[DaCounselor]

We can probably all agree on the list of market conditions that helped form the “perfect storm” in inflating the real estate bubble and ultimately leading many to ask themselves the question “to walk or not to walk?” In my mind, however, the decision regarding walking is much more forward-looking than its opposite counterpart.

Certainly I think there are those that may attempt to justify/rationalize a walk-away by more than just chalking it up to a business decision but by also indicting “the system” for creating the environment that precipitated them putting on their walking shoes. So there is some backward-looking analysis by some. Nevertheless, I have little doubt that the primary issue is forward-looking – ie, “what will happen to me if I walk?” Using this rationale, you can make the argument that it is the non-recourse nature of CA purchase money loans and the historical lack of pursuit of judicial foreclosures/deficiency judgments by lenders as to recourse loans that cinches the decision to walk. Bottom line being that if a borrower was facing not only ruined credit but also a strong likelihood of a judgment against them for six figures, they would have to be more inclined to take that second job, rent out that room, etc, to try and salvage the situation. Recourse (or lack thereof) is THE issue with respect to walking away.

[DaCounselor]

We can probably all agree on the list of market conditions that helped form the “perfect storm” in inflating the real estate bubble and ultimately leading many to ask themselves the question “to walk or not to walk?” In my mind, however, the decision regarding walking is much more forward-looking than its opposite counterpart.

Certainly I think there are those that may attempt to justify/rationalize a walk-away by more than just chalking it up to a business decision but by also indicting “the system” for creating the environment that precipitated them putting on their walking shoes. So there is some backward-looking analysis by some. Nevertheless, I have little doubt that the primary issue is forward-looking – ie, “what will happen to me if I walk?” Using this rationale, you can make the argument that it is the non-recourse nature of CA purchase money loans and the historical lack of pursuit of judicial foreclosures/deficiency judgments by lenders as to recourse loans that cinches the decision to walk. Bottom line being that if a borrower was facing not only ruined credit but also a strong likelihood of a judgment against them for six figures, they would have to be more inclined to take that second job, rent out that room, etc, to try and salvage the situation. Recourse (or lack thereof) is THE issue with respect to walking away.

[DaCounselor]

We can probably all agree on the list of market conditions that helped form the “perfect storm” in inflating the real estate bubble and ultimately leading many to ask themselves the question “to walk or not to walk?” In my mind, however, the decision regarding walking is much more forward-looking than its opposite counterpart.

Certainly I think there are those that may attempt to justify/rationalize a walk-away by more than just chalking it up to a business decision but by also indicting “the system” for creating the environment that precipitated them putting on their walking shoes. So there is some backward-looking analysis by some. Nevertheless, I have little doubt that the primary issue is forward-looking – ie, “what will happen to me if I walk?” Using this rationale, you can make the argument that it is the non-recourse nature of CA purchase money loans and the historical lack of pursuit of judicial foreclosures/deficiency judgments by lenders as to recourse loans that cinches the decision to walk. Bottom line being that if a borrower was facing not only ruined credit but also a strong likelihood of a judgment against them for six figures, they would have to be more inclined to take that second job, rent out that room, etc, to try and salvage the situation. Recourse (or lack thereof) is THE issue with respect to walking away.

[DaCounselor]

We can probably all agree on the list of market conditions that helped form the “perfect storm” in inflating the real estate bubble and ultimately leading many to ask themselves the question “to walk or not to walk?” In my mind, however, the decision regarding walking is much more forward-looking than its opposite counterpart.

Certainly I think there are those that may attempt to justify/rationalize a walk-away by more than just chalking it up to a business decision but by also indicting “the system” for creating the environment that precipitated them putting on their walking shoes. So there is some backward-looking analysis by some. Nevertheless, I have little doubt that the primary issue is forward-looking – ie, “what will happen to me if I walk?” Using this rationale, you can make the argument that it is the non-recourse nature of CA purchase money loans and the historical lack of pursuit of judicial foreclosures/deficiency judgments by lenders as to recourse loans that cinches the decision to walk. Bottom line being that if a borrower was facing not only ruined credit but also a strong likelihood of a judgment against them for six figures, they would have to be more inclined to take that second job, rent out that room, etc, to try and salvage the situation. Recourse (or lack thereof) is THE issue with respect to walking away.

[DaCounselor]

China’s market was well overbought by ’07. Were there really people here on pigginton hyping the days of the 6K index as a good time to jump into China? While staring the face of overt Chinese gov’t tightening measures?

I’m still not in love with China even after the tremendous devaluation of its market but I am at least now paying attention to a few indices and will eventually get into China if there is a bit more downward movement. If Jim Rogers is right, it’s China and commodities moving forward.

[DaCounselor]

China’s market was well overbought by ’07. Were there really people here on pigginton hyping the days of the 6K index as a good time to jump into China? While staring the face of overt Chinese gov’t tightening measures?

I’m still not in love with China even after the tremendous devaluation of its market but I am at least now paying attention to a few indices and will eventually get into China if there is a bit more downward movement. If Jim Rogers is right, it’s China and commodities moving forward.

[DaCounselor]

China’s market was well overbought by ’07. Were there really people here on pigginton hyping the days of the 6K index as a good time to jump into China? While staring the face of overt Chinese gov’t tightening measures?

I’m still not in love with China even after the tremendous devaluation of its market but I am at least now paying attention to a few indices and will eventually get into China if there is a bit more downward movement. If Jim Rogers is right, it’s China and commodities moving forward.

[DaCounselor]

China’s market was well overbought by ’07. Were there really people here on pigginton hyping the days of the 6K index as a good time to jump into China? While staring the face of overt Chinese gov’t tightening measures?

I’m still not in love with China even after the tremendous devaluation of its market but I am at least now paying attention to a few indices and will eventually get into China if there is a bit more downward movement. If Jim Rogers is right, it’s China and commodities moving forward.

[DaCounselor]

China’s market was well overbought by ’07. Were there really people here on pigginton hyping the days of the 6K index as a good time to jump into China? While staring the face of overt Chinese gov’t tightening measures?

I’m still not in love with China even after the tremendous devaluation of its market but I am at least now paying attention to a few indices and will eventually get into China if there is a bit more downward movement. If Jim Rogers is right, it’s China and commodities moving forward.

[DaCounselor]

Sounds like a potentially dangerous strategy to me. Regarding the $60K balance transfer, I have not seen a no-fee deal recently – they may be out there but what I am seeing is typically a 3% fee deal with no cap. On $60K, that’s $1800 in fees. The $4200 HELOC interest is tax deductable, so you are probably looking at about $3K out of pocket. So you are probably looking at saving a little over $1K for the year. Is this enough savings to offset the risk of a HELOC reduction to the point where you can’t draw to pay off the CC? If you get stuck in the CC your carrying costs will be huge – you are looking at monthly minimum payments in $1200-1800 range on the $60K – ouch. Compare that to a HELOC payment of what – about $400-450/month on $60K? Personally, I would pass on this strategy.

[DaCounselor]

Sounds like a potentially dangerous strategy to me. Regarding the $60K balance transfer, I have not seen a no-fee deal recently – they may be out there but what I am seeing is typically a 3% fee deal with no cap. On $60K, that’s $1800 in fees. The $4200 HELOC interest is tax deductable, so you are probably looking at about $3K out of pocket. So you are probably looking at saving a little over $1K for the year. Is this enough savings to offset the risk of a HELOC reduction to the point where you can’t draw to pay off the CC? If you get stuck in the CC your carrying costs will be huge – you are looking at monthly minimum payments in $1200-1800 range on the $60K – ouch. Compare that to a HELOC payment of what – about $400-450/month on $60K? Personally, I would pass on this strategy.

[DaCounselor]

Sounds like a potentially dangerous strategy to me. Regarding the $60K balance transfer, I have not seen a no-fee deal recently – they may be out there but what I am seeing is typically a 3% fee deal with no cap. On $60K, that’s $1800 in fees. The $4200 HELOC interest is tax deductable, so you are probably looking at about $3K out of pocket. So you are probably looking at saving a little over $1K for the year. Is this enough savings to offset the risk of a HELOC reduction to the point where you can’t draw to pay off the CC? If you get stuck in the CC your carrying costs will be huge – you are looking at monthly minimum payments in $1200-1800 range on the $60K – ouch. Compare that to a HELOC payment of what – about $400-450/month on $60K? Personally, I would pass on this strategy.

[DaCounselor]

Sounds like a potentially dangerous strategy to me. Regarding the $60K balance transfer, I have not seen a no-fee deal recently – they may be out there but what I am seeing is typically a 3% fee deal with no cap. On $60K, that’s $1800 in fees. The $4200 HELOC interest is tax deductable, so you are probably looking at about $3K out of pocket. So you are probably looking at saving a little over $1K for the year. Is this enough savings to offset the risk of a HELOC reduction to the point where you can’t draw to pay off the CC? If you get stuck in the CC your carrying costs will be huge – you are looking at monthly minimum payments in $1200-1800 range on the $60K – ouch. Compare that to a HELOC payment of what – about $400-450/month on $60K? Personally, I would pass on this strategy.

[DaCounselor]

Sounds like a potentially dangerous strategy to me. Regarding the $60K balance transfer, I have not seen a no-fee deal recently – they may be out there but what I am seeing is typically a 3% fee deal with no cap. On $60K, that’s $1800 in fees. The $4200 HELOC interest is tax deductable, so you are probably looking at about $3K out of pocket. So you are probably looking at saving a little over $1K for the year. Is this enough savings to offset the risk of a HELOC reduction to the point where you can’t draw to pay off the CC? If you get stuck in the CC your carrying costs will be huge – you are looking at monthly minimum payments in $1200-1800 range on the $60K – ouch. Compare that to a HELOC payment of what – about $400-450/month on $60K? Personally, I would pass on this strategy.

[DaCounselor]

This game of chicken is going to be played over and over again. I expect a growing secondary market for recourse Heloc judgments. I’m curious what the typical cents-on-the-dollar purchase prices will be.

I would not be surprised to also see non-recourse 2nds/Helocs play hardball with borrowers at the outset, but at the end of the day these lenders are going to have to cave. Many are looking at total losses.

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