[UCGal]

[quote=SK in CV]Great post analyst.

When homebuyers and lenders enter into mortgage contracts, each side takes on risks. Included in the risk that the lender assumes, is that the collateral will maintain value in excess of the loan amount. When that doesn’t happen and a homeowner continues to make payments, for whatever reason, they are performing above and beyond the implied expectations of the contract.

I find it no more immoral for borrowers to stop paying in these circumstances than for the lender to foreclose. (Actually, I don’t think ethics or morals should even be a consideration. Lender corporations, despite the courts treatment of them as a “person”, rarely act out of ethical or moral considerations. They act based of legal considerations.)

Things get a little bit dicier for recourse loans, risks are greater for the borrrower, more options exist for the lender. But morals and ethics still don’t come into play in any greater degree. Risks are still taken by the lender. And the legal consequences of failing to pay are spelled out in the contract. Both borrower and lender have to live with those consequences.[/quote]

I would argue that to stop paying while continuing to live in the home is unethical. It’s trying to play both sides. Breaking the contract but still reaping the benefits (occupation of the house.)

I believe that there is plenty of blame and pain to share among the parties to the contract – borrower loses downpayment and takes credit hit. Lender takes hit to investment and has costs associated with reselling the property. But if the person doesn’t vacate and chooses to not pay – in some ways, that’s theft. It’s kind of like “dining and dashing”. They are reaping the benefits without the costs.

[UCGal]

[quote=SK in CV]Great post analyst.

When homebuyers and lenders enter into mortgage contracts, each side takes on risks. Included in the risk that the lender assumes, is that the collateral will maintain value in excess of the loan amount. When that doesn’t happen and a homeowner continues to make payments, for whatever reason, they are performing above and beyond the implied expectations of the contract.

I find it no more immoral for borrowers to stop paying in these circumstances than for the lender to foreclose. (Actually, I don’t think ethics or morals should even be a consideration. Lender corporations, despite the courts treatment of them as a “person”, rarely act out of ethical or moral considerations. They act based of legal considerations.)

Things get a little bit dicier for recourse loans, risks are greater for the borrrower, more options exist for the lender. But morals and ethics still don’t come into play in any greater degree. Risks are still taken by the lender. And the legal consequences of failing to pay are spelled out in the contract. Both borrower and lender have to live with those consequences.[/quote]

I would argue that to stop paying while continuing to live in the home is unethical. It’s trying to play both sides. Breaking the contract but still reaping the benefits (occupation of the house.)

I believe that there is plenty of blame and pain to share among the parties to the contract – borrower loses downpayment and takes credit hit. Lender takes hit to investment and has costs associated with reselling the property. But if the person doesn’t vacate and chooses to not pay – in some ways, that’s theft. It’s kind of like “dining and dashing”. They are reaping the benefits without the costs.

[UCGal]

[quote=SK in CV]Great post analyst.

When homebuyers and lenders enter into mortgage contracts, each side takes on risks. Included in the risk that the lender assumes, is that the collateral will maintain value in excess of the loan amount. When that doesn’t happen and a homeowner continues to make payments, for whatever reason, they are performing above and beyond the implied expectations of the contract.

I find it no more immoral for borrowers to stop paying in these circumstances than for the lender to foreclose. (Actually, I don’t think ethics or morals should even be a consideration. Lender corporations, despite the courts treatment of them as a “person”, rarely act out of ethical or moral considerations. They act based of legal considerations.)

Things get a little bit dicier for recourse loans, risks are greater for the borrrower, more options exist for the lender. But morals and ethics still don’t come into play in any greater degree. Risks are still taken by the lender. And the legal consequences of failing to pay are spelled out in the contract. Both borrower and lender have to live with those consequences.[/quote]

I would argue that to stop paying while continuing to live in the home is unethical. It’s trying to play both sides. Breaking the contract but still reaping the benefits (occupation of the house.)

I believe that there is plenty of blame and pain to share among the parties to the contract – borrower loses downpayment and takes credit hit. Lender takes hit to investment and has costs associated with reselling the property. But if the person doesn’t vacate and chooses to not pay – in some ways, that’s theft. It’s kind of like “dining and dashing”. They are reaping the benefits without the costs.

[UCGal]

This scenario actually happened to me 20 plus years ago. I rented a small 2 br house in Normal Heights on 36th street, adjacent to the old safeway. Turns out the guy I rented from had been hired by the Safeway corp to keep the lawn mowed and empty the house (and a bunch of others like it) because they were building “super stores”.) Instead he was living in one, and renting the others. 18 months later we get a letter from Safeway corp asking us what rent we’ve been playing and giving us 60 days notice. The guy went to jail.

It was a hassle to move – but it was a great and inexpensive place to live for a year and half when I was going to SDSU.

(House is now torn down with a supermarket on top of the site.)

[UCGal]

This scenario actually happened to me 20 plus years ago. I rented a small 2 br house in Normal Heights on 36th street, adjacent to the old safeway. Turns out the guy I rented from had been hired by the Safeway corp to keep the lawn mowed and empty the house (and a bunch of others like it) because they were building “super stores”.) Instead he was living in one, and renting the others. 18 months later we get a letter from Safeway corp asking us what rent we’ve been playing and giving us 60 days notice. The guy went to jail.

It was a hassle to move – but it was a great and inexpensive place to live for a year and half when I was going to SDSU.

(House is now torn down with a supermarket on top of the site.)

[UCGal]

This scenario actually happened to me 20 plus years ago. I rented a small 2 br house in Normal Heights on 36th street, adjacent to the old safeway. Turns out the guy I rented from had been hired by the Safeway corp to keep the lawn mowed and empty the house (and a bunch of others like it) because they were building “super stores”.) Instead he was living in one, and renting the others. 18 months later we get a letter from Safeway corp asking us what rent we’ve been playing and giving us 60 days notice. The guy went to jail.

It was a hassle to move – but it was a great and inexpensive place to live for a year and half when I was going to SDSU.

(House is now torn down with a supermarket on top of the site.)

[UCGal]

This scenario actually happened to me 20 plus years ago. I rented a small 2 br house in Normal Heights on 36th street, adjacent to the old safeway. Turns out the guy I rented from had been hired by the Safeway corp to keep the lawn mowed and empty the house (and a bunch of others like it) because they were building “super stores”.) Instead he was living in one, and renting the others. 18 months later we get a letter from Safeway corp asking us what rent we’ve been playing and giving us 60 days notice. The guy went to jail.

It was a hassle to move – but it was a great and inexpensive place to live for a year and half when I was going to SDSU.

(House is now torn down with a supermarket on top of the site.)

[UCGal]

This scenario actually happened to me 20 plus years ago. I rented a small 2 br house in Normal Heights on 36th street, adjacent to the old safeway. Turns out the guy I rented from had been hired by the Safeway corp to keep the lawn mowed and empty the house (and a bunch of others like it) because they were building “super stores”.) Instead he was living in one, and renting the others. 18 months later we get a letter from Safeway corp asking us what rent we’ve been playing and giving us 60 days notice. The guy went to jail.

It was a hassle to move – but it was a great and inexpensive place to live for a year and half when I was going to SDSU.

(House is now torn down with a supermarket on top of the site.)

[UCGal]

Being a nerdly engineer… I’d do a cost benefit analysis…

Short sale – if you have a non-recourse loan and the bank agrees… Less ding to the credit.

Foreclosure – bigger hit to the credit score longterm.

If you thought for sure you might be coming back to the area in the future – it might be worth hanging on to it and renting it out (covering the difference between rent/owning…) But only if the condo meets your needs long term. Since you only planned to hold into it for 5 years… it probably doesn’t.

My advice – take a full look at the benefits and consequences of each choice… then determine what you are most comfortable with.

[UCGal]

Being a nerdly engineer… I’d do a cost benefit analysis…

Short sale – if you have a non-recourse loan and the bank agrees… Less ding to the credit.

Foreclosure – bigger hit to the credit score longterm.

If you thought for sure you might be coming back to the area in the future – it might be worth hanging on to it and renting it out (covering the difference between rent/owning…) But only if the condo meets your needs long term. Since you only planned to hold into it for 5 years… it probably doesn’t.

My advice – take a full look at the benefits and consequences of each choice… then determine what you are most comfortable with.

[UCGal]

Being a nerdly engineer… I’d do a cost benefit analysis…

Short sale – if you have a non-recourse loan and the bank agrees… Less ding to the credit.

Foreclosure – bigger hit to the credit score longterm.

If you thought for sure you might be coming back to the area in the future – it might be worth hanging on to it and renting it out (covering the difference between rent/owning…) But only if the condo meets your needs long term. Since you only planned to hold into it for 5 years… it probably doesn’t.

My advice – take a full look at the benefits and consequences of each choice… then determine what you are most comfortable with.

[UCGal]

Being a nerdly engineer… I’d do a cost benefit analysis…

Short sale – if you have a non-recourse loan and the bank agrees… Less ding to the credit.

Foreclosure – bigger hit to the credit score longterm.

If you thought for sure you might be coming back to the area in the future – it might be worth hanging on to it and renting it out (covering the difference between rent/owning…) But only if the condo meets your needs long term. Since you only planned to hold into it for 5 years… it probably doesn’t.

My advice – take a full look at the benefits and consequences of each choice… then determine what you are most comfortable with.

[UCGal]

Being a nerdly engineer… I’d do a cost benefit analysis…

Short sale – if you have a non-recourse loan and the bank agrees… Less ding to the credit.

Foreclosure – bigger hit to the credit score longterm.

If you thought for sure you might be coming back to the area in the future – it might be worth hanging on to it and renting it out (covering the difference between rent/owning…) But only if the condo meets your needs long term. Since you only planned to hold into it for 5 years… it probably doesn’t.

My advice – take a full look at the benefits and consequences of each choice… then determine what you are most comfortable with.

[UCGal]

[quote=Allan from Fallbrook][quote=UCGal][quote=Allan from Fallbrook]UCGal: I occasionally see large purple spiders battling it out in my living room.

Is that bad?[/quote]

That made me laugh.[/quote]

UCGal: Yeah, but what if I wasn’t kidding?!?[/quote]

Then I’m terrified. From your posts you’re heavily armed and have access to lots of explosives. Yikes.

[UCGal]

[quote=Allan from Fallbrook][quote=UCGal][quote=Allan from Fallbrook]UCGal: I occasionally see large purple spiders battling it out in my living room.

Is that bad?[/quote]

That made me laugh.[/quote]

UCGal: Yeah, but what if I wasn’t kidding?!?[/quote]

Then I’m terrified. From your posts you’re heavily armed and have access to lots of explosives. Yikes.

[Author]

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