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(former)FormerSanDiegan
ParticipantAn introduction …
Alex this is inflation. Inflation, this is Alex. The two of you are going to be seeing a lot more of each other in the next few years.
Participantn_s_r – I generally agree with all of your points. A borrower needs to account for ARM resets if/when agreeing to the loan. It may have been irresponsible in this case. If he made 200K when purchasing, but now makes 40K, it may be a combinaiton of factors, not just irresponsibility. It may include a combination of lack of foresight, low intelligence, irresponsibility and bad luck.
The banks do have a fiduciary responsibility to “devine” the future via assessing their risks for loans they are originating and/or purchasing.
Having formerly been in debt to the tune of about 35K when I finished school, I believe in taking personal responsibility for my affairs and think others should do the same. I spent a few years climbing out of my own personal hole and I believe that I am better off now having done so.
However, it is easy to be noble in the abstract without having to walk in this man’s shoes. You may think that the noble thing for him would be to try to scratch by, draw down his cash and maybe take on some room-mates, so that he can go broke at age 55-60, rather than taking his lumps now and trying to recover financially before it’s too late to recover.
Perhaps if he chooses the trying to scratch by path he actually becomes more of a burden to society in the long run.
Consider this. The US debt currently amounts to $29,354 per man/woman and child in this country.
The noble thing to do financially would be for each of us to send a check to the Internal Revenue Service for about 30K for ourselves and each of our dependents. The law does not require this, but maybe it is the right thing to do.Let me know when you send in your check.
Participantn_s_r – I generally agree with all of your points. A borrower needs to account for ARM resets if/when agreeing to the loan. It may have been irresponsible in this case. If he made 200K when purchasing, but now makes 40K, it may be a combinaiton of factors, not just irresponsibility. It may include a combination of lack of foresight, low intelligence, irresponsibility and bad luck.
The banks do have a fiduciary responsibility to “devine” the future via assessing their risks for loans they are originating and/or purchasing.
Having formerly been in debt to the tune of about 35K when I finished school, I believe in taking personal responsibility for my affairs and think others should do the same. I spent a few years climbing out of my own personal hole and I believe that I am better off now having done so.
However, it is easy to be noble in the abstract without having to walk in this man’s shoes. You may think that the noble thing for him would be to try to scratch by, draw down his cash and maybe take on some room-mates, so that he can go broke at age 55-60, rather than taking his lumps now and trying to recover financially before it’s too late to recover.
Perhaps if he chooses the trying to scratch by path he actually becomes more of a burden to society in the long run.
Consider this. The US debt currently amounts to $29,354 per man/woman and child in this country.
The noble thing to do financially would be for each of us to send a check to the Internal Revenue Service for about 30K for ourselves and each of our dependents. The law does not require this, but maybe it is the right thing to do.Let me know when you send in your check.
ParticipantL J R – If I Assume the following (based on the info you’ve provided):
1. the application was legit
2. intermediate-term increase in income prospects are slim
3. He has enough savings to make about 2 years or less worht of mortgage payments.
4. unlikely to see a rebound of the property in a timeframe for which he could carry the loan with his assets
4. That all loans on the property were the initial purchase loans (no refi’s) for primary residence.
5. The loan payment is more than his current monthly income.If it were my friend, I would recommend that he spend a small portion of my savings to contact a real estate attorney to weigh the option of walking.
Screwing over the banks, pension funds and/or other purchasers of MBS’ based on this guys poor judgment sucks, but I don’t see many other options other than bleeding away his life savings over the next 2 years.
Of course, that same logic doesn’t apply to the borrower. You thinks his risk is just the credit ding.
n_s_r – It’s not about logic it’s about the law and economic survival.ParticipantL J R – If I Assume the following (based on the info you’ve provided):
1. the application was legit
2. intermediate-term increase in income prospects are slim
3. He has enough savings to make about 2 years or less worht of mortgage payments.
4. unlikely to see a rebound of the property in a timeframe for which he could carry the loan with his assets
4. That all loans on the property were the initial purchase loans (no refi’s) for primary residence.
5. The loan payment is more than his current monthly income.If it were my friend, I would recommend that he spend a small portion of my savings to contact a real estate attorney to weigh the option of walking.
Screwing over the banks, pension funds and/or other purchasers of MBS’ based on this guys poor judgment sucks, but I don’t see many other options other than bleeding away his life savings over the next 2 years.
Of course, that same logic doesn’t apply to the borrower. You thinks his risk is just the credit ding.
n_s_r – It’s not about logic it’s about the law and economic survival.ParticipantIf the loans were purchase loans for a owner occupied property they are non-recourse loans according to CA state law. Therefore, if he defaults and the bank or loan holder forecloses, they have no right to his other assets to make themselves whole. The lenders for primary residence purchase loans in CA understand the rules, too, so they are just as culpable (unless of course there was fraud on the buyers’ part). Since the guy makes 45K there is a distinct possibility that he may have committed fraud on his application. After all the loan is over 14x his income. This would complicate this situation from a legal standpoint.
If it were me, I would take all things into consideration:
including my assets, potential income in the next few years, likelihood of the property value recovering to the purchase price, etc. I would attempt to map out a way to do the right thing and pay my debt. If, after careful analysis I realize that there is zero or low probability of being able to do so, I would investigate the other options, such as allowing foreclosure and walking away with bad credit for the next 3-7 years. I don;t think there are any refinance options for this guy.Of course, it would appear that this person is mathematically challenged. A similar analysis of this situation prior to getting a home loan equal to about 14x his income, would have kept him out of this mess.
ParticipantIf the loans were purchase loans for a owner occupied property they are non-recourse loans according to CA state law. Therefore, if he defaults and the bank or loan holder forecloses, they have no right to his other assets to make themselves whole. The lenders for primary residence purchase loans in CA understand the rules, too, so they are just as culpable (unless of course there was fraud on the buyers’ part). Since the guy makes 45K there is a distinct possibility that he may have committed fraud on his application. After all the loan is over 14x his income. This would complicate this situation from a legal standpoint.
If it were me, I would take all things into consideration:
including my assets, potential income in the next few years, likelihood of the property value recovering to the purchase price, etc. I would attempt to map out a way to do the right thing and pay my debt. If, after careful analysis I realize that there is zero or low probability of being able to do so, I would investigate the other options, such as allowing foreclosure and walking away with bad credit for the next 3-7 years. I don;t think there are any refinance options for this guy.Of course, it would appear that this person is mathematically challenged. A similar analysis of this situation prior to getting a home loan equal to about 14x his income, would have kept him out of this mess.
ParticipantJennyo – Thanks for the sanity check. I think the same conspiracy comments were made on this board last summer when they released growth projections..
ParticipantJennyo – Thanks for the sanity check. I think the same conspiracy comments were made on this board last summer when they released growth projections..
Participantkewp – I agree. Don’t see ultra-rich swooping in to save the market anywhere.
I do wonder if the downtown condo market will get snatched up as vacation homes/rentals for foreigners when the bottom falls out, though.
What about other parts of the US and CA ? I could see wealthy folks in LA, SF, and other parts of the west being a significant part of the condo market at some price point.
Participantkewp – I agree. Don’t see ultra-rich swooping in to save the market anywhere.
I do wonder if the downtown condo market will get snatched up as vacation homes/rentals for foreigners when the bottom falls out, though.
What about other parts of the US and CA ? I could see wealthy folks in LA, SF, and other parts of the west being a significant part of the condo market at some price point.
Participant“You’re assuming that they would actually buy in these foreign locales.”
Not necessarilly. But I am assuming that the rent is related to the underlying price. More expensive places to buy tend to be more expensive to rent. I believe that many of the places mentioned are considerably more expensive than southern California to rent or purchase.
Participant“You’re assuming that they would actually buy in these foreign locales.”
Not necessarilly. But I am assuming that the rent is related to the underlying price. More expensive places to buy tend to be more expensive to rent. I believe that many of the places mentioned are considerably more expensive than southern California to rent or purchase.
ParticipantThey’ll spend 3-6 months on Hawaii, 3-6 months in Buenos Aires, 3-6 months outside Lisbon, 3-6 months in Greece or Turkey, 3-6 in Thailand, 3-6 months in Australia, 3-6 months in Indonesia, 3-6 oonths in coastal France, 3-6 months in Coastal Italy, 3-6 months in Costa Rica, 3-6 months in Brazil, 3-6 months outside Johannesburg, 3 months for a summer in Norway, 3 months in Amsterdam, 3 months in Ireland, on and on and on…
So, what are prices like in Lisbon, Hawaii, Buenos Aires, Norway, Australia, etc ?
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