BubbaMarkTL

Even if you are still lucky enough to be able to afford your mortgage payment, is it really even worth it to keep paying????

Lets say your mortgage payment is 1500 per month and your rate is somewhere around 7%.

You could keep right on paying that payment every month and doing the right thing but at the end of the day what is that getting you??? NOTHING....

The value of your home is, at best, staying the same, and more that likely it is decreasing so you are in essence throwing your money down the toilet!

Now lets say you stop paying today. Given the nature of the economic situation, you can easily go 90 days before even facing the possibility of forclosure. So after 90 days, you now have an extra $4500 in cash in your pocket, and you are in a position to renegotiate your mortgage for a lower rate or possibly a lower pay-off balance depending on your lender.

What is the BAD part of this scenario?? Your credit goes sour for a few years?? big fuckin deal, 10% of the nation is now in forclosure or behind on their payments!!

simply STOPPING your mortgage payments even if you are capable of continuing to do so may be the smartest thing to do right now, it will give you a stockpile of cash and it will position you for a great negotiation in your favor with the bank so when you do begin to start paying the mortgage again, your balance could be 10s of thousands of dollars less OR your payment is 100's less per month based on interest rate reductions.

seems like a win-win to me!!!

at the very worst, you get forclosed on and have to give up your house....the vast majority of homeowners right now would LOVE to be able just to walk away scott-free from their home but are now upside down, so in this case, even foreclosure sounds like a blessing!!

please, if i am missing something other than the obvious ding on the credit score, enlighten me!!

princelybug

iTrader: (16)

What about doing the right thing?

doopstr

You are missing the part about the bank reviewing your income and expenses and seeing no reason why you are not paying your mortgage other than you being a dick. They will repo your house, your 750 score will go sub 500 overnight. You will not be able to get another mortgage, a car, a credit card, and most landlords will check your credit. So you will be without a place to live. Hell you may even have a problem getting a new job as many employers check your credit.

If you don't want to pay your mortgage sell your house and pay rent.

Fucking up a mortgage is not like missing a month on the credit card. It will stick around with you like herpes.

BubbaMarkTL

that may have been true 5 years ago or even a year ago but now that defaulting is so incredibly common, its not the kiss of death it once was. defaulting or falling behind is no longer just the lower end of the economic spectrum, its crossing all boundaries and effecting all classes. Lenders are far more sympathetic than they have ever been in history, offering rate reductions, altered payment plans and even outstanding balance reductions.

I could easily go to any landlord with empty units and get a place, even if i defaulted, they are hurting as much as anyone else...id say go ahead, do a credit check on me, id explain the situation, show him my balance in my checking account, hell, id pay 4 months + up front just because now i had this stockpile of cash. i can easily prove that im capable of making income and making payments.

i already have a credit card with a great interest rate and an available balance far beyond anything i could ever need. I already have 2 cars of my own, one i own free and clear, so really i still fail to see any negative aspect of ceasing to pay the mortgage.

Anachostic

I have a good rate on my first mortgage. I can't refinance my second mortgage for less (just recently tried). I can afford them. I don't see why I would risk my credit rating for a few thousand dollars.

As far as the value of the home, you are incorrect that I am throwing my money down the toilet. When you pay on a mortgage, you are always building equity, even if that equity is currently a negative value. I was fortunate enough to buy before the peak of the bubble. When the prices return, there will be greater equity in the house than if I deferred payments.

MR1

How about acting and feeling like a responsible adult? Nobody should have guaranteed you that your residence would go up in value. Sometimes in life we commit to what turns out to be good deals, sometimes not.

If you think any financier is going to let you keep a low rate card after a foreclosure, I want some of what you are smoking. Banks are currently cutting credit limits and raising rates on people that continue to pay their bills including the mortgage. An awful lot of folks want their daddy or somebody to save them cause they were stupid and are not happy.

If you decide to try and take advantage of the system please let us know how it works out for you. If you try hard enough maeby you can have your second car repossesed, loose your job and health insurance as well. Why just try for a single when you could hit a homerun? Just about everyone is hurting to some extent right now and it will get worse. How much worse and for how long depends on how the fortunate ones like you react. Matter of fact, your indicated thoughts are a major part of the initial problem.

That's what you are missing imho.

HI OFECR

Irresponsibility like this is the exact reason our economy is the way it is!!!!!!!!!!


If i quit paying taxes, and started getting paid under the table i could save some money too doesn't make it the right thing to do.


Everyone wants a fucking hand out, Im sure you are thinking to yourself why the government isn't bailing you out too.

phil2

I am at a loss for words........

wndrlst

:fucktard:

BubbaMarkTL

my credit card company is not my mortgage company, and neither of those companies are my car loan company. i have contracts for the duration of loans with all of them independently. if i let my mortgage go and keep paying all my other bills, none of those loans and none of those companies are effected in any way.

i still fail to see how stopping payment on a mortgage in this horrible economy could possibly be a bad thing besides those of you who feel you owe it to yourselves or to "big brother" to keep paying into the machine that has fucked us all over at this point...

irresponsible??? sure, maybe in terms of the mortgage contract itself but overall??? stopping payment on a mortgage might be the single most prudent and advantageous move i and many other (yourselves included, if you got off your high horses and ran some simple numbers) could make!!

Anachostic

Holy cow. Do you understand the concept of "credit history"? These companies share all your information and if you fuck one of them over, they will ALL fuck you right back.

I hope you reconsider, because if you go through with this, you are going to exit the middle-class and you will likely never get back.

MR1

I think you asked for responses. They have been posted and you don't like them. Continue to delude yourself and remember how you got where you are going. Have a nice trip, no whining.

BubbaMarkTL

look, i am not seriously considering stopping payment on my mortgage, i am merely presenting the point that it may not be such a bad idea.

credit history is not ruined by one forclosure or one bankruptsy. hell, my father, when he was even younger than me, about 25, filed for bankruptsy and lost a home in san diego and now, 30 years later has more than i could ever hope for. the fact is that a foreclosure or a bankrupsty lasts 5-7 years on a credit history and truth be told this recession / possible depression may last longer than that, who knows??

with that in mind, stopping payment on a mortgage to allow yourself to stockpile some cash in light of a scary econonic time we are in as well as positioning yourself for a free and easy renegotiation of your existing mortgage sounds like a pretty god damn good deal regardless of a potential credit history hit which is temporary. you only live once. a 5 year hit on your credit is meaningless in the long run when you are faced with a recession like this.

BubbaMarkTL

i dont think you get it. if i were to default on my mortgage that doesnt mean that acura-honda finance can automatically raise my payments on my car loan for my tl that i have been paying on time for 3 years now. ihave a loan and the terms are set, just like anyone elses car loan. you cant change those terms if the person falls on economic hardships. it also doesnt mean that somehow my credit card company will jack my rates and even if they did somehow, it wouldnt matter as i pay it off every month.

sho_nuff1997

iTrader: (2)

I fail to see how getting booted out of your house for $4500 is prudent. Why not stop paying your car note and restructure that, too? Your logic is beyond flawed. Credit card companies can raise your rates at any given moment. There is a thread here about it, if you don't believe me.

Do whatever the fuck you want, but you are retarded if you think this is a good plan.

MR1

Here is the credit card real world thread.

https://acurazine.com/forums/money-investing-17/credit-card-apr-games-699071/

Not much mention of missed payments or mortgage default. Read the tealeaves. Go ahead and default, I'll rent to you.

combat mediC

iTrader: (1)

thats unbelievable....

Silver™

Companies are becoming much more risk adverse.

So you are wrong, it is even worse than 5 years ago when companies we lining up to give credit to morons...

No company wants to give their limited amount of credit to someone who just defeualted on a 6 figure purchase.

Will Y.

Interesting thought. Other items to consider:
1) Are you a business owner who has personal guarantees on business leases or lines of credit, or will you be a principal in a business in the next five years? If the answer is "yes," a foreclosure or negative credit history may affect your ability to obtain credit for business purposes.
2) How will a lender respond to one who stops paying because one could, and not because one doesn't have enough money? Is the lender more likely to renegotiate due to the default? Or will the lender may view a foreclosure as being preferable to having an unreliable/untrustworthy borrower?
3) How much will moving from the house cost? Depending where you live and personal possessions you have, just the movers' bill may exceed $4500, so the numbers don't work. Add into that changes of address, rental cost, etc.
4) How much will a rental cost? Our house was purchased just before the start of the housing bubble, so my mortgage is less than the rental amount for a similar house, or even a two-bedroom apartment in West Los Angeles. That amount saved from not paying the mortgage for six months would be gone in less than 2 years of paying rent, at which point one is by rental prices and a screwed-up credit report.
5) What is the likelihood that housing values, and the value of one's home specifically, will turn upwards? Housing values are cyclical -- will losing the house now result in a greater loss of appreciation ten years down the road? In my neighborhood, houses going for $120,000 in the 1992-1994 (end of a big recession) have now dropped in value to somewhere around $600,000 from their $800,000+ peaks. Those people that walked away in 1988-1996 probably took bigger hits than those people that kept paying their mortgages and continued to own the homes after 1999.

Fibonacci

In addition:

1. All major companies run credit reports thru HR before hiring - this would obviously not help you gain employment if you lose your job or consider switching employers.

2. Most insurance companies now consider credit scores in their risk profiles, so be prepared to pay higher rates.

3. If enough dingleberrys like you take action in this manner, our financial system will implode and their won't be any jobs for anyone other than working for water-s.

doopstr

Do not make the mistake of thinking that nothing can happen to your credit card. I have outstanding credit (800++ fico). I received two notices in the mail this week. One from Chase, they are closing a Visa account that I didn't use, with no option to reopen it. This was my backup card. I now need to scramble to get another Visa open before I get laid off from my job. I also received a notice from UPromise that my Mastercard is being moved from Citi to Bank of America in March.

Search here and the web. There are plenty of stories of people with great credit having credit card accounts closed, fees imposed, and credit lines lowered. You will never know when a time may come that you will need the ability to open a new credit account. Credit card companies do monitor your credit report. They will lower your available credit and jack your interest rate because of bad things going on with your credit.

Anachostic

This would only work for someone that already has nothing to lose. People that consider this action should not have become homeowners in the first place.

And although you are correct that eventually things will improve, it's the time before that that will be painful. Every thing will be more expensive or more difficult. Car loans, insurance, college, credit cards, for starters. Over 5 years (which is quite conservative), that can add up to a lot of money. That's money that could have been building equity in a house, invested in undervalued stocks, or paying down other high-APR debt.

When you are in that position, and in this case it'd be self imposed, it's like having a hand hold you down. You can get loans, but they have high APRs. If your APR was lower, you could pay it off quicker, but you can't. Because the interest drains your funds, you have less to pay other things. You don't have the available funds for investing. If something unexpected happens, you might have to borrow more money at a higher APR. It's not easy.

You are correct that they cannot change your current terms, but that is very short-sighted thinking. I was not misunderstanding that part.

I think the topic you are discussing is called "Moral Hazard".

http://www.reuters.com/article/ousiv...44667820071023

BubbaMarkTL

allowing yourself to lose your home for 4500 in cash is not prudent, you are correct.

however, allowing yourself to lose a home that you have NO equity in and that is losing its value every month (i beleive nationwide its now down 16% on average and no sign of stopping) PLUS the 4500 is not such a bad idea.

its sad but true that homes in most areas of the country have now become depreciating assets like cars but on a much larger scale. Any financial advisor will tell you to unload a depreciating asset, it makes no sense to keep it! if the methods to go about unloading said depreciating asset has potential damages (credit history hit) one has to weigh their options. Again, unloading a house via a sale or a foreclosure is a permenant and irreversable transaction...having a forclosure on your credit history is completely eraseable and temporary, lasts 5-7 years tops and 5-7 years is starting to seem like not such a long time considering the recession we are in.

WdnUlik2no

I'd rather pay my mortgage; I signed the loan papers so it's my responsibility to pay it back. Sorry that's just how I am.

Also, 5 - 7 years is a LONG time to have a foreclosure on your credit report. Anything can happen in those 5 - 7 years and I would think someone wouldn't want a foreclosure hanging over their head; ESPECIALLY if they could have easily avoided it by just paying the bill.

BubbaMarkTL

1. - this may be true for certain industries but certainly not all. additionally, in times of economic hardship, recession, and god forbid, depression, it is unfair and unlikely that employers would be holding a persons credit history against them when chosing potential employees. im sure there are quite a few brilliant and talented people on the job market right now that have screwed up credit due to circumstances beyond their control. there is now and will continue to be far more understanding and sympathy for people who truely fell on hard times. economic hardships, in alot of cases, have nothing to do with your ability to be a good and valuable employee.

2. that is true that insurance could go up, but at this point in my imaginary scenario, what insurance do you really need? you dont need homeowners insurance thats for sure! you would need car insurance which would go up very minimally at your next renewal based on a credit hiccup. if you are established for years and years with a car insurance company and are in good standing with a good driving record, they are not going to give you any sort of signficant bump in rates due to a foreclosure.

3. well theres no argument there, you are correct!

phil2

BubbaMarkTL

phil, with all due respect, you and i both know that you have the car in your avatar, as well as many other nice things in your life because you played a contributing factor in providing risky and unconventional mortgages to people and on some level could have contributed to some of this mess!

sho_nuff1997

iTrader: (2)

Tell you what, I will come down there and give you $4500 for your house. You can then sign it over to me, move out and you won't have a default on your record. Sound like a plan?

BubbaMarkTL

seriously???? if you came down here with 4500 cash and assumed full responsibility for my mortgage i would be HAPPY to walk away from my place!!

phil2

You are a complete idiot! You do not know my business or what I do. I focus primarily on multifamily sales and commercial loans and a small portion of residential that consists of FHA not subprime. I did sell products to the consumers that banks offered to me as a broker but, I in no way created these programs nor the mess we are in. You should be renamed Bubba-S!

amisconception

Sure, just let the taxpayer pay for it. Great idea

TzarChasm

Since when have companies been known to be fair? I think most employers who have a policy like this will continue to use it, until such time that they can no longer get enough employees. With a lot of companies laying people off, I don't think it's going to be a tough sell to say "we only want the best".

Your car insurance may very well go up by quite a bit. You once again assume that insurance companies are going to be fair. I dont know where you got these deluded thoughts into your head, but the world is a tough place for most people. And a forclosure is not a "credit hiccup" it is a MAJOR credit event. How many years you have been with a company matters about as much as what you had for breakfast, numbers are all that matters and it is a proven fact that people with bad credit are higher risks.

What you also fail to take into account is that while you THINK you may walk away with $4,500 you may very well not. Especially in a case where you CAN pay and just choose not to, the bank is most likely going to get a judgement against you for whatever value is left on the home. What that means is that since you owe more than its worth they sell it at a forclosure price, then they bill you for whatever is left on your morgage. for example, if you bought your house at $150K, and it's now worth $120K and you owe $130K, you think you get out and save $10K right? Wrong, the bank sells that property for $100K then sends you a bill for $30K. If you don't pay, but you can, they go to court and attach payments to your paycheck. Now you are paying on something you don't even own, and you have bad credit. Good thinking pal.

Moog-Type-S

This thread has to go down as one of the most stupid around here....in quite some time.

NSXNEXT

iTrader: (2)

I think the turney clickey thread has just been dethroned.

BubbaMarkTL

that is not true at all. Banks are letting people walk away from negative equity free and clear all over the place now, its called a short sale. Banks would rather sell the property they now own due to foreclosure at a slight loss and eat that loss rather than hold onto it and watch the value continue to drop.

there are no "judgements" involved here, its simple, you stop paying your mortgage, after a few months of phone calls and letters you are finally put into foreclosure and then finally served papers where you have to leave, the home is no longer yours and you have to be out, its as simple as that.

if a person (and there are many, they just dont talk about it or advertise it) that want out of their homes and mortgages and are willing to accept that their credit will suffer for 5-7 years, this is an easy way out!! is it the "right thing to do"?? hell no, is it fair to the people who are paying their bills on time?? not at all, but the fact is, this sort of thing is going on and will continue to grow in popularity as this recession continues.

NSXNEXT

iTrader: (2)

And Bubba, if you think it's such a good idea.....

DO IT!!!!


Be a man, show us how cool you are.

BubbaMarkTL

how can you possibly say that? Just because you find the topic morally reprehensible does not mean it isnt current, valid, interesting, or worth discussing. Major news outlets across the world do not find this topic stupid as more and more articles are popping up describing this exact scenario and how it is becoming more and more prevailant.

amisconception

You have to show hardship for a short sale, pal.

NSXNEXT

iTrader: (2)

If you had started the topic with, how can people just walk away from their mortgage and feel good about themselves, you might have received a little warmer response.

The tone in your thread indicated that you see no issue doing this, which is what got you flamed.

BubbaMarkTL

i am keeping emotion, laws, personal values, and morals out of this discussion. Merely as a numbers game, this truely IS a great idea for a great number of people, that fact cannot be denied.