the sellers have to come in with close to 100k cash as a shortfall. They are doing it.
I have a short sale that I just listed in Lakeside. In all probability they will lose the home. This was a true (believe it or not) hardship case. He lost his job and still has not found employment. Now granted they pulled a bonehead purchase 3 years back but they are trying to short sell it and they will suffer ramifications if it indeed does short sell.
I just think that there is an amount of personal responsibility here. You can’t pull a 30k per average American is in debt card out. My taxes already fund enough benefcial programs for which I have no control over. I don’t think it is accurate to portray that we all should foot the bill for the foolishness of others. They indeed should take responsibility…
I think by letting people simply walk away from the problem, there will be no incentive for them to not do it again in the future. It is not much different then punishing kids for poor behavior. Yet, you take this guys 90k away from him and I bet you a dollar he never buys a speculative property again.
SD Realtor
July 11, 2007 at 12:15 PM #65238Raybyrnes
ParticipantThe roommate option was brought up but another option might be to take in foreign exchange students. I have friends who get paid 1000 a month for taking 2 students over the summer and 700 a month for 1 student during the school year. If he has a 3 or 4 bedroom place this might provide some additional cash flow to get through the down cycle. The students are usually off traveling and are responsible for their own food. Drastic time call for drastic measures.
July 11, 2007 at 12:15 PM #65300ParticipantThe roommate option was brought up but another option might be to take in foreign exchange students. I have friends who get paid 1000 a month for taking 2 students over the summer and 700 a month for 1 student during the school year. If he has a 3 or 4 bedroom place this might provide some additional cash flow to get through the down cycle. The students are usually off traveling and are responsible for their own food. Drastic time call for drastic measures.
July 11, 2007 at 12:19 PM #65302DaCounselor
ParticipantHis $90K is safe and he won’t get hit with a 1099. The fallout to him will be limited to a credit ding (more like dent).
As for what he should do – ethically – that’s another question. If you boil his deal with the lenders down to its essence, the agreement was that he will make certain payments over a certain period of time, and if he does not they can take the house. That’s the deal. And if anyone should know the ins and outs of these types of deals, it’s the lenders who do them everyday. Countrywide decided to go 95% LTV on this deal and now they are going to get pounded. Countrywide made a business decision and the deal is turning out bad. If this guy pledged his $90K, his 401K, his car, his baseball card collection, etc etc, as collateral for the deal, then those assets are in play. But that’s not the case here.
July 11, 2007 at 12:19 PM #65240ParticipantHis $90K is safe and he won’t get hit with a 1099. The fallout to him will be limited to a credit ding (more like dent).
As for what he should do – ethically – that’s another question. If you boil his deal with the lenders down to its essence, the agreement was that he will make certain payments over a certain period of time, and if he does not they can take the house. That’s the deal. And if anyone should know the ins and outs of these types of deals, it’s the lenders who do them everyday. Countrywide decided to go 95% LTV on this deal and now they are going to get pounded. Countrywide made a business decision and the deal is turning out bad. If this guy pledged his $90K, his 401K, his car, his baseball card collection, etc etc, as collateral for the deal, then those assets are in play. But that’s not the case here.
July 11, 2007 at 12:28 PM #65242lonestar2000
ParticipantDaCounselor is correct, if he put no other assets up as collateral he has no obligation to liquidate them to pay the mortgage. Considering how much me makes he will not be able to afford the payments long term, so he should cut his losses and walk.
He should rent a place and allow thant 90k to grow over the next two years, at which point he’ll be able to buy the same house at a price he can afford, and probably with some nice upgrades included.
July 11, 2007 at 12:28 PM #65305ParticipantDaCounselor is correct, if he put no other assets up as collateral he has no obligation to liquidate them to pay the mortgage. Considering how much me makes he will not be able to afford the payments long term, so he should cut his losses and walk.
He should rent a place and allow thant 90k to grow over the next two years, at which point he’ll be able to buy the same house at a price he can afford, and probably with some nice upgrades included.
July 11, 2007 at 12:39 PM #65244Ash Housewares
ParticipantWhy these banks make loans to people with so little skin in the game is beyond me. The banks take almost all the risk (if the market declines) and the buyer gets all the reward (if market appreciates). They made a bad business decision in loaning the money in the first place, plain and simple.
Think of it this way: by walking, your friend is effectively spending the 5% (~30k? can’t remember the purchase price) down to receive 100k debt reduction. Sounds like a good deal to me. He’d be crazy not to walk.
July 11, 2007 at 12:39 PM #65307ParticipantWhy these banks make loans to people with so little skin in the game is beyond me. The banks take almost all the risk (if the market declines) and the buyer gets all the reward (if market appreciates). They made a bad business decision in loaning the money in the first place, plain and simple.
Think of it this way: by walking, your friend is effectively spending the 5% (~30k? can’t remember the purchase price) down to receive 100k debt reduction. Sounds like a good deal to me. He’d be crazy not to walk.
July 11, 2007 at 12:40 PM #65246waiting hawk
ParticipantStick it to Countrywide. Casey and everyone else is. 1 more wont kill em (or maybe it will).
July 11, 2007 at 12:40 PM #65309ParticipantStick it to Countrywide. Casey and everyone else is. 1 more wont kill em (or maybe it will).
July 11, 2007 at 1:14 PM #65252Alex_angel
Participantwho’s Casey?
July 11, 2007 at 1:14 PM #65315Participantwho’s Casey?
July 11, 2007 at 2:11 PM #65321blue_sky
Participant“who’s Casey?”
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