Report shows strategic defaults increasing

User Forum Topic
Submitted by Arraya on March 27, 2010 - 5:04pm

http://blogs.reuters.com/rolfe-winkler/2...

How widespread are strategic defaults? Laurie Goodman and her team at Amherst Mortgage Insight yesterday released a report that shows they are indeed on the rise and for reasons we might suspect: negative equity and a more borrower-friendly environment.

The second reason should be kept in mind as we consider President Obama’s soon-to-be-announced plan to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, well, expect defaults to spike.

Strategic default isn’t necessarily synonymous with mailing your keys to the bank and walking away. It may simply mean a borrower choosing to stop payments to the bank when economic incentives would have him do so. Amherst has come up with a novel metric to measure strategic default — the “default transition rate.” DTR looks at the percentage of borrowers who’ve never been more than one payment behind on their mortgage suddenly missing two payments in a row.

Lo and behold, negative equity leads more folks to strategically default, regardless of their credit score and whether they took out a liar loan:

Submitted by briansd1 on March 30, 2010 - 5:26pm.

Arraya wrote:
Actually, you could blow up every bank in the world along with wall street put the dow at zero and the world would be fine. It does not change the natural order of things one bit.

I agree Arraya.

When the debts become unsustainable and the financial system collapses, we will just hit the reset button. Leaders will get together and reallocate the assets. Military armadas will be moved around to provide for best negotiating positions.

There won't be Armageddon, just a rearranging of the pieces.

In the mean time, we need credit to flow so that economic activity continues uninterrupted and so that Walmart store stay fully stocked.

Submitted by SD Realtor on March 30, 2010 - 5:42pm.

Fantastic posts. I think you post to read what you write. Bottom line is none of what you said addressed my points. To me the bailouts are a waste of money, have kept the corrupt in power (and I don't mean politically), killed the natural cycle of real estate bust and boom cycles, punished those who have saved diligently, heaped trillions of debt upon the taxpayers, and will result in delaying the recovery perhaps substantially. I don't buy the dog and pony show about keeping the social order you referred to.

Submitted by FormerSanDiegan on March 30, 2010 - 6:09pm.

briansd1 wrote:

You make an excellent point jpinpb.

Debt repayment does not contribute to economic activity. You need spending on goods and services to support the economy.

So the deadbeats are doing the right things and helping us avert a deeper recession by not paying the banks and spending on other things.

This is not necessarily true. Consider the flip side. Some person, group of persons, pension fund or other entity or group of entities was expecting a return on their money.

If you have money in CDs for example, you might use the interest to buy stuff. If the holder of the CD stops paying, guess what, you no longer have that income to buy stuff.

Furthermore, the loan repayments not being made back to the bank result in less capital available within the banking system for providing lending for productive purposes.

Submitted by briansd1 on March 30, 2010 - 6:53pm.

SD Realtor wrote:
To me the bailouts are a waste of money

But you notice that the government bailouts work in holding up real estate values, and driving sales activity.

To me, the bailouts are a waste of money only if they don't work for the intended purposes.

I believe that, in the long term, after inflation, house prices will be at a trough that would have been reached had there been no bailouts. In that respect, the bailouts will fail (That's why I advocate patience if one wants to buy that dream house).

But right now, the bailouts are working in providing stability to the markets. That's the intended purpose of the bailouts.

The Federal Reserve bailout money will be paid back over time, less some write offs.

The TARP money will be paid back with some write offs.

I think of this whole bailout thing as giving us some breathing room to preserve our standard of living and not cause wrenching social change. We are trading security now for future growth later.

Submitted by briansd1 on March 30, 2010 - 7:07pm.

FormerSanDiegan wrote:

This is not necessarily true. Consider the flip side.

Very true.

But a big portion of the money is owed to foreigners and pension funds that won't need to pay out the funds 'til later.

The money that deadbeats spend, right now, gets recycled into the economy faster. That's assuming they spend the money they don't pay the banks; but that would be a pretty safe bet.

Submitted by briansd1 on March 30, 2010 - 7:06pm.

Arraya wrote:
Actually, you could blow up every bank in the world along with wall street put the dow at zero and the world would be fine. It does not change the natural order of things one bit.

How you see the cataclysm you warned against come about, considering that the natural order of things doesn't depend on the financial system?

Submitted by NotCranky on March 30, 2010 - 7:55pm.

briansd1 wrote:
SD Realtor wrote:
To me the bailouts are a waste of money

But you notice that the government bailouts work in holding up real estate values, and driving sales activity.

To me, the bailouts are a waste of money only if they don't work for the intended purposes.

I believe that, in the long term, after inflation, house prices will be at a trough that would have been reached had there been no bailouts. In that respect, the bailouts will fail (That's why I advocate patience if one wants to buy that dream house).

But right now, the bailouts are working in providing stability to the markets. That's the intended purpose of the bailouts.

The Federal Reserve bailout money will be paid back over time, less some write offs.

The TARP money will be paid back with some write offs.

I think of this whole bailout thing as giving us some breathing room to preserve our standard of living and not cause wrenching social change. We are trading security now for future growth later.

I think you are at least in some parts correct. We are having a reset and I will be able to pay my house off with a box of tomatoes in a few years. However, is there no such thing as moral hazard?

It's principle reductions to overspenders that has me peeved. If Obama is spokesman for this and the rest of the continued corruption, he should be held as accountable as Bush should have been accountable otherwise there is a double standard.

You want to preserve our standard of living. How about instead of giving rate and principle reductions to gluttons, asking the public if they want the house at the terms offered to the strategic defaulter. Of course, the defaulter would probably strip it first in that case.

Besides robbing society of truly shared services or support to the weakest, propping up, middle and upper middle class FB's is also pre-selecting others for austerity(equalizer you're next). How could any "real american" not have a problem with that? What are they going to do next say that FB'S can have your job? That you must share your equity with your more gluttonous comrades who are broke. We are not talking about helping those who need it. This kind of socialism should bother you, Brian.

I'd rather risk as crash and serious permanent set- back to our standard of living than have "spokesman" after "spokesman" sell us these strategies of help the biggest crook and cheat. And no, I never believed the end of the world propaganda. I believe a large fraud has been perpetrated...period.

Submitted by scaredyclassic on March 30, 2010 - 8:55pm.

As I was making an offer of nearly half a million to some doofus who heloced the crap out of the place. Whhose agent is tellingme not enough we need more money from you I am sometimes thinking fuck you bank fuck you fb fuck you entire system. And I suppose that's why we have lawyers and agents so we don't start yelling those thoughts during negotiations but seriously ... The system is so retarded I occasionally feel spasms of telling it to go fuck itself then I remember it already has. I start therapy tomorrow

Submitted by SD Realtor on March 30, 2010 - 9:05pm.

Brian you are hilarious. Really. Your postings here rival your posts on why you don't like american women or why they don't like you. In this one thread alone you talk about the importance of credit and how our country runs on it but then you advocate deadbeatism which in term ruins credit and even try to give some bizarre argument about how being a deadbeat helps the economy. How about moving out of the house, letting it foreclose, and rent something alot cheaper. Then you get to pay less for your shelter, spend more to "recycle" into Brians economy, and the foreclosed home gets sold to someone who will afford it and it will be sold at the correct market value. I guess that makes to much sense. Forget it your right. Credit for everyone and nobody needs to worry about being a deadbeat because it all will magically work. Sounds good man. I guess your most recent posts are the only ones that really count. Why stick with one point when you can conveniently jump to another.

Submitted by BillS78 on March 30, 2010 - 11:55pm.

briansd1 wrote:
jpinpb wrote:
BillS78 wrote:

Now it's 20 months later and still no NOD.

When I talk about people living for free not paying their mortgage and not receiving NODs, they think it's an rare, isolated incident.

20 months of living for free is nothing to sneeze at considering that most first time buyers buy with hardly any skin in the game.

Going on 2 years of free housing is a huge windfall that few would pass up if they had the option.

I have to laugh at the bitter people like desmond and even SD realtor, sucks to be them.

I don't know why my lender hasn't sent out a NOD yet but I've lived up to my side of the contract, I'm not leaving till they live up to their side. Maybe if I stop watering the grass and doing all the other upkeep they'll get the hint. Sure hope they foreclose before the end of 2012, wouldn't want to pay Fed income tax on this place. ;)

It's hilarious to hear the shylocks' servant SDrealtor call people deadbeats.

Submitted by BillS78 on March 31, 2010 - 12:13am.

SD Realtor wrote:
Yes they are living for free. Just remember you are paying for them. As will everyone else in your family who pays federal taxes. So each deadbeat that lives for free sucks money away from all the social programs that you feel are essential to our country.
No one is paying federal taxes for me, they are paying for the banking and lending industries that make your completely worthless profession possible. You are the real leech in this scenario, the bailout money and HAMP are your livelihood.

Submitted by BillS78 on March 31, 2010 - 12:30am.

jpinpb wrote:
That's what I keep thinking. The only reason our economy hasn't completely collapsed is those people who are strategically not paying their mortgage are using the money for other things. Your biggest expense is housing and cars. If you don't have to pay for housing, that's a lot of discretionary spending. But I'm sure there are people in a bad way and not paying a mortgage could mean they have no money so nothing is going towards spending to help the economy.
I did buy a Kuro 600m with a surround sound setup, a near mint 1977 Gibson SG, and 2 weeks in Europe last year just to help the economy.

But seriously, the best thing to come of all this, other than my financial gain and a valuable lesson learned about relationships, is that I've been able to help my friend through grad school by letting him live here rent free.

Submitted by cabal on March 31, 2010 - 12:33am.

BillS78 wrote:
Here's my not so planned strategic default story.

I bought a house a little over 3 years ago for just under $570k. I was getting married that June after being together for 4 1/2 years. The loan amount was just about 5 times my annual income and less than 3 1/2 times our soon to be combined income. I was going to put 10% down but the mortgage broker said that I only needed to put down 3%, okay cool.

So we move in and then 2 months later she says she's done, it's over. Great. She gets stuck with the wedding deposits, and I have this big house that I don't really want but at least I took back the engagement ring. I get a friend to move in thinking that this will be doable and I can salvage my 810 credit rating, I'm only 28 this will work out.

By July of 08 I'd had it, the market was continuing to drop and my house was just this big thing I didn't need so I decided I wasn't going to pay anymore, it's a non-recourse loan they can have the house. I figure they'll probably take it back before the end of the year. I'm kind of a minimalist, my car is a 99 civic, and have no other debts and I can start fresh.

Now it's 20 months later and still no NOD. This is awesome. With all the money I've saved and made in the market this last year I could buy the exact same place down the street in the low $400Ks with 50% down. I wont but it's nice how this has worked out.

I don't blame anyone but myself, it was just a bad decision made for a relationship. I guess the moral of the story is when life gives you lemons make lemon aid, or just throw the lemons at your Ex.

Thank god I didn't marry her and there's no kids.

If you don’t mind further sharing…

- Have you received pestering calls from bill collectors?

- What has happened to your credit score?

- Who is your lender?

- Are you current on property taxes?

- Are you concerned about qualifying for another mortgage?

FYI – I don’t agree with everything SD R says, but his comments are usually well balanced, measured, and insightful. He adds a lot of value to this board.

Submitted by CA renter on March 31, 2010 - 1:29am.

BillS78 wrote:
SD Realtor wrote:
Yes they are living for free. Just remember you are paying for them. As will everyone else in your family who pays federal taxes. So each deadbeat that lives for free sucks money away from all the social programs that you feel are essential to our country.
No one is paying federal taxes for me, they are paying for the banking and lending industries that make your completely worthless profession possible. You are the real leech in this scenario, the bailout money and HAMP are your livelihood.

Bill,

You've been here for one day, yet you've managed to badmouth one of our valuable, long-time posters. Not cool.

We've all had our disagreements here, but it's extremely important that people present their facts and opinions (preferably based on logic, not emotions), then let the other side make their counterpoints. Name calling makes you look like you can't put a respectable argument together. You're not likely to gain any support for your ideas if you insult other posters.

Let's keep things civil, please.

Submitted by flu on March 31, 2010 - 5:53am.

delete.

Submitted by scaredyclassic on March 31, 2010 - 5:57am.

civility is valuable.

it does seem easier for a dude without a wife and kids and a grad student roommate to hang out nd wait for a NOD than a guy witha bunch of kids, a wife and various obligations. "free rent" is more valuable to a guy with fewer possessions and commitments. seems liek a very ucky covergence of circumstances that let you fully extract value from the situation.

Submitted by scaredyclassic on March 31, 2010 - 6:13am.

when people call lawyers "worthless beings" and real estate agents "leeches", i reflexively think "nuh-uh" but then also occasionally think, "well, at times".

Submitted by flu on March 31, 2010 - 7:09am.

cabal wrote:
BillS78 wrote:
Here's my not so planned strategic default story.

I bought a house a little over 3 years ago for just under $570k. I was getting married that June after being together for 4 1/2 years. The loan amount was just about 5 times my annual income and less than 3 1/2 times our soon to be combined income. I was going to put 10% down but the mortgage broker said that I only needed to put down 3%, okay cool.

So we move in and then 2 months later she says she's done, it's over. Great. She gets stuck with the wedding deposits, and I have this big house that I don't really want but at least I took back the engagement ring. I get a friend to move in thinking that this will be doable and I can salvage my 810 credit rating, I'm only 28 this will work out.

By July of 08 I'd had it, the market was continuing to drop and my house was just this big thing I didn't need so I decided I wasn't going to pay anymore, it's a non-recourse loan they can have the house. I figure they'll probably take it back before the end of the year. I'm kind of a minimalist, my car is a 99 civic, and have no other debts and I can start fresh.

Now it's 20 months later and still no NOD. This is awesome. With all the money I've saved and made in the market this last year I could buy the exact same place down the street in the low $400Ks with 50% down. I wont but it's nice how this has worked out.

I don't blame anyone but myself, it was just a bad decision made for a relationship. I guess the moral of the story is when life gives you lemons make lemon aid, or just throw the lemons at your Ex.

Thank god I didn't marry her and there's no kids.

If you don’t mind further sharing…

- Have you received pestering calls from bill collectors?

- What has happened to your credit score?

- Who is your lender?

- Are you current on property taxes?

- Are you concerned about qualifying for another mortgage?

FYI – I don’t agree with everything SD R says, but his comments are usually well balanced, measured, and insightful. He adds a lot of value to this board.

Don't get all worked up this one. I call B.S. on this one.

Let's do some analysis

BillS78 wrote:
Here's my not so planned strategic default story.

I bought a house a little over 3 years ago for just under $570k. I was getting married that June after being together for 4 1/2 years. The loan amount was just about 5 times my annual income and less than 3 1/2 times our soon to be combined income.

$114k salary.

Quote:

I was going to put 10% down but the mortgage broker said that I only needed to put down 3%, okay cool.

Supposedly had $57k to put down, ended up putting down $11.7k

Quote:
....personal stuff deleted.........I can salvage my 810 credit rating, I'm only 28 this will work out.
.....I'm kind of a minimalist, my car is a 99 civic, and have no other debts and I can start fresh.....Now it's 20 months later and still no NOD. This is awesome. With all the money I've saved and made in the market this last year I could buy the exact same place down the street in the low $400Ks with 50% down.

20 months of non-rent paying, are we to believe that now all the sudden you ahave $200k post-tax to put down?

Submitted by NotCranky on March 31, 2010 - 7:09am.

I think you would be wrong FLU. I agree with SDR, bill is a deadbeat. If it were not for bailouts he wouldn't be where he is at is all. SDrealtor would still be selling houses.

Submitted by flu on March 31, 2010 - 7:11am.

Russell wrote:
I think you would be wrong FLU. I agree with SDR, bill is a deadbeat. If it were not for bailouts he wouldn't be where he is at is all. SDrealtor would still be selling houses.

I find folks so blazen about debts like this tend to have some skeletons in the closet elsewhere....But that's just me.

Submitted by NotCranky on March 31, 2010 - 7:18am.

I think you would be wrong Flu.

Bill is a deadbeat. If it were not for bailouts Bill wouldn't be where he is at all. He would have been a shorter term deadbeat and would have been less harmful to restoring a market in which honest people can participate and cheaper for society. I think SdRealtor already explained this in his above post. Sdrealtor would still be selling houses.

Submitted by FormerSanDiegan on March 31, 2010 - 7:44am.

SD Realtor wrote:
Brian you are hilarious. Really. Your postings here rival your posts on why you don't like american women or why they don't like you. In this one thread alone you talk about the importance of credit and how our country runs on it but then you advocate deadbeatism which in term ruins credit and even try to give some bizarre argument about how being a deadbeat helps the economy. How about moving out of the house, letting it foreclose, and rent something alot cheaper. Then you get to pay less for your shelter, spend more to "recycle" into Brians economy, and the foreclosed home gets sold to someone who will afford it and it will be sold at the correct market value. I guess that makes to much sense. Forget it your right. Credit for everyone and nobody needs to worry about being a deadbeat because it all will magically work. Sounds good man. I guess your most recent posts are the only ones that really count. Why stick with one point when you can conveniently jump to another.

I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.

I figure that I am simply too dense to understand.

Submitted by Arraya on March 31, 2010 - 8:18am.

Flu caught him. he embellished on how much he has saved. who knows how much else this deviant deadbeat is hiding.

A friend of mine went through a foreclosure about 3 years ago, after much pestering from me. his credit score went back up above 700 in 18 months. though, he only had about 8 months free rent.

Bill obviously made a very responsible, prudent and wise financial decision. Given the information. On a board that berates the opposite I find that very hypocritical to criticize him for doing what ever body here preaches. Financial responsibility. Do we want people to be responsible or not.

This is what is interesting. We collectively criticize them for making the initial stupid decision. Then we continue to criticize them if they wise up. Which is really what the principle reductions are all about. Nipping in the bud people wising up and making wise financial decisions. If there was a sudden rash of financial responsibility it would cost us a lot more. In the form of millions of foreclosures. Then suddenly they turn from irresponsible FBs to deadbeats...

Submitted by jpinpb on March 31, 2010 - 8:26am.

BillS78 wrote:

But seriously, the best thing to come of all this, other than my financial gain and a valuable lesson learned about relationships, is that I've been able to help my friend through grad school by letting him live here rent free.

I'm glad to hear you at least paid it forward and helped someone w/education.

flu wrote:

20 months of non-rent paying, are we to believe that now all the sudden you ahave $200k post-tax to put down?

Could be he took the money that was not used for paying the mortgage and invested it in stocks or gold or something and made more money there. Not paying the mortgage gave him money that he used to invest that he otherwise would not have available.

Submitted by briansd1 on March 31, 2010 - 8:40am.

SD Realtor wrote:
Brian you are hilarious. Really. Your postings here rival your posts on why you don't like american women or why they don't like you.

First, I never said that I don’t like American women. I just prefer foreign-born women. It’s just a relative thing.

Some people prefer imported wine. What’s wrong with that? If you take pride in the local variety, you may disagree; but I’m entitled to my preference. I don’t question yours.

I like my Saab and you love your Dodge Caravan. So what?

SD Realtor wrote:

In this one thread alone you talk about the importance of credit and how our country runs on it but then you advocate deadbeatism which in term ruins credit and even try to give some bizarre argument about how being a deadbeat helps the economy. How about moving out of the house, letting it foreclose, and rent something alot cheaper. Then you get to pay less for your shelter, spend more to "recycle" into Brians economy, and the foreclosed home gets sold to someone who will afford it and it will be sold at the correct market value. I guess that makes to much sense. Forget it your right. Credit for everyone and nobody needs to worry about being a deadbeat because it all will magically work. Sounds good man. I guess your most recent posts are the only ones that really count. Why stick with one point when you can conveniently jump to another.

I’m not advocating anything nor making a morality judgment, as much as I’m trying to understand the system.

I’m looking at the incentives set by our financial system and government, and I see that people will act accordingly.

Why would a rational homeowner who’s losing his house not stay until the last minute if the bank won’t foreclose? If the bank won’t foreclose, it would be stupid to move out and pay rent while the house sits empty. It's still the homeowner's house until the bank forecloses.

Banks pay cash for keys. So why not take advantage of that too? The credit is already ruined so what’s the difference? The homeowner is in distress so saving the cash would benefit him.

I’m seeing that, as this economic downturn continues, millions of homeowners will see the financial benefits, or the necessity, of living for free as long as it’s allowed.

I don’t confuse what’s individually beneficial with what the government should do for the benefit of all. And yes, individual decisions can conflict with community well-being. They do every day.

I made a correct prediction of the living-for-free trend that we now see. That maybe unsavory behavior, in your estimation, but it’s a fact that is becoming more common. Why not recognize it for that it is? Just like you may not like the bailouts; but they are a fact of life and you're taking advantage of them through your house-flipping business.

Submitted by SD Realtor on March 31, 2010 - 8:44am.

Life is simple for me because I call them as I see them. I have posted plenty before about people who feel entitled to act or behave in a certain manner due to their own mistakes. If Bill "rented" a home from a landlord he would have been evicted long ago.

FSD like you I stopped understanding commentary about how our economy benefits from deadbeats but I think Brian likes to argue simply to argue rather and even he doesn't honestly believe what he wrote.

People who run businesses, have to meet payrolls, are landlords, and/or and have accomplished goals in life through hard work have a better understanding of integrity. The underlying fundamentals of capitalism are those of credit and trust. Entitlement is not one of them, thus for every deadbeat who feels entitled to act in that way, the cost of credit does incrementally grow. If our govt had a clue they would not reward this behavior to individuals OR to the lame banks that lent them the money. In reality we should have sky high rates, and much lower prices. I am okay with people walking away from homes and loans. If people want to stop paying and feel good about living for free then that is their prerogative. Why stop there though. The same opportunity is available with credit cards as well.

Two classes right? The working class and the entitled class. Bill you feel entitled to live for free correct? Why? Is it my fault you signed the loan docs? Is it the lenders fault? Did someone hold a gun to your head?

Yes I am bitter not so much because of your behavior but because our govt has institutionalized and validated your behavior. We all should "help" people like you and help modify your loan, reduce your loan balance because why? Tell me again? Because you signed the loan docs.

Arraya the stupid decision to buy was Bills. The wise decision by Bill to stop paying is good for Bill alone. The decision to look at himself honestly and say, okay I will mail the keys in to the lender and go rent an apartment should be Bills and anyone else who wants to behave in that manner. However "wise" you think it is to pawn the cost of shelter off to someone else is beyond me. Why not make a habit of it? Go find a home, buy it using 100% financing and never make a payment. What is the difference in that behavior Arraya?

You don't get it. I am not berating Bill the deadbeat for walking on his loan. I am berating him for not leaving his home. Same with you or anyone else who is living in a home for free because THEY made the initial mistake. All I ask is that you move out and live somewhere you can afford? What is wrong with that?

Answer one question, what entitles someone to live for free?

Submitted by briansd1 on March 31, 2010 - 8:50am.

Arraya wrote:

This is what is interesting. We collectively criticize them for making the initial stupid decision. Then we continue to criticize them if they wise up. Which is really what the principle reductions are all about. Nipping in the bud people wising up and making wise financial decisions. If there was a sudden rash of financial responsibility it would cost us a lot more. In the form of millions of foreclosures. Then suddenly they turn from irresponsible FBs to deadbeats...

That's well said Arraya.

At least I'm logical. I make fun of the FBs for buying a the peak. But I don't begrudge them for walking or living for free right now. That's part of the correction process.

Even more of that would happen without the bailouts.

Submitted by briansd1 on March 31, 2010 - 8:55am.

SD Realtor wrote:

You don't get it. I am not berating Bill the deadbeat for walking on his loan. I am berating him for not leaving his home. Same with you or anyone else who is living in a home for free because THEY made the initial mistake. All I ask is that you move out and live somewhere you can afford? What is wrong with that?

What's the point of moving out if the bank won't foreclose?

As long as the bank doesn't foreclose, that house cannot be sold to anyone else at a lower price.

Submitted by NotCranky on March 31, 2010 - 9:07am.

briansd1 wrote:
SD Realtor wrote:

You don't get it. I am not berating Bill the deadbeat for walking on his loan. I am berating him for not leaving his home. Same with you or anyone else who is living in a home for free because THEY made the initial mistake. All I ask is that you move out and live somewhere you can afford? What is wrong with that?

What's the point of moving out if the bank won't foreclose?

As long as the bank doesn't foreclose, that house cannot be sold to anyone else at a lower price.

I kind of don't get that either, he is an enabled deadbeat not a saint.I do agree that it's the enabling that is at the core of it...taking human nature into the equation.

Submitted by flu on March 31, 2010 - 9:13am.

jpinpb wrote:
BillS78 wrote:

But seriously, the best thing to come of all this, other than my financial gain and a valuable lesson learned about relationships, is that I've been able to help my friend through grad school by letting him live here rent free.

I'm glad to hear you at least paid it forward and helped someone w/education.

flu wrote:

20 months of non-rent paying, are we to believe that now all the sudden you ahave $200k post-tax to put down?

Could be he took the money that was not used for paying the mortgage and invested it in stocks or gold or something and made more money there. Not paying the mortgage gave him money that he used to invest that he otherwise would not have available.

Well, I don't know. It doesn't seem to pencil out.
Bill claims to have saved $200k by not paying a mortgage over 20 month window and from stock investments on a $114k (give or take) salary .

Let's say his mortgage is $4000/month (which is probably much more than IF he was prudent/miser as he claims he is from his comment about the 99 civic). $4000/month *20 month = $80k. True, he also does mention "stock investment", but that would be taxable income, and his tax rate would be for $114k base salary + $120k (alleged gain in stock), which would put him into a high tax bracket. Also, no itemized deduction from his mortgage payment and I assume his property tax.

I don't know...Seems embellished. That's why it's the internet. Believe maybe 10% of what you read imho.

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