if this guy walks aways from house #1, what are the odds that he walks away from house #2 in a year or so if home prices continue to fall another 30% (with no rebound in sight) and just rents?
iceman, i was thinking the same thing. From a purely financial standpoint what the subject is doing makes perfect sense. Of course what happens in a few years when the new residence is underwater? Would be best to rent a place now while his credit is good and live there for the next few years. It will be cheaper too.
"Would be best to rent a place now while his credit is good and live there for the next few years. It will be cheaper too."
I think he's got one shot to do this before his "walking away" becomes clear to all involved. Switching to rent for a few years means he'll be well known to the banks as a jingle-mailer when he tries to buy again.
Although only anecdotal evidence exists of California borrowers ruthlessly using their option to default through moral hazard rather than involuntary inability to repay, the Fannie Mae experience suggests that allowing deficiency judgments at least reduces the incidence of foreclosure when home values decline.
As it turns out the California borrowers were exercising the put option, as mentioned in the report, which is if you your home is worth less than you owe you hand the keys to the lenders. The workouts are for the benefit the lenders, for the most part. Involuntary inability to repay? You mean borrowers are not supposed to be calculating; only the lenders are? LOL.
BTW, there are no moral hazards in a morally bankrupt, or calculating, society, only legal hazards. The ethical hazards in America are all driven from the top to the bottom. Finally, the bottom is catching up!
I'm more interested in what the sociological implications are of a majority of voters agreeing that it's "wise" to default on the loan. Even the most heartless of libertarian free marketers should acknowledge that any transaction, on any level, is an act of trust, and that without trust, the social fabric needeed to get on with a communal life breaks down.
We saw it happen when employers began treating employees as chess pieces rather than people. The old loyalties to one's employer went out the window, and feelings of obligation evaporated on both sides.
There's your Randian brave new world: everyone is the enemey now.
If housing is now an investment and not a home then walking away is rational behavior. Of course the lenders were betting on the new "investors" to retain the old homeowner commitment. Also, one should keep in mind that most of these borrowers have never seen a market where credit was not available to deadbeats. If lenders get tight on the standards like way back in the past, then walking away could end up being tougher than anticipated.
the reason he's moving is cause of the reset--
the gse mega cap loan will solve that problem... he should just wait a few months for Jas's favorite folks to pass the law.
Like a lot of things, walking away is good for individuals but bad for society. If I saw reports about Wall Street getting $39 billion in bonuses at the same time my home had lost so much value that I was underwater on my mortgage, I might walk away, too. (But that's not where I'm at financially.)
I'd like to add my two cents since I happen to be in the same boat as this guy. I own a home in Northern CA that lost over 350K in value since Aug 07. the value is now equal to the loan amount. I've tried to sell it but to no avail. jumbo financing makes the purchasing of the home very cost prohibitive.
so what should I do? continue to feed the home hoping the value will someday rebound? Or should I cut my losses and start over?
I've got responsibilities more pressing than my promissory note. So, I'm walking.
I'd rather be a dead beat now than have nothing when it comes time to retirement....
--
"The financial leadership in this country CANNOT be trusted!"
Certainly it is less trustworthy than the political leadership of Nazis in Germany.
Bad leadership doesn't just happen to other countries; in due course it happens to all powerful, or imperial, countries and now it is America's turn. Evil leadership cycles thru.
When credit card companies (and banks) use "universal default" on a borrower and jack up all of their rates across the board due to missed payments on one debt, is that fair?
If the banks have no ethics, why should we expect the borrowers to have any in return? I thought we were all for "free markets"?
"if this guy walks aways from house #1, what are the odds that he walks away from house #2 in a year or so if home prices continue to fall another 30% (with no rebound in sight) and just rents?"
I think the guy wants to be in a house/condo and not renting. If he goes straight to renting and then wants to buy a house in the next seven years, he'll most likely have a tough time getting a mortgage, given his history of walking away from his current mortgage.
What I find fascinating is that he was able to get a mortgage on a new place when he's already upside-down on his first place. I'm assuming this was a full-disclosure loan, but apparently the brokers only want to know his current payment, not his payment in x months when his ARM resets. The reset in his ARM will have a material impact on his ability to pay both loans. You'd only hope that in this era of "tightened" lending standards that someone would be watching out for this type of scheme. Pretty soon we'll have more fallout from these types of transactions.
I agree with the poster who was talking about the trust issue in a transaction. Once trust is gone, it's very difficult to get back. The stigmas associated with bankruptcy and foreclosure really don't exist anymore, so people are going to be much more willing to walk away and start over. When someone puts 20% down they're going to think twice before walking away. With no downpayment, it appears to be a much easier decision.
Off topic (a bit), but I see that yet again having children qualifies you for a substantially higher rebate.
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. We also pay for family coverage that subsidizes doctor visits for people with children. Now people not only get an additional tax break for the progeny (never mind all the college savings tax shelters), they get substantial more in cash payments.
Also: I'm quite surprised the gay Americans haven't latched onto this as unfair taxation, hell they can't even filed jointly.
--
"We saw it happen when employers began treating employees as chess pieces rather than people."
Capitalists are money whores, pure and simple, and there are no loyalties. Unlike the landowners, the capitalists can take their capital elsewhere, as Adam Smith recognized, or withhold it, and they have no loyalty to the land or the people. After screwing Americans they will move on to China, etc. They will leave Americans with tens of trillions of dollars in debt.
Evil is what evil does. Pushing Debt is certifiably evil.
What surprises me is the number of people who try to put a 'moral' label on behavior by an individual homeowner when they would not do that to transactions made by commercial developers, big contractors, investment banks or wealthy investors.
If it is cheaper to walk, people will walk. The banks had better get used to it.
There's no third rail of discourse for me with Nazi references, so long as it's justified. In this case, I think it absolutely IS and applaud the commenter.
A mortgage fraud investigator of my acquaintance once said, "If a borrower is caught defrauding a lender, the borrower goes to jail. If a lender is caught defrauding a borrower, he might have to give some of the money back."
My pet theory about Jas' posts is similar to the react-o-matic theory posited on the prior thread. He has a MadLibs posting template . . . but has misinterpreted Mad to mean angry.
Seeing as the person likely didnt take any financial advice upon purchasing a condo at the top of the real estate market, Im thinking the answer to legal and tax advice is a big fat no.
Incredulous:
What is the fascination people have with parity of taxes in - benefits out? Sure, you don't have kids in school right now, but do you really think you get no benefit from contributing to the school system? Tell me, without contributing to the school system now, where do you think the doctors will come from when you get older?
Do you really get less benefit from trash collection? Arguably, you may prefer a trash tax commiserate with the volume of trash collected, but that's nothing to do with having children.
Really, what are you complaining about? Would you agree with a person who has no car that their taxes are too high because they have to pay for roads which you get more use from (setting aside trucking, for instance)?
And the idea that parents get some sort of unfair benefit from setting aside college funds is strange, too. How does that adversely effect you?
Basically, it seems like you're just saying "why do people get a benefit that I've chosen not to get? That's unfair".
--
"You lose automatically when you employ Hitler or nazis in an argument -- at least with reasonable people."
Reasonable people are born-and-bred dopes and the doping process makes them agree with vast majority and feel good by being likable.
Most regrettably, my conclusion is that financial Nazis of America will make German Nazis look good. We shall find out in another 20 years. Until then lot of suffering for Americans at the hands of Americas financial Nazis will continue. Dont forget that they constructed the Debt Concentration Camps and piped them with the financial poison gas Debt. How efficient!
"There's no third rail of discourse for me with Nazi references, so long as it's justified. In this case, I think it absolutely IS and applaud the commenter."
Cool. Just to make sure we agree on our terms, though, the Nazis I'm referring to were the ones that murdered and incinerated 12 million people.
Re: France's No. 2 bank apologized to shareholders after discovering what appears to be the largest trading fraud in history to be carried out by a single person.
"were friggn sorry ok? Were sorry, how many friggn ways to we have to friggn say it? How many languages....oui? Do I need to put a friggn laser on my friggn head, we are sorry
The tax question is interesting. If I'm $100,000 underwater on my mortgage and I mail the bank the keys, will the IRS say I need to pay income tax on that $100,000?
How the Feds Stopped The States From Averting The Lending Mess
FFDIC | 01.25.08 - 1:53 pm
Thanks FFDIC ... I always thought Georgia had its act together, its why I left Texas(5th generation Texican)
@cobradriver
Thanks for answering my question yesterday regarding 12 months-of-supply, not 'til 2009
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. We also pay for family coverage that subsidizes doctor visits for people with children. Now people not only get an additional tax break for the progeny (never mind all the college savings tax shelters), they get substantial more in cash payments.
Please calculate the growth rate of an economy with zero children. Tell me how that may impact your future retirement plans.
Personally, I'm kind of pissed that you aren't fully sharing the burden of investing in the economies future growth while at the same time enjoying a greater share of the gains.
My children will be supporting you in your old age. My children will be busy rebuilding this country from the mess we're leaving them. My children are educated and will be able to be productive citizens thanks to your taxes.
I would have a feeling bank #1 would go after him if he defaulted on loan for house 1 if he purchased house 2 knowing he planned on defaulting on loan 1
*140 job cuts in latest wave of layoffs
*Rising CMBS spreads shut down lending
*B-piece buyers facing altered landscape
*Wachovia takes $600mm loss on commercial MBS portfolio in 4Q.
Wouldnt home 2 be considered an investment at this point, without knowledge of the plan to bail on the first? If so, I think some folks might not take kindly to this scheme.
See? In this country, moral hazards immediately become business models.
Though, I agree we are seeing a major breakdown of trust in America. Hobbesian ethics are a hallmark of third-world societies, where life for the rich is lavish but just as dangerous and uncertain as it is for the poor, and corruption sabotages growth.
'Course, the CEOs should have thought of that before they breached the social contract first. They'll have plenty of time to repent as they mount the scaffold.
--
99.9% of "educated" Americans believe that they know the truth about the economy and the political system. In truth, less than 0.1% do. Talk about a delusional population deluded about its knowledge.
It seems more a result of breeding dopes, who claim to know when they dont know diddley, than anything else to me.
Unlike most here, I always keep in mind that I could be wrong in my conclusions.
I don't think you should all worry your pretty little heads about the walkaways receiving 1099s for debt forgiveness. It's one of the giveaways perky little Nancy has already in the works.
Like Donna, my kids will help take care of you in your dodderhood.
If you think it's unfair for me to have children, I invite you to fill out FAFSA paperwork to see just how much my kids and I will profit from all of the financial aid available.
They'll (and we) will be paying the higher taxes to help pay for what remains of SS (HA!) as well as their own loans (while we pay ours as well).
Organizations are amoral about responsibilities, but act with individual rights. Individual people are now behaving
just like organizations, yet the organizations that put those people in this
position are lecturing them on moral
behavior. How ironic. How pointless.
One of my predictions this year is a plan to allow homeowners (really renters with an option on price increases) to walk away from a home without tax obligations. After enough "predatory lending" stories get run on the news a tax exemption will be granted. We will see.
Someone correct me if I'm wrong, here, but isn't "jingle mail", aka "Deed-in-lieu-of-foreclosure", part of the contract?
Isn't the mortgage contract a loan agreement between the lender and the lendee stating that the lendee will pay the principal amount back, with interest, over a specified time period, with the home being purchased given as collateral?
I have never had a mortgage before, so I don't know the specifics of the contract, but it would seem to me that in principle a mortgage, PROVIDED DUE DILIGENCE by the lender, is win-win for the lender and all of the risk is assumed by the lendee. If the lendee pays the contract to fulfillment, the lender gets all of its initial investment back plus a lot of (profitable) interest. If the lendee defaults on the contract, the lender gets posession of the house, and sells it to recoup all of its investment. Assuming a closing fee, and at least some payments including interest, even in foreclosure the lender should have made some profit on the loan. (Or at worst broke even given the costs of foreclosing.)
It seems to me the reason that lenders are currently losing a great deal of money from lendees walking away from mortgages is that that the lenders waived all of the essential parts of the mortgage that were there to protect them from losses, like
A. Realistic (read: conservative) appraisals of property value
B. Downpayments sufficent to cushion reasonable loss of value (20%, anyone?)
C. Terms of amortization such that the lendee is paying principal AND interest immediately
While I am certainly not trying to excuse people walking away from their mortgages, especially people that are trying to sneakily buy a new house before they let the old one go into foreclosure , I don't see how the banks have anyone to blame here but themselves.
If someone offered me a large loan, given say, my collection of DVDs as collateral, for which the appraisal was grossly overvalued, and for which I had to provide no downpayment or even pay full interest for years, and the consequences of my defaulting on the loan anytime in the future were likely to be merely the loss of my DVD collection, it almost seems like I would be stupid not to take such a deal. As such I can't really see why anyone is now surprised that people are coming to the same realization with their mcMansions.
Incredulous - so other people's kids will be working their whole lives to pay your social security and pay off the debt that the Federal government racked up while you were a voter. How fair is that to them that you didn't even bother having any kids to help take care of you in your old age?
I'm amazed a majority of the poll
takers think it's ok.
Have you spoken to any of those who advanced credit to United, Northwest, or Delta in the 2002-2005 timeframe? Or any (now former) United pensioners? They might not think it was so "amazing".
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. blah blah blah.
Being childless myself and a non-driver and not a couple and not generally being in favor of subsidizing whatever bozo war certain un-named individuals keep dreaming up, I too -- no, wait, actually I don't mind paying taxes because, on the whole, I think of them as being an expression of support for the society I live in. Even the individual parts I don't exactly agree with at that time. Package deal, alas! Sometimes I am forced to contemplate that, perhaps just maybe, when it comes to putting their money where their mouths are, people don't much care for America. "It's Their Money" over It's Their Country.
I love Google translator...
(quote)
Exclusive: Fortis keldert after rumour new capital increase and heavy write-off....On Euronext Brussels closed the Fortis shares 10.4 percent lower at 13.26 euros.....Rumours about a new capital increase and a write-off of 1 billion euros did the share plunging.... The Dutch bank ING in Amsterdam was sharply lower after rumours that the bank with a winstwaarschuwing would come....There are rumours circulating that Fortis struggling with a liquidity problem and that a new capital increase for soon would be" sounded on the market.... Another market player, the fact that Fortis would consider for its dividend in shares to pay for it.....An analyst talks about the rumour that Fortis an amount of 1 billion euros should afboeken on subprimeportefeuille....'That is nothing new, "says the analyst..... 'But it would be through the profit & loss account...That means that the loss of paper but a final loss..... Another analyst said that both Fortis and ING possible with a winstwaarschuwing....In Amsterdam ING closed 5.2 percent lower at 21.60 euros.... Another analyst reacts' surprised 'on the koersval of the share...."The rumours about the liquidity problems I find illogical Friday for a bank with a retail network as Fortis', he says.
I don't understand how any moral hazard is involved in walking away from a non-recourse loan when the value of the collateral is far less than the amount of the loan it secures.
Stupid lenders deserve to lose money. They always have and always will.
We've just had an overabundance of stupid lenders these past few years.
Lumping Ayn Rand with Greenspan tells me you probably haven't read her. As a writer she wasn't much, but she was way ahead of her time in seeing how things would play out.
She had the mealymouthed politicians (e.g. the Clintons) down pat.
I'm still sitting here in N.H. scratching my head over this issue, but I guess it's because the median house price last year was $260,000 here, far from the $520K mentioned in this article. I don't see or hear walking away where I am, but it's completely regional. I do read about the local homeless shelter turning people away who have just had their homes foreclosed. It's just an entirely different world.
Lenders typically like to see 4 years since the foreclosure was discharged. However, Fannie Mae (government loan agency) currently requires only 2 years. Before you know it, you will have this behind you and a fresh start!
Guess how much youwalkaway.com charges for its info service? $995.
Here's a sample of the service you get for that:
"There are certain circumstances when an attorney is needed, however, hiring an attorney can be expensive with retainers and high hourly fees. With our Walk Away Protection Plan & Kit, we correspond with your lender if needed and we teach you, so you can do it all yourself. Attorneys have helped us put together our Walk Away Protection Plan & Kit so it contains information that attorneys may give you anyways. (sic) This alone can save you thousands of dollars."
Hmmm. The bar association may take a dim view of some of this.
The guy is just playing by the new rules. The banks created a system to offload the risk for making loans, and that caused huge price increases. This guy had to choose between renting or paying the price for the banks gaming the system by overpaying for his condo. Why should the banks be the only ones to get to freeload and if the guy can find a way out why shouldn't he get game the system too? When it is no longer in his advantage for the guy to own the house he should follow the lead of the banks and play to his advantage. That is the new way -- actually it is an old way that was put on the shelf for a few decades, but it has now been dusted off and is being used again. I believe in regulation not gaming but his guy is just following today's conventional wisdom.
--
"using your own conclusions, you prefer murderers to thieves?"
Especially, when thieves hire murderers, or cause murders by their plunder.
BTW, how many people are aware of the role that London's and NYC's moneybags, and their political hacks, played in the future Holocaust? Nazis were the murderers but who gave rise to the Communists and the Nazis? I suggest that you read The Boer War very carefully to see the seeds of future evil REACTION to the evil ways of the moneybags of London and NYC.
Hey scav, I'm with you. I've always seen taxes as the price we pay to live in a civilized society. I've spent the last thirty years watching as certain people in our government paint taxes as "evil", and wondering how long it would be until the "civilized" was taken out of our society. I guess I finally have my answer.
You Walk Away, LLC is located in San Diego and run by a team with over 50 years of combined real estate and legal experience. It is the objective of Walk Away, LLC to empower homeowners who purchased their homes at the peak of the real estate market to take control of their financial future. We strive to help people understand their rights and know their options so they do not feel helpless
Why would anyone even think of bringing morals into a legal contract after the fact. If the contract allows you to walk away and it make more financial sense there is no moral obligation.
900 a month on a 520k condo... I'm trying to work the amortization on that but he had to have a good deal of money down going in to get the payment that low... unless it's one of those pay less than interest loans.
I'm a banker (a real consumer and commercial banker, not "mortgage banker"). I have no problem with what this guy is doing.
I love this blog (long time lurker), but I think there's sometimes some overcomplication in the discussion. The recent mortgage lunacy was nothing more than one huge agency problem.
Mortgage rates were incredibly low for this entire decade, and yet mortgage scum were "selling" buyers/refi'ers on things like pay option arms and IO loans, when the coupon on those was equal to or in fact higher than on a 10/1 amortizing note. They were doing 2/28s that they knew had no chance of making the 25th payment. They did 100% financing with limited documentation just to keep the whole ponzi scheme going.
We don't need a huge gubmint bailout. What we need are a few hundred thousand more borrowers like this guy and we'll get through this mess relatively quickly, while keeping homeownership rates relatively high and housing prices back where they belong.
Look, consumer finance can be very seedy (think auto loans, layaway purchases, mortgages, etc.). While I certainly do not even remotely condone consumers defrauding lenders, I have no problem with consumers availing themselves of whatever contractual and legal alternatives are available to them, which is exactly what banks are going to do.
Also it appears the homeowner has not properly disclosed the planned foreclosure on his current home with his new lender
Honest question since it's been ages since I actually took an application, but I don't remember seeing anywhere where this disclosure would be required.
I guess what I'm saying is for an industry that pushed 2/28s and products that had payments that were both UNAFFORDABLE and UNECONOMIC (vs. other market rates), turnabout is fair play.
--
"Why would anyone even think of bringing morals into a legal contract after the fact. If the contract"
Legalism is a morally bankrupt ideology, or political philosophy.
Jesus must be rolling in his grave! (This is assuming that he never rose from the dead). Jesus was a political and moral philosopher, or teacher (rabbi). Adam Smith was a moral philosopher.
Since housing has just become another class of financial asset, it makes perfect sense to stop out a bad trade. Mortgages advanced without standards to profit on the housing boom are no different than bridge loans made to profit on lbo's. What's the difference between an lbo going bad and the bank's taking a bath on the pier loans and jingle mail? The corporate executives aren't personally accountable for the losses, which hardly sets a shining example for glorified renters to suck it up and take the financial hit. I disagree with almost all of Jas's extreme views, but he is right to point out that the bad example here is being set at the top.
To state the obvious, 20% down would make this person's choice much more interesting.
Still upside down, but in a situation where it would be financially reasonable stick it out. In fact, given all the transaction costs of bailing, with 20% down, sticking it out under even worse market conditions seems reasonable.
"Look, consumer finance can be very seedy (think auto loans, layaway purchases, mortgages, etc.). While I certainly do not even remotely condone consumers defrauding lenders, I have no problem with consumers availing themselves of whatever contractual and legal alternatives are available to them, which is exactly what banks are going to do."
Amen. Morals and ethics have nothing to do with this. It's business; bad business, but the walk-aways are playing by the same rules as the big boys, the people who made the business bad. And now they cry?
"They were doing 2/28s that they knew had no chance of making the 25th payment."
Thats what I was thinking its hard to bemoan the loss of moral in your customer base when so many agents are making loans in bad faith to begin with. Not excusing either side, but the brokers and their employers should have known better.
I still can't imagine walking away from my home though... guess I'm one of those economically illogical type who view it as more than just a bunch of wood ontop of land I'm paying off.
[Visitor] Hi, I got disconnected. I was asking how you can get a foreclosure off my credit report. I haven't walked away from my house yet, but I'm thinking about it. The big sticking point is having that foreclosure on my credit report, but your "Protection Plan and Kit" says you can remove a foreclosure from my credit report. How do you do that?
[Veronika] The law firm has a legal way of convincing the lender to remove the foreclosure.
[Visitor] A legal way? But if I walk away, stop paying, and the lender forecloses on me, then it's a foreclosure, right? It's not a mistake. I got foreclosed. How do they wipe the record clean?
[Veronika] I'm not sure. you would have to speak to a lawyer
incredulous, others have mentioned it, but really ... we live in a society, seriously, educating the children is as worthwhile to you as incarcerating theives and murderers.
Heck, my wife and I just locally adopted three boys (I have a vasectomy, so we were intentionally not breeding). Without parents pushing values of education, non-violence and emotional stability, how do you think that they'd turn out? Heck, seeing how their half brother is turning out already is quite frankly scary.
Just as you benefit by living in society (you can specialize at one task, rather than having to raise food, knit clothes, etc), society benefits by educating the young. Unless you're living off the grid and a hermit, you really are pretty simple minded to be complaining as you are.
I live in SC and have bought and sold several homes profitably 1994-2005. I carefully read the put option imbedded in my loan agreements before signing. It was a factor in my decision to borrow, especially as prices in my neighborhood went up 200, 300, 400%. The banks knew I would accept a higher inerest rate on my mortgage, and a larger balance if the put option was included. It made them bigger fees, and they could sell off the paper to inexperienced foreign investors. Now the banks are complaining about trust. IMO the banks are hypocrites. Walk Away (this song by Oscar Brown Jr. is a gas).
MiddyFeek:
Are you seriously disputing the affect Rand had on Greenspan??? Seriously? You know, Greenspan was a disciple of Rand... I'd say that's a pretty strong connection.
As to Rand's views of politicians... Well, far be it for me to defend them, but Rand's idea of the oh-so noble business leader, looking out for nothing other than his own best interest, seems to have not served us very well these last couple of years, has it? And taken a step further, aren't these homeowners who walk away simply making the most rational, self-interested decision available to them? Why should they not walk away? Social contract? Screw that. It's every man for himself! That's America!
Like a lot of things, walking away is good for individuals but bad for society.
Actually, it may be bad for the bank, or more likely the current bond holders that hold the mortgage, but for society as a whole, even the economy as a whole, I think it's almost surely a net gain.
What if tomorrow everyone's mortgage fell to a price no more than the market value of their home in 2002. Sure, bondholders would be screwed, but think of all the new disposable income available.
Granted, things like pension funds probably hold a lot of mortgage debt, but who has a pension now-a-days?
Though, I agree we are seeing a major breakdown of trust in America.
I admit to being deeply skeptical of all arguments that are rooted in nostalgia for past times that were never in fact as good as remembered.
Let's just stick with lending. A generation ago, a furniture store could sell you something on an installment plan and then repo everything for even one DQ (if that's what the contract provided). That's no longer true today.
A generation ago, banks redlined and wouldn't lend in certain areas. That's no longer true today, despite what nutso groups like ACORN would have you believe.
Each of us is by turns honorable and horrible, so let's not kid ourselves that the posters here (or some long ago generation of people that never existed in reality) are some kind of moral and pure sect.
I wouldn't bother. It has apparently been Feed The Troll Day all day here at CR, and I for one have given up.
I just won't participate in a thread at this point. Sorry, but if folks want to argue with trolls, the cost of that is doing nothing but arguing with trolls.
A murderer is still a murderer and an idiot is still an idiot. You are the latter and I suspect if you were in Germany 65 years ago, with your "brilliant" reasoning, well, .....
The best thing for the Economy is for this housing price bubble to burst as quickly as possible and for prices to get back to fundamentals. I think that people sending in the jingle mail accomplishes this quicker than a long, drawn out foreclosure.
One thing that has me worried is the public sector. Will jingle mail mean that people escape their property taxes? (I'm not a fan of people paying their fair share) On the other hand, it may reduce the calls for bailouts if people are sending the jingle mail. But I'm not sure.
"Also it appears the homeowner has not properly disclosed the planned foreclosure on his current home with his new lender"
If you read the thread all the way down the original poster mentions in the comment section that the holder of the loan on the second house NEVER asked about his plans for the first home. Ther was no fraud, just incompitance.
Hey I am the 999,999th visitor for the third time today! and Jas responeded to ME!! I feel special.I think i'll have some chamomile tea and acquavit and just BASK in my feelings.
You had mentioned in an earlier thread that you are looking at heritage properties in Sonoma County. What is a heritage property? BTW are you in the RE biz?
--
" Though, I agree we are seeing a major breakdown of trust in America."
A much larger % of Americans have discovered that the road to success in acquisition of money and sex lies in deception, fraud (if one thinks the he has a good chance to get away with it), and manipulation.
It has filtered down from the very top (BFNYC) to the lowest level. BFNYC are born-and-bred manipulators. And they have incorporated more and more deception in their practices by introducing complexity that dopes cant fully figure out.
Race to the bottom is on. And the America system will be driven to the ground.
All during settlement, the Loan Officer was winking and nodding every time mortgage resets came up. I under the distinct impression that what was on the paper was a simple formality, and that I wouldn't be held responsible for the additional interest on my ARM. Turns out, the dude had Tourette's Syndrome.
This thread reads remarkably similar to the one a few weeks ago about the 400k a year guy selling short and buying the house next door cheaper... with trolls and all.
The issue is not so much that of borrowers being irresponsible or smart or both.
If lenders used responsible underwriting standards (um,... like checking if the guy already is foreclosing or planning to on another house) and offered loans to people who can pay the loan back for properties worth the amount requested, jingle mailing might not be so attractive these days
A much larger % of Americans have discovered that the road to success in acquisition of money and sex lies in deception, fraud (if one thinks the he has a good chance to get away with it), and manipulation.
Was it ever different any time or place in the history of primates?
Tanta said: "...I just won't participate in a thread at this point. Sorry, but if folks want to argue with trolls, the cost of that is doing nothing but arguing with trolls."
And killing the board. I thought it reached a new high in offensiveness (a pretty high bar already) when posters were being told not to have so many children.
Confirms an observation I've made about posters here: The mean-spirited ones are also the most-ignorant.
I think that the difference between "being able to pay" and "unable to pay" is not that clear in many cases. For people who stretched to get into an ARM, paying after resets might be "difficult." Also, it seems that if you are far underwater, you can't move and you can't refinance. Not much to look forward to--stuggling for 5 or 10 years with a high payment and then not being able to sell or selling for less than what is owed. I think that people should pay their debts, but at some point it doesn't make sense. My main point is that, in many cases, this will be a difficult situation and a person ought to look as several long term scenarios and try to assign them probabilities (not an easy thing to do)
As far as the newly homeless people that were homeowners but have now been foreclosed and are now going to shelters.....why don't they rent? Seems this is more of an ubran legend to me...
Seb doesn't even read them apparently -- I just went searching for where anyone was berated for having too many kids (or keyword child) in this thread. It covered a lot of territory and got pretty wild but didn't go there.
--
"You can't possibly be unaware that Greenspan was one of Ayn Rand's prime disciples."
To get appointed, and to serve BFNYC, Greenspan trained himself in the art of deception and manipulation. That is the #1 skill requirement for Fed chairman.
Ayn Rand was a superb manipulator! (I have read almost all she wrote). "Objectivism?"! Greenspan was Objective!! His objective was to help BFNYC and Corporate Crooks of America screw working-class Americans. He was a great success.
"the value is now equal to the loan amount." Ohh, the humanity! I never would have bought it if I thought it was only worth what I was going to pay for it!
"Will jingle mail mean that people escape their property taxes?"
No, it means that the lender will be getting the tax bills after foreclosure. Now if the lender also decides to walk away, then the county gets the keys.
In extremely distressed areas, where a vicious cycle of foreclosure and falling home prices sets in, this is going to happen. Probably already has happened somewhere.
"Each of us is by turns honorable and horrible, so let's not kid ourselves that the posters here (or some long ago generation of people that never existed in reality) are some kind of moral and pure sect."
CA Credit Risk
You noted, "Also: I'm quite surprised the gay Americans haven't latched onto this as unfair taxation, hell they can't even filed jointly."
This gay American has his hands full just trying to get basic human rights. But, as soon as that happens, I promise I'll get right on your unfair tax situation. In the meantime, enjoy all the rights that you do have. The unfair taxes you pay may just have something to do with the rights most citizens enjoy in this country.
Jas,
When you count the votes...the prudent saver will get screwed by the politicians and the speculator and/or deadbeat will get rewarded.
I live in an expensive home in the RTP area of NC with a large jumbo (about 45% equity though), I think that when my home becomes eligible for a conforming loan from the GSE's, I will do a cashout refi, ship the money out of the country and then become an "American Victim" of the terrible people who force me litterally force me to borrow. And Credit Cards too! Hey, maybe those moslem guys around the world have it right...gee if they are charged with sexual assault or rape in the US they can tell the judge...but judge...she had a bikini on, I couldn't resist, I am not responsible, "I am the victim" and she should be punished for "tempting" me.
How does a culture go down hill so fast? I am old enough to remember that when I make a commitment...I make a commitment. Now it is if the house goes up, I am a genius at the cocktail party...if it goes down...I was forced into it. The same with American women, when the income goes, the romance isn't far behind out the door. The marriage vows are now...for better and better, for healthier and healthier, and for richer and richer. If something goes wrong, how does she say it to her girfriends..."WE GREW APART".
We are in serious s**t as c culture. Who in the hell would be stupid enough to lend us the money now?
"Granted, things like pension funds probably hold a lot of mortgage debt, but who has a pension now-a-days?"
Public employees and some union workers. Not as many as once upon a time, but still a lot.
The beauty of the public pension plans is that if they can't meet their obligations because of financial problems, that bag could be handed to taxpayers, unless I am much mistaken.
I just took a gander at Conjure's link re: bank borrowings from the federal reserve. It is striking, but I have no idea what it means. The banks, it seems, are borrowing from the fed at unprecedented rates. Who would like to expound on the significance of that.
"This gay American has his hands full just trying to get basic human rights."
--MR
Reminds me of a New Yorker cartoon--the old curmudgeon sitting with his wife on his sofa, watching the TV news, muttering: "So now it's marriage for gays? Haven't they already suffered enough?"
Now let's see? If this guy can make a rational decision to exercise his "put" and walk (after all that is the rational and american thing to do), why can't a lender (after lending at 5% for 30 years realize after the long term rate goes to 10% and he is under water), reneg on the contract? It's the california/american way...n'cest pas?
In regards to the Greenspan/Rand issue, I wonder, how rich/powerful/influential does one have to be to before his immediate friends become his "inner circle"?
Perhaps I should have the people who hang out on the couch in my apartment and watch TV sign some sort of "inner-circle" non-disclosure agreement, specifying that neither I, nor any schools of thought associated with me, can be held liable for their words and deeds. I should probably also add a clause specifying a share of any proceeds they earn from appearing on any form of E, A&E, or VH1 channel special program in regards to me.
Or I could just make sure there is always beer in the fridge so they are never tempted to go off into the outside world.
--
"Was it ever different any time or place in the history of primates?"
That shows gross ignorance of history. It has varied greatly over time and over civilizations.
Dopes under-estimate the role religion beliefs played in making primates behave against their "natural" instincts for the good of the whole, i.e., most, even when some, e.g., priests, benefited from those beliefs.
Good Lord, I don't log on for an hour and look at what happens!
mp and conjure....OMG. Now that's a graph.I'd like to see what proportion of that spike went to which institutions. That would tell us a lot now, wouldn't it?
On the taxes...well...I am childless and I do pay my share, in fact, my taxes are usually more than the median income so please excuse me if I take a little umbrage at the fact that I get less back because I am single and childless. And to those of you that think your children will take care of me, think about the fact that all of that hard-earned money I made will be paying their salaries to do so. So I'm sure it's a wash in the end. But on the whole, I actually don't mind paying taxes at a first-world rate because I want first-world services, something this administration has worked hard to destroy. So maybe that will change.
But like another poster, I'll worry about that after I get my basic rights that all other citizens get that I don't because I'm gay. Except marriage. That one I don't want but all the gays can feel free to fight for it if they want, all I want is my SS to go to a partner just like it does for everyone else.
And on the Jas thing...just skip over his posts like I do. I don't feel deprived because I don't read them or the responses. It's just like a ringing phone...don't answer it if you don't feel like talking!
This is probably too late and too far gone in the thread to bring up, but sue me...my daughter just linked me to an AFP story on the saddest victims of these walk-aways: family pets left to starve to death inside the houses. I know it's hard to believe anyone could do this, but evidently it's been going on for awhile now.
There is power in numbers. If enough people rebel against predatory loan practices, the banks will have to deal or risk total collapse. Call it a Financial Revolt. Storming of Wall Street. This time it's upside down home squatters taking back control. Jefferson said it best:
When, in the course of human events, it becomes necessary for a people to advance from that subordination in which they have hitherto remained, and to assume among the powers of the earth, the equal and independent station to which the laws of nature and of nature's god entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the change.
Walking away is an option. It use to be that you would receive a Form 1099-C from the IRS for a mortgage debt forgiveness from a short sale or forecloser (where the bank could not recover their losses). However, a recent bill - The Mortgage Cancellation Tax Relief Act of 2007 (HR 1876) which was passed in December will amend the tax code to generally exclude debt forgiveness on principal home mortgages from treatment as income. The bill approved as an amendment to H.R. 3648 creates a three-year exception for debt forgiveness on home loans helping families already unable to meet their mortgages to avoid incurring large tax bills as well. This bill will only allow debt forgiveness on aquistion debt. Other debt such as Helocs and refinanced mortgages where not related to the orginal acquisition may not be covered. Check with your lawayer or walkaway.com for information.
Translation:
I buy a house in California and it is foreclosed on. Assuming that I only have my aquisition loans, I walk after a few months (lets assume 8 months) and the bank takes the house. Since the state is a non recourse state, the bank can not come after my assets and the IRS can not bill me for the fogiven debt.
Now, do you understand why it is time to walk away. If you can save your mortgage for 8 months (assume 8 * $2000 = $16,000) and rent a cheaper place, you probably will be able to get a place after two years with a government loan. And yes, the government programs only look at the last two years per my HUD loan years. They will note the forecloser but will base most of the financial decision on the last two years.
We all have the right to remain ignorant as well as be wedded to our prejudices.
I respect your right to your view of the world, which is obviously different than mine. It is a good feeling to be in a cocoon, I suppose, or be like a frog in the well.
Stealthwii--it seems they didn't even ask. This is, of course, a report from the individual concerned, so he may simply be lying--can a bank actually be that stupid?
If jingle mail becomes widespread, I think it will have a major impact on mortgage lending. Banks will have to rethink the risks involved with underwriting mortgages and price it accordingly. If we return to 80% LTV and much lower debt-to-income ratios, home prices will have much further to fall. This will create a self re-enforcing downward spiral; more people underwater walking away from their homes, causing tighter lending standards...on and on.
At least once a month, back in the 1999-2000 time frame, the LA Times' Sunday real estate section carried an article on whether you should walk away from your upsidedown mortgage.
My take is a deed-in-lieu of foreclosure option is a legal choice made by a borrower in distress. there should be no moral judgement, it's just a legitmate business decision, imo.
the pick-a-pay, interest only, minimum payment, 2/28 or 3/27 subprime or non conforming loan push was perhaps more about Wall Street Greed than unethical mortgage brokers or dishonest home buyers; though commission based originators (95%+ of the market) had incentives to fund loans. the bigger the loan the greater the pay day. interest only favored buying more house than one could qualify for; and the bigger the loan the higher the broker yield.
and in California, not to mention the embedded conflict of interest whereby the Department of Real Estate licenses both real estate agents and loan officers. am i missing something here??
also, the underwriting of then new condo purchase loan (the subject of the LA Times blog poll) is based on the buyer's history or performance, NOT future intentions to legally "manage" the liability side of his balance sheet.
Let me echo the comments of an earlier poster: if a business walked away from an unprofitable investment, nobody would bat an eyelash. When individuals do it it becomes "immoral".
Grumpy realist--no, the guy is not lying, one of my clients did the same thing about 10 months ago. He didn't lie on his application to the best of my knowledge. And, as to my client, I don't think he will default, unless there is a death or the usual default causes. He is an older man, and this is a one-shot thing with him. My client put 30% down on the 2nd house, so it would take a really big drop to put him underwater.
I just noticed this forum and thought it was interesting. I work at youwalkaway.com They are really helping people who don't have any other options. They actually turn away people that can either do a short sale or have equity in their home. There are many people out there who are facing enormous stress and it is affecting everything from their job to their family. $995 isn't a whole lot of money for 8 months worth of service and peace of mind.
lawyerliz--thanks for the info. I'm definitely getting a kick out of the heat and light over a decision which, if a business had done it, would be considered a "sound business decision", but magically when it is done by an individual, now somehow mutates to "immoral."
I also think that the people getting involved in "jingle mail" are seeing the walk-offs the CEOs involved in these messes received and think: heck, I'm supposed to keep my nose to the grinder and keep paying out for the benefit of one of these twirps?!
Basically, banks and mortgagers were riding on their "fiduciary image" for a long time, and now the fact that they treated people like used-car salesmen is now coming around to bite them in the fundament.
I have no problem paying taxes for schools etc to educate kids, keep them healthy etc. Fully support it, it's the price you pay for a stable society.
What gets me is the superior attitude coming from some parents, who are loud and obnoxious enough to outweigh all the very nice ones.
Seriously, having kids isn't that hard - lots of girls I was at school with managed it as teenagers and they were drunk. So don't pretend you are so great because you had them. Where you are great, is if you can raise them well, so they don't cause havok in society around them, and you don't expect the others around you to foot the bill, either in time or money, to raise your progeny.
Most parents seem to fall into the 'former' category. I want to play violent video games, but you want to stop that because you can't be bothered to vet what your kid does and plays. I want to watch films that have bare nipples, but you make it hard because little Timmy might see it and you can't take the 10 mins to check it out before hand. I can't have a nice meal at a restaurant in peace because you can't police your kids and they are running screaming around the restaurant. I get looks in a pub at 9pm because I'm drinking with my friends and poor Jane's ears are sullied by swearing.
So parents, here's the summary - we don't mind paying the costs needed for a stable and productive society. But stop taking the piss, don't put the burden of raising your child onto others, do the job yourself, and don't then look down your nose at us because we decide a different path in life from you.
There is power in numbers. If enough people rebel against predatory loan practices, the banks will have to deal or risk total collapse.
I'm surprised there haven't (AFAIK) already been stealth attempts by non-recourse states to switch to recourse. If not now, then right after elections.
The degree to which renting is an attractive option depends on various aspects of renting, e.g., cases in which the landlord defaults on his mortgage and the tenant gets evicted.
Walking away might be smart. As much as the lenders may be responsible for setting themselves up for this jingle mail, I think that the guy who signed the dotted line has to also take a hit too. If nothing happens to the jingle mailer then this will be rampant. It just seems anarchic and chaotic.
The more I learn the more the whole system appears to be heading toward Armageddon.
When I read the other day that to avoid mortgage insurance someone could piggy back their loans and this is an acceptable practice, I found that in of itself problematic. The safeguards put in to prevent financial uncertainty and collapse have been removed to make more business and more mortgages without really any thought to why these practices were instituted in the first place.
OMG! Just scrolled down and commented. Is this the most insane idea yet? No, don't tell me, I know it is!
We haven't even begun to see the GSE losses yet....be Afraid..be very Araird...totally a Bear now, and worried for all of our futures.
Majority rules. It must be smart.
rich | 01.25.08 - 1:46 pm | #
Once, I saved all my bills, and at the end of the month, paid them.
Then, to goose their late fees, companies started to send bills at strange times, with offset due-dates, and now I have to pay bills constantly, all month long.
A small thing, but a line has been crossed. If we lived in the former world (pay bills once-a-month), walking would be irresponsible. Now, I'd have to agree: walking is smart.
And I hate that I live in a world where I am saying that.
Two evil institutions of Platonic Greek "Republic": Lawyers and Physicians, the thrive of the former represents moral decay, the high salary of latter physical decay. Unfortunately, American has both.
When the deans of Medical School and the presidents of Universities start having titles like CEOs, how much morality is left for future in a plutocratic society.
The main goal of corporate American is economic stablity. Humanity and Freedom are not the options. My hope is that they will find the optimal equilibrium that was brilliantly prophesied in Huxley's " Brave New World" not some individualistic new world.
As to those interesting seditious intellectuals like Jas Jains ( though I agree with most of his comments, though it is difficult to have objective abstract discussions), they will be sent to remote islands as exiles. We will be left with a peaceful, sterile landscape.
It doesn't really mean much at all. All of the spike is accounted for by the new Term Auction Credit facility. FRB New York drains the increased reserves created by this borrowing by open-market purchases. So what happens is borrowed reserves go up, while non-borrowed reserves go down. The net effect on high-powered money is zero.
I agree,he saw the light and is cutting his losses.
To those who have their view set in stone and sit upon then like a throne,
I seek not to change, for you would not.
The GAO has said "we" will be 53 Trillion in debt,
I don't recall asking them to spend that much.
And CorpCow gives you tomorrow's milk, not at today's prices, but for free.
Don't expect ERISA to be a fix.
Unfunded liabilities? Thanks,but no thanks.
And "we" (This so-called mass of humanity owe,and can't walk away from it,
for the so-called greater good),will end up poor for it.
As they say in Australia, "Good on ya, mate!" He's exactly right. There's nothing immoral about walking away. It's the smart thing to do. When the bank makes the loan, the law and the contract make clear that the bank is your partner in taking on real estate risk. If you put little or no money down, the bank is taking on more risk and is compensated for that risk in the form of a higher interest rate. If it so happens that bank took on stupid risks and lost the gamble, there is no obligation for a borrower to shield the bank from the consequences of its actions.
downgrade Friday continues - 93 pass thrus and 25 sub-prime MBSs
I'm amazed a majority of the poll takers think it's ok.
if this guy walks aways from house #1, what are the odds that he walks away from house #2 in a year or so if home prices continue to fall another 30% (with no rebound in sight) and just rents?
iceman, i was thinking the same thing. From a purely financial standpoint what the subject is doing makes perfect sense. Of course what happens in a few years when the new residence is underwater? Would be best to rent a place now while his credit is good and live there for the next few years. It will be cheaper too.
define good credit...?
No....The New Term for good credit, that is
Joke will be on that guy when values continue to tank. And the banks. And wall street. Lots of jokes to go around.
The financial leadership in this country CANNOT be trusted!
"Would be best to rent a place now while his credit is good and live there for the next few years. It will be cheaper too."
I think he's got one shot to do this before his "walking away" becomes clear to all involved. Switching to rent for a few years means he'll be well known to the banks as a jingle-mailer when he tries to buy again.
By that time, perhaps they won't care.
--
Nothing new here
2004 Freddie Mac working paper:
http://www.freddiemac.com/news/pdf/fmwp_0403_servicing.pdf
Although only anecdotal evidence exists of California borrowers ruthlessly using their option to default through moral hazard rather than involuntary inability to repay, the Fannie Mae experience suggests that allowing deficiency judgments at least reduces the incidence of foreclosure when home values decline.
As it turns out the California borrowers were exercising the put option, as mentioned in the report, which is if you your home is worth less than you owe you hand the keys to the lenders. The workouts are for the benefit the lenders, for the most part. Involuntary inability to repay? You mean borrowers are not supposed to be calculating; only the lenders are? LOL.
BTW, there are no moral hazards in a morally bankrupt, or calculating, society, only legal hazards. The ethical hazards in America are all driven from the top to the bottom. Finally, the bottom is catching up!
Jas
Banks face a further $300B sub-prime hit
Banks 'face a further $300bn sub-prime hit' - Telegraph
It's almost like having a stop loss. If properties don't go down an additional 30%, keep it then. If they do, say bye to that one also.
I'm more interested in what the sociological implications are of a majority of voters agreeing that it's "wise" to default on the loan. Even the most heartless of libertarian free marketers should acknowledge that any transaction, on any level, is an act of trust, and that without trust, the social fabric needeed to get on with a communal life breaks down.
We saw it happen when employers began treating employees as chess pieces rather than people. The old loyalties to one's employer went out the window, and feelings of obligation evaporated on both sides.
There's your Randian brave new world: everyone is the enemey now.
If housing is now an investment and not a home then walking away is rational behavior. Of course the lenders were betting on the new "investors" to retain the old homeowner commitment. Also, one should keep in mind that most of these borrowers have never seen a market where credit was not available to deadbeats. If lenders get tight on the standards like way back in the past, then walking away could end up being tougher than anticipated.
the reason he's moving is cause of the reset--
the gse mega cap loan will solve that problem... he should just wait a few months for Jas's favorite folks to pass the law.
You can't see the results of the poll without giving an answer.
Like a lot of things, walking away is good for individuals but bad for society. If I saw reports about Wall Street getting $39 billion in bonuses at the same time my home had lost so much value that I was underwater on my mortgage, I might walk away, too. (But that's not where I'm at financially.)
Wow, I have a friend who paid off his mortgage years ago that is now considering "just walking away" because it's the cool thing to do.
He said something about expanding his social network.
Breaking news on Fortis (looking for an English version)
De Tijd: Fortis keldert na gerucht nieuwe kapitaalverhoging en zware afboeking
Ayn Rand should be disinterred, drawn, quartered, burned, and the ashes scattered to the four corners of the earth.
Ditto for Greenspan's corpse, when he finally dies. Though, Greenspan's corpse should first be staked through the shriveled, blackened heart.
Treasury Fact Sheet: Examples of How the Economic Growth Package Will Benefit Americans:
http://www.treas.gov/press/releases/reports/fact_sheet_examples.pdf
... through the shriveled, blackened heart.
You give Greenspan too much credit here.
Please note, I do not advocate any violence against any living person.
ac, lol.
I'd like to add my two cents since I happen to be in the same boat as this guy. I own a home in Northern CA that lost over 350K in value since Aug 07. the value is now equal to the loan amount. I've tried to sell it but to no avail. jumbo financing makes the purchasing of the home very cost prohibitive.
so what should I do? continue to feed the home hoping the value will someday rebound? Or should I cut my losses and start over?
I've got responsibilities more pressing than my promissory note. So, I'm walking.
I'd rather be a dead beat now than have nothing when it comes time to retirement....
I think he should walk away because it's best for society if house prices are more affordable and the bubble popped as soon as possible.
--
"The financial leadership in this country CANNOT be trusted!"
Certainly it is less trustworthy than the political leadership of Nazis in Germany.
Bad leadership doesn't just happen to other countries; in due course it happens to all powerful, or imperial, countries and now it is America's turn. Evil leadership cycles thru.
Jas
When credit card companies (and banks) use "universal default" on a borrower and jack up all of their rates across the board due to missed payments on one debt, is that fair?
If the banks have no ethics, why should we expect the borrowers to have any in return? I thought we were all for "free markets"?
I just voted in the L.A. Land poll.
40% think it's irresponsible.
60% think it's smart.
Majority rules. It must be smart.
No deficiency judgment in California if all the loans are purchase money.
Balances out all the predatory lending. I would not recommend buying another house though.
"if this guy walks aways from house #1, what are the odds that he walks away from house #2 in a year or so if home prices continue to fall another 30% (with no rebound in sight) and just rents?"
I think the guy wants to be in a house/condo and not renting. If he goes straight to renting and then wants to buy a house in the next seven years, he'll most likely have a tough time getting a mortgage, given his history of walking away from his current mortgage.
What I find fascinating is that he was able to get a mortgage on a new place when he's already upside-down on his first place. I'm assuming this was a full-disclosure loan, but apparently the brokers only want to know his current payment, not his payment in x months when his ARM resets. The reset in his ARM will have a material impact on his ability to pay both loans. You'd only hope that in this era of "tightened" lending standards that someone would be watching out for this type of scheme. Pretty soon we'll have more fallout from these types of transactions.
I agree with the poster who was talking about the trust issue in a transaction. Once trust is gone, it's very difficult to get back. The stigmas associated with bankruptcy and foreclosure really don't exist anymore, so people are going to be much more willing to walk away and start over. When someone puts 20% down they're going to think twice before walking away. With no downpayment, it appears to be a much easier decision.
Off topic (a bit), but I see that yet again having children qualifies you for a substantially higher rebate.
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. We also pay for family coverage that subsidizes doctor visits for people with children. Now people not only get an additional tax break for the progeny (never mind all the college savings tax shelters), they get substantial more in cash payments.
Also: I'm quite surprised the gay Americans haven't latched onto this as unfair taxation, hell they can't even filed jointly.
OK Rant over.
ING, Fortis fall on talk of profit warning: Traders
ING, Fortis fall on talk of profit warning: traders
| Reuters
--
"We saw it happen when employers began treating employees as chess pieces rather than people."
Capitalists are money whores, pure and simple, and there are no loyalties. Unlike the landowners, the capitalists can take their capital elsewhere, as Adam Smith recognized, or withhold it, and they have no loyalty to the land or the people. After screwing Americans they will move on to China, etc. They will leave Americans with tens of trillions of dollars in debt.
Evil is what evil does. Pushing Debt is certifiably evil.
Jas
"Certainly it is less trustworthy than the political leadership of Nazis in Germany."
Jas,
Nazis?
You lose automatically when you employ Hitler or nazis in an argument -- at least with reasonable people.
Could you step it back down a couple notches to the "money whore" level?
SLATE
Crashing the Subprime Party
How the Feds Stopped The States From Averting The Lending Mess.
How the feds stopped the states from averting the lending mess. - By Nicholas Bagley - Slate Magazine
What surprises me is the number of people who try to put a 'moral' label on behavior by an individual homeowner when they would not do that to transactions made by commercial developers, big contractors, investment banks or wealthy investors.
If it is cheaper to walk, people will walk. The banks had better get used to it.
Mish: Changing Social Attitudes About Debt:
Mish's Global Economic Trend Analysis: Changing Social Attitudes About Debt
There's no third rail of discourse for me with Nazi references, so long as it's justified. In this case, I think it absolutely IS and applaud the commenter.
A mortgage fraud investigator of my acquaintance once said, "If a borrower is caught defrauding a lender, the borrower goes to jail. If a lender is caught defrauding a borrower, he might have to give some of the money back."
My pet theory about Jas' posts is similar to the react-o-matic theory posited on the prior thread. He has a MadLibs posting template . . . but has misinterpreted Mad to mean angry.
Hilarity ensues.
Seeing as the person likely didnt take any financial advice upon purchasing a condo at the top of the real estate market, Im thinking the answer to legal and tax advice is a big fat no.
And on-topic . . . isn't the answer to the poll "Yes" or "Both"?
still, few bothered at the time to read hitlers mein kampf,later actions were entirely consistent
Incredulous:
What is the fascination people have with parity of taxes in - benefits out? Sure, you don't have kids in school right now, but do you really think you get no benefit from contributing to the school system? Tell me, without contributing to the school system now, where do you think the doctors will come from when you get older?
Do you really get less benefit from trash collection? Arguably, you may prefer a trash tax commiserate with the volume of trash collected, but that's nothing to do with having children.
Really, what are you complaining about? Would you agree with a person who has no car that their taxes are too high because they have to pay for roads which you get more use from (setting aside trucking, for instance)?
And the idea that parents get some sort of unfair benefit from setting aside college funds is strange, too. How does that adversely effect you?
Basically, it seems like you're just saying "why do people get a benefit that I've chosen not to get? That's unfair".
Oh, please. Americans are financial idiots. He has no clue what he's in for.
--
"You lose automatically when you employ Hitler or nazis in an argument -- at least with reasonable people."
Reasonable people are born-and-bred dopes and the doping process makes them agree with vast majority and feel good by being likable.
Most regrettably, my conclusion is that financial Nazis of America will make German Nazis look good. We shall find out in another 20 years. Until then lot of suffering for Americans at the hands of Americas financial Nazis will continue. Dont forget that they constructed the Debt Concentration Camps and piped them with the financial poison gas Debt. How efficient!
Jas
"There's no third rail of discourse for me with Nazi references, so long as it's justified. In this case, I think it absolutely IS and applaud the commenter."
Cool. Just to make sure we agree on our terms, though, the Nazis I'm referring to were the ones that murdered and incinerated 12 million people.
Jas,
I'm reasonable and I'm not a dope. My knee doesn't jerk and I don't react from rote every time I type.
Re: France's No. 2 bank apologized to shareholders after discovering what appears to be the largest trading fraud in history to be carried out by a single person.
"were friggn sorry ok? Were sorry, how many friggn ways to we have to friggn say it? How many languages....oui? Do I need to put a friggn laser on my friggn head, we are sorry
The tax question is interesting. If I'm $100,000 underwater on my mortgage and I mail the bank the keys, will the IRS say I need to pay income tax on that $100,000?
How the Feds Stopped The States From Averting The Lending Mess
FFDIC | 01.25.08 - 1:53 pm
Thanks FFDIC ... I always thought Georgia had its act together, its why I left Texas(5th generation Texican)
@cobradriver
Thanks for answering my question yesterday regarding 12 months-of-supply, not 'til 2009
John,
IMHO, its only a tax issue if you refi, which is a capital gai
wally,
Bingo. Imagine, individuals behaving like commercial enterprises. Maximizing utility may become in vogue again.
--
"Oh, please. Americans are financial idiots."
Because they are bred to be so! Breeding hard-working dopes is part of the plan of America's economic rulers.
Jas
Most regrettably, my conclusion is that financial Nazis of America will make German Nazis look good.
Can we stop feeding this troll? Thanks.
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. We also pay for family coverage that subsidizes doctor visits for people with children. Now people not only get an additional tax break for the progeny (never mind all the college savings tax shelters), they get substantial more in cash payments.
Please calculate the growth rate of an economy with zero children. Tell me how that may impact your future retirement plans.
Personally, I'm kind of pissed that you aren't fully sharing the burden of investing in the economies future growth while at the same time enjoying a greater share of the gains.
OK, Incredulous, I'll say this once:
My children will be supporting you in your old age. My children will be busy rebuilding this country from the mess we're leaving them. My children are educated and will be able to be productive citizens thanks to your taxes.
Get it?
Now just pay them and shut up already.
Jas is cranky agai
--
"Jas, I'm reasonable and I'm not a dope."
And I am Buddha and lord Krishna combined. LOL!
Jas
FFDIC
Thanks for the english news re Fortis and ING. My Dutch sucks and the only word that I understood was "tulip".
I would have a feeling bank #1 would go after him if he defaulted on loan for house 1 if he purchased house 2 knowing he planned on defaulting on loan 1
Commercial Mortgage Alert headlines today:
*140 job cuts in latest wave of layoffs
*Rising CMBS spreads shut down lending
*B-piece buyers facing altered landscape
*Wachovia takes $600mm loss on commercial MBS portfolio in 4Q.
Wouldnt home 2 be considered an investment at this point, without knowledge of the plan to bail on the first? If so, I think some folks might not take kindly to this scheme.
--
"Jas is cranky again"
Let us shoot the messenger because we don't like his message?
Jas
FT - Regulators may force banks into greater disclosure (lets hope so).
FT.com / Financials - Banks could face greater disclosure
Everyone will love this, I promise:
You Walk Away - Foreclosure Protection Plan and Kit, Mortgage Loan Modification, Foreclosure Assistance, Debt Consolidation, Credit Repair from Foreclosures
See? In this country, moral hazards immediately become business models.
Though, I agree we are seeing a major breakdown of trust in America. Hobbesian ethics are a hallmark of third-world societies, where life for the rich is lavish but just as dangerous and uncertain as it is for the poor, and corruption sabotages growth.
'Course, the CEOs should have thought of that before they breached the social contract first. They'll have plenty of time to repent as they mount the scaffold.
FFDIC,
I used google traslator on that article.
Google Translate
Cheers,
jas...ay , so be it....bang..
jus jokin
ps.
Did you know the swastika was a Jain Symbol?
i'm sure it's the good luck version, right?
--
99.9% of "educated" Americans believe that they know the truth about the economy and the political system. In truth, less than 0.1% do. Talk about a delusional population deluded about its knowledge.
It seems more a result of breeding dopes, who claim to know when they dont know diddley, than anything else to me.
Unlike most here, I always keep in mind that I could be wrong in my conclusions.
Jas
I don't think you should all worry your pretty little heads about the walkaways receiving 1099s for debt forgiveness. It's one of the giveaways perky little Nancy has already in the works.
355 Visitors Online
is the market having a bad day or something ?
Incredulous:
Like Donna, my kids will help take care of you in your dodderhood.
If you think it's unfair for me to have children, I invite you to fill out FAFSA paperwork to see just how much my kids and I will profit from all of the financial aid available.
They'll (and we) will be paying the higher taxes to help pay for what remains of SS (HA!) as well as their own loans (while we pay ours as well).
The medicine is sweet, but the fever is still there.
--
"Did you know the swastika was a Jain Symbol?"
I started drawing Swastikas, the right way!, in my father's accounting books at the age of four on Diwali (fiscal new year)!
Jas
youwalkaway.com is stunning!
Everything about it has me laughing:
Organizations are amoral about responsibilities, but act with individual rights. Individual people are now behaving
just like organizations, yet the organizations that put those people in this
position are lecturing them on moral
behavior. How ironic. How pointless.
IMMOBILIENBLASEN
Watch Cramer vs Santeli! A must see!
immobilienblasen
--
I despise German Nazis and America's financial Nazis equally, but if I must choose as to who is more evil, I will choose America's financial Nazis.
Jas
I do appreciate your input, jas...
I actually learned the real meaning behind it after studying(mildy) your religion...
opened eyes see more!
OT: A representative from Egan Jones is on CNBC right now (2:18) talking about that $200B estimate.
One of my predictions this year is a plan to allow homeowners (really renters with an option on price increases) to walk away from a home without tax obligations. After enough "predatory lending" stories get run on the news a tax exemption will be granted. We will see.
Someone correct me if I'm wrong, here, but isn't "jingle mail", aka "Deed-in-lieu-of-foreclosure", part of the contract?
Isn't the mortgage contract a loan agreement between the lender and the lendee stating that the lendee will pay the principal amount back, with interest, over a specified time period, with the home being purchased given as collateral?
I have never had a mortgage before, so I don't know the specifics of the contract, but it would seem to me that in principle a mortgage, PROVIDED DUE DILIGENCE by the lender, is win-win for the lender and all of the risk is assumed by the lendee. If the lendee pays the contract to fulfillment, the lender gets all of its initial investment back plus a lot of (profitable) interest. If the lendee defaults on the contract, the lender gets posession of the house, and sells it to recoup all of its investment. Assuming a closing fee, and at least some payments including interest, even in foreclosure the lender should have made some profit on the loan. (Or at worst broke even given the costs of foreclosing.)
It seems to me the reason that lenders are currently losing a great deal of money from lendees walking away from mortgages is that that the lenders waived all of the essential parts of the mortgage that were there to protect them from losses, like
A. Realistic (read: conservative) appraisals of property value
B. Downpayments sufficent to cushion reasonable loss of value (20%, anyone?)
C. Terms of amortization such that the lendee is paying principal AND interest immediately
While I am certainly not trying to excuse people walking away from their mortgages, especially people that are trying to sneakily buy a new house before they let the old one go into foreclosure , I don't see how the banks have anyone to blame here but themselves.
If someone offered me a large loan, given say, my collection of DVDs as collateral, for which the appraisal was grossly overvalued, and for which I had to provide no downpayment or even pay full interest for years, and the consequences of my defaulting on the loan anytime in the future were likely to be merely the loss of my DVD collection, it almost seems like I would be stupid not to take such a deal. As such I can't really see why anyone is now surprised that people are coming to the same realization with their mcMansions.
Godwin's law has been invoked, thus killing this thread.
so jas,
using your own conclusions, you prefer murderers to thieves?
you are often interesting but you are losing me
Incredulous - so other people's kids will be working their whole lives to pay your social security and pay off the debt that the Federal government racked up while you were a voter. How fair is that to them that you didn't even bother having any kids to help take care of you in your old age?
Tanta, hurry, switch from coffee to your 'cough syrup' and help!
"Did you know the swastika was a Jain Symbol?"
My uncle laid it in tile in the 1930's, it was always funny to look under the kitchen table and see it.
I thought a law was recently passed where debt forgiveness would not trigger a 1099 from the IRS.
Have you spoken to any of those who advanced credit to United, Northwest, or Delta in the 2002-2005 timeframe? Or any (now former) United pensioners? They might not think it was so "amazing".
Cranky
As a childless couple,, my husband and I already pay in much more than we draw out of the system via property taxes/water/trash etc. blah blah blah.
Being childless myself and a non-driver and not a couple and not generally being in favor of subsidizing whatever bozo war certain un-named individuals keep dreaming up, I too -- no, wait, actually I don't mind paying taxes because, on the whole, I think of them as being an expression of support for the society I live in. Even the individual parts I don't exactly agree with at that time. Package deal, alas! Sometimes I am forced to contemplate that, perhaps just maybe, when it comes to putting their money where their mouths are, people don't much care for America. "It's Their Money" over It's Their Country.
I love Google translator...
(quote)
Exclusive: Fortis keldert after rumour new capital increase and heavy write-off....On Euronext Brussels closed the Fortis shares 10.4 percent lower at 13.26 euros.....Rumours about a new capital increase and a write-off of 1 billion euros did the share plunging.... The Dutch bank ING in Amsterdam was sharply lower after rumours that the bank with a winstwaarschuwing would come....There are rumours circulating that Fortis struggling with a liquidity problem and that a new capital increase for soon would be" sounded on the market.... Another market player, the fact that Fortis would consider for its dividend in shares to pay for it.....An analyst talks about the rumour that Fortis an amount of 1 billion euros should afboeken on subprimeportefeuille....'That is nothing new, "says the analyst..... 'But it would be through the profit & loss account...That means that the loss of paper but a final loss..... Another analyst said that both Fortis and ING possible with a winstwaarschuwing....In Amsterdam ING closed 5.2 percent lower at 21.60 euros.... Another analyst reacts' surprised 'on the koersval of the share...."The rumours about the liquidity problems I find illogical Friday for a bank with a retail network as Fortis', he says.
(end quote)
winstwaarschuwing??
illogical Friday??
I don't understand how any moral hazard is involved in walking away from a non-recourse loan when the value of the collateral is far less than the amount of the loan it secures.
Stupid lenders deserve to lose money. They always have and always will.
We've just had an overabundance of stupid lenders these past few years.
Gary,
Lumping Ayn Rand with Greenspan tells me you probably haven't read her. As a writer she wasn't much, but she was way ahead of her time in seeing how things would play out.
She had the mealymouthed politicians (e.g. the Clintons) down pat.
I'm still sitting here in N.H. scratching my head over this issue, but I guess it's because the median house price last year was $260,000 here, far from the $520K mentioned in this article. I don't see or hear walking away where I am, but it's completely regional. I do read about the local homeless shelter turning people away who have just had their homes foreclosed. It's just an entirely different world.
Re: Youwalkaway.com
This line is funny especially in light of yesterdays events!
In FAQ link
You Walk Away - Foreclosure FAQ's Frequently Asked Questions, Question and Answers, Foreclosure Prevention, Stop Foreclosure, Avoid Foreclosure
Lenders typically like to see 4 years since the foreclosure was discharged. However, Fannie Mae (government loan agency) currently requires only 2 years. Before you know it, you will have this behind you and a fresh start!
Guess how much youwalkaway.com charges for its info service? $995.
Here's a sample of the service you get for that:
"There are certain circumstances when an attorney is needed, however, hiring an attorney can be expensive with retainers and high hourly fees. With our Walk Away Protection Plan & Kit, we correspond with your lender if needed and we teach you, so you can do it all yourself. Attorneys have helped us put together our Walk Away Protection Plan & Kit so it contains information that attorneys may give you anyways. (sic) This alone can save you thousands of dollars."
Hmmm. The bar association may take a dim view of some of this.
A man's word is his bond, unless it isn't, then all bets are off.
"And I am Buddha and lord Krishna combined. LOL!
Jas"
If you keep this up I'll have to dump something into the PayPal jar with a suggestion that CR put you back on you anti-anxiety meds.
CONJURE'S FUN FACTS
Conjure Bag submits the following fun-filled graph for your viewing pleasure:
St. Louis Fed: Series: BORROW, Total Borrowings of Depository Institutions from the Federal Reserve
She had the mealymouthed politicians (e.g. the Clintons) down pat.
Middyfeek | 01.25.08 - 2:30 pm
Did she say anything useful regarding Bush and Cheney? If not, she's not worth reading, at this juncture.
The guy is just playing by the new rules. The banks created a system to offload the risk for making loans, and that caused huge price increases. This guy had to choose between renting or paying the price for the banks gaming the system by overpaying for his condo. Why should the banks be the only ones to get to freeload and if the guy can find a way out why shouldn't he get game the system too? When it is no longer in his advantage for the guy to own the house he should follow the lead of the banks and play to his advantage. That is the new way -- actually it is an old way that was put on the shelf for a few decades, but it has now been dusted off and is being used again. I believe in regulation not gaming but his guy is just following today's conventional wisdom.
MGM Monte Carlo...in LV is one fire, one big fire!
mp, nice spike. We all knew Viagra would be abused.
There is a fire at Monte Carlo casino in Las Vegas, watch the CNN. Looks like the fire is getting out of hand.
--
"using your own conclusions, you prefer murderers to thieves?"
Especially, when thieves hire murderers, or cause murders by their plunder.
BTW, how many people are aware of the role that London's and NYC's moneybags, and their political hacks, played in the future Holocaust? Nazis were the murderers but who gave rise to the Communists and the Nazis? I suggest that you read The Boer War very carefully to see the seeds of future evil REACTION to the evil ways of the moneybags of London and NYC.
Ignorance is bliss?
Jas
The nerve of some people - dragging moral and ethical issues into a discussion of credit and finance. Sheesh.
Hey scav, I'm with you. I've always seen taxes as the price we pay to live in a civilized society. I've spent the last thirty years watching as certain people in our government paint taxes as "evil", and wondering how long it would be until the "civilized" was taken out of our society. I guess I finally have my answer.
Trishyla
Jas, please, take a nap or something. Deep breaths. Relax. Easy now...
otherwise, this "discourse" is more suited to some other blogs.
JJ, Give it a rest. Go in your room and play with yourself for a while.
"fun-filled graph for your viewing pleasure"
mp | 01.25.08 - 2:35 pm
Here's a link that might answer why would a bank change the reserves it holds to be reserves it must pay for at the TAF?
I know it turns out I was missing something.
You Walk Away, LLC is located in San Diego and run by a team with over 50 years of combined real estate and legal experience. It is the objective of Walk Away, LLC to empower homeowners who purchased their homes at the peak of the real estate market to take control of their financial future. We strive to help people understand their rights and know their options so they do not feel helpless
Why would anyone even think of bringing morals into a legal contract after the fact. If the contract allows you to walk away and it make more financial sense there is no moral obligation.
--
"Jas... If you keep this up I'll have..."
Threats? How fitting for freedom loving Americans who tout freedom of speech and can't practice what they preach at home.
Jas
A man's word is his bond, unless it isn't, then all bets are off.
Marcus,
A man's credibility is never questioned until it has already been lost.
But, when betting, there is always a winner and a loser.
900 a month on a 520k condo... I'm trying to work the amortization on that but he had to have a good deal of money down going in to get the payment that low... unless it's one of those pay less than interest loans.
I'm a banker (a real consumer and commercial banker, not "mortgage banker"). I have no problem with what this guy is doing.
I love this blog (long time lurker), but I think there's sometimes some overcomplication in the discussion. The recent mortgage lunacy was nothing more than one huge agency problem.
Mortgage rates were incredibly low for this entire decade, and yet mortgage scum were "selling" buyers/refi'ers on things like pay option arms and IO loans, when the coupon on those was equal to or in fact higher than on a 10/1 amortizing note. They were doing 2/28s that they knew had no chance of making the 25th payment. They did 100% financing with limited documentation just to keep the whole ponzi scheme going.
We don't need a huge gubmint bailout. What we need are a few hundred thousand more borrowers like this guy and we'll get through this mess relatively quickly, while keeping homeownership rates relatively high and housing prices back where they belong.
Look, consumer finance can be very seedy (think auto loans, layaway purchases, mortgages, etc.). While I certainly do not even remotely condone consumers defrauding lenders, I have no problem with consumers availing themselves of whatever contractual and legal alternatives are available to them, which is exactly what banks are going to do.
Also it appears the homeowner has not properly disclosed the planned foreclosure on his current home with his new lender
Honest question since it's been ages since I actually took an application, but I don't remember seeing anywhere where this disclosure would be required.
I guess what I'm saying is for an industry that pushed 2/28s and products that had payments that were both UNAFFORDABLE and UNECONOMIC (vs. other market rates), turnabout is fair play.
The fact that Jas is both the Lord Krishna and The Living Buddha explains his humility and Loving attitude toward all sentient beings.Namaste
I'm having a little trouble with the moral and ethical debate. Isn't the moral problem solved by a priest giving you penance or buying an indulgence?
--
"Why would anyone even think of bringing morals into a legal contract after the fact. If the contract"
Legalism is a morally bankrupt ideology, or political philosophy.
Jesus must be rolling in his grave! (This is assuming that he never rose from the dead). Jesus was a political and moral philosopher, or teacher (rabbi). Adam Smith was a moral philosopher.
Jas
Since housing has just become another class of financial asset, it makes perfect sense to stop out a bad trade. Mortgages advanced without standards to profit on the housing boom are no different than bridge loans made to profit on lbo's. What's the difference between an lbo going bad and the bank's taking a bath on the pier loans and jingle mail? The corporate executives aren't personally accountable for the losses, which hardly sets a shining example for glorified renters to suck it up and take the financial hit. I disagree with almost all of Jas's extreme views, but he is right to point out that the bad example here is being set at the top.
"Jas... If you keep this up I'll have..."
Threats? How fitting for freedom loving Americans who tout freedom of speech and can't practice what they preach at home.
YouTube - Monty Python and the Holy Grail
"Now we see the violence inherent in the system!"
To state the obvious, 20% down would make this person's choice much more interesting.
Still upside down, but in a situation where it would be financially reasonable stick it out. In fact, given all the transaction costs of bailing, with 20% down, sticking it out under even worse market conditions seems reasonable.
"Look, consumer finance can be very seedy (think auto loans, layaway purchases, mortgages, etc.). While I certainly do not even remotely condone consumers defrauding lenders, I have no problem with consumers availing themselves of whatever contractual and legal alternatives are available to them, which is exactly what banks are going to do."
Amen. Morals and ethics have nothing to do with this. It's business; bad business, but the walk-aways are playing by the same rules as the big boys, the people who made the business bad. And now they cry?
"They were doing 2/28s that they knew had no chance of making the 25th payment."
Thats what I was thinking its hard to bemoan the loss of moral in your customer base when so many agents are making loans in bad faith to begin with. Not excusing either side, but the brokers and their employers should have known better.
I still can't imagine walking away from my home though... guess I'm one of those economically illogical type who view it as more than just a bunch of wood ontop of land I'm paying off.
--
"The fact that Jas is both the Lord Krishna and The Living Buddha..."
Sorry, I don't suffer delusion like most Americans do about themselves, e.g., "knowledge," or "I am reasonable." Who is the judge? Oneself?
Jas
youwalkaway.com has a nice chat feature:
[Veronika] hello
[Visitor] Hi, I got disconnected. I was asking how you can get a foreclosure off my credit report. I haven't walked away from my house yet, but I'm thinking about it. The big sticking point is having that foreclosure on my credit report, but your "Protection Plan and Kit" says you can remove a foreclosure from my credit report. How do you do that?
[Veronika] The law firm has a legal way of convincing the lender to remove the foreclosure.
[Visitor] A legal way? But if I walk away, stop paying, and the lender forecloses on me, then it's a foreclosure, right? It's not a mistake. I got foreclosed. How do they wipe the record clean?
[Veronika] I'm not sure. you would have to speak to a lawyer
[Visitor] OK, can I speak to a lawyer?
[Veronika] what is your name?
[Visitor] Jas Jai
incredulous, others have mentioned it, but really ... we live in a society, seriously, educating the children is as worthwhile to you as incarcerating theives and murderers.
Heck, my wife and I just locally adopted three boys (I have a vasectomy, so we were intentionally not breeding). Without parents pushing values of education, non-violence and emotional stability, how do you think that they'd turn out? Heck, seeing how their half brother is turning out already is quite frankly scary.
Just as you benefit by living in society (you can specialize at one task, rather than having to raise food, knit clothes, etc), society benefits by educating the young. Unless you're living off the grid and a hermit, you really are pretty simple minded to be complaining as you are.
With a 4% interest rate and 10% down this guy should be paying 2407 a month, just rough calculations, how how the hell is he paying $900?
I live in SC and have bought and sold several homes profitably 1994-2005. I carefully read the put option imbedded in my loan agreements before signing. It was a factor in my decision to borrow, especially as prices in my neighborhood went up 200, 300, 400%. The banks knew I would accept a higher inerest rate on my mortgage, and a larger balance if the put option was included. It made them bigger fees, and they could sell off the paper to inexperienced foreign investors. Now the banks are complaining about trust. IMO the banks are hypocrites. Walk Away (this song by Oscar Brown Jr. is a gas).
children: shush up and play nice.
Thanks for that translation, Misean.
Fortis is like SocGen. They are Europe's leaders in creating structured derivative products with guarantees.
They hedge those guarantees using similar techniques and counterparties.
I'm sure there is a rogue trader at Fortis, too.
The markets are tanking because it's becoming aware of a cover-up scandal that could bring down the French govt.
MiddyFeek:
Are you seriously disputing the affect Rand had on Greenspan??? Seriously? You know, Greenspan was a disciple of Rand... I'd say that's a pretty strong connection.
As to Rand's views of politicians... Well, far be it for me to defend them, but Rand's idea of the oh-so noble business leader, looking out for nothing other than his own best interest, seems to have not served us very well these last couple of years, has it? And taken a step further, aren't these homeowners who walk away simply making the most rational, self-interested decision available to them? Why should they not walk away? Social contract? Screw that. It's every man for himself! That's America!
Like a lot of things, walking away is good for individuals but bad for society.
Actually, it may be bad for the bank, or more likely the current bond holders that hold the mortgage, but for society as a whole, even the economy as a whole, I think it's almost surely a net gain.
What if tomorrow everyone's mortgage fell to a price no more than the market value of their home in 2002. Sure, bondholders would be screwed, but think of all the new disposable income available.
Granted, things like pension funds probably hold a lot of mortgage debt, but who has a pension now-a-days?
The person said their payment would be going up $900 after a reset, nothing about current payment
"Walking away" is only one name for it. The other is "Trading worthless paper."
JJ were you being facetious in your claim? I took your statement at face value,after all you are Jas Jain,the Voice of Morality on this blog!
The markets are tanking because it's becoming aware of a cover-up scandal that could bring down the French govt. -rich
Now your intimate with French politics? Man, you get around...
Though, I agree we are seeing a major breakdown of trust in America.
I admit to being deeply skeptical of all arguments that are rooted in nostalgia for past times that were never in fact as good as remembered.
Let's just stick with lending. A generation ago, a furniture store could sell you something on an installment plan and then repo everything for even one DQ (if that's what the contract provided). That's no longer true today.
A generation ago, banks redlined and wouldn't lend in certain areas. That's no longer true today, despite what nutso groups like ACORN would have you believe.
Each of us is by turns honorable and horrible, so let's not kid ourselves that the posters here (or some long ago generation of people that never existed in reality) are some kind of moral and pure sect.
Ahhhh, misread, thanks.
Depends if he had his fingers crossed at the closing.
Conjures graph on bank borrowing from the Fed is remarkable. The next six months should be very interesting.
children: shush up and play nice.
I wouldn't bother. It has apparently been Feed The Troll Day all day here at CR, and I for one have given up.
I just won't participate in a thread at this point. Sorry, but if folks want to argue with trolls, the cost of that is doing nothing but arguing with trolls.
Perhaps I could be of some service?
Conjure bags graph scares me the most this week. This plus Harley buyers are on hold means were in a recessio
Jas-
A murderer is still a murderer and an idiot is still an idiot. You are the latter and I suspect if you were in Germany 65 years ago, with your "brilliant" reasoning, well, .....
The best thing for the Economy is for this housing price bubble to burst as quickly as possible and for prices to get back to fundamentals. I think that people sending in the jingle mail accomplishes this quicker than a long, drawn out foreclosure.
One thing that has me worried is the public sector. Will jingle mail mean that people escape their property taxes? (I'm not a fan of people paying their fair share) On the other hand, it may reduce the calls for bailouts if people are sending the jingle mail. But I'm not sure.
PSYCHODAVE,
could you illuminate the implications of flow5's insight for we illiterate serfs
"Also it appears the homeowner has not properly disclosed the planned foreclosure on his current home with his new lender"
If you read the thread all the way down the original poster mentions in the comment section that the holder of the loan on the second house NEVER asked about his plans for the first home. Ther was no fraud, just incompitance.
Is Jas a troll? For what group?
unibombers_r_people_too.org?
Sorry, but if folks want to argue with trolls, the cost of that is doing nothing but arguing with trolls.
The Boss has spoken. Please, everyone, don't respond to Jas. Tanta has asked everyone to ignore him before.
Hey I am the 999,999th visitor for the third time today! and Jas responeded to ME!! I feel special.I think i'll have some chamomile tea and acquavit and just BASK in my feelings.
this is getting out of control...
Thank you, Dwight Schrute.
Apologies all.
Tom Stone
You had mentioned in an earlier thread that you are looking at heritage properties in Sonoma County. What is a heritage property? BTW are you in the RE biz?
--
" Though, I agree we are seeing a major breakdown of trust in America."
A much larger % of Americans have discovered that the road to success in acquisition of money and sex lies in deception, fraud (if one thinks the he has a good chance to get away with it), and manipulation.
It has filtered down from the very top (BFNYC) to the lowest level. BFNYC are born-and-bred manipulators. And they have incorporated more and more deception in their practices by introducing complexity that dopes cant fully figure out.
Race to the bottom is on. And the America system will be driven to the ground.
Jas
All during settlement, the Loan Officer was winking and nodding every time mortgage resets came up. I under the distinct impression that what was on the paper was a simple formality, and that I wouldn't be held responsible for the additional interest on my ARM. Turns out, the dude had Tourette's Syndrome.
I think I have grounds for a non-disclosure suit.
malabar if he skipped to the next post, i can say he is a broker for wineries and the like in nor-cal. family owned wineries as i remember...
This thread reads remarkably similar to the one a few weeks ago about the 400k a year guy selling short and buying the house next door cheaper... with trolls and all.
The issue is not so much that of borrowers being irresponsible or smart or both.
If lenders used responsible underwriting standards (um,... like checking if the guy already is foreclosing or planning to on another house) and offered loans to people who can pay the loan back for properties worth the amount requested, jingle mailing might not be so attractive these days
middyfeek, you must be joking. You can't possibly be unaware that Greenspan was one of Ayn Rand's prime disciples.
...just remember - if they wink and nod at the closing table, it probably doesn't mean what you think it does.
Do folks really want "Vegas lightning" as the alternative to "jingle mail"?
A much larger % of Americans have discovered that the road to success in acquisition of money and sex lies in deception, fraud (if one thinks the he has a good chance to get away with it), and manipulation.
Was it ever different any time or place in the history of primates?
"Fairness" does not exist - period.
Cynical Jim
Tanta said: "...I just won't participate in a thread at this point. Sorry, but if folks want to argue with trolls, the cost of that is doing nothing but arguing with trolls."
And killing the board. I thought it reached a new high in offensiveness (a pretty high bar already) when posters were being told not to have so many children.
Confirms an observation I've made about posters here: The mean-spirited ones are also the most-ignorant.
Sebastia
I think that the difference between "being able to pay" and "unable to pay" is not that clear in many cases. For people who stretched to get into an ARM, paying after resets might be "difficult." Also, it seems that if you are far underwater, you can't move and you can't refinance. Not much to look forward to--stuggling for 5 or 10 years with a high payment and then not being able to sell or selling for less than what is owed. I think that people should pay their debts, but at some point it doesn't make sense. My main point is that, in many cases, this will be a difficult situation and a person ought to look as several long term scenarios and try to assign them probabilities (not an easy thing to do)
And Sebastian can't post in 90% of all threads until another one is started so he can have an opportunity to have the last word.
As far as the newly homeless people that were homeowners but have now been foreclosed and are now going to shelters.....why don't they rent? Seems this is more of an ubran legend to me...
Well I have some advice....run don't walk.
Seb doesn't even read them apparently -- I just went searching for where anyone was berated for having too many kids (or keyword child) in this thread. It covered a lot of territory and got pretty wild but didn't go there.
--
"You can't possibly be unaware that Greenspan was one of Ayn Rand's prime disciples."
To get appointed, and to serve BFNYC, Greenspan trained himself in the art of deception and manipulation. That is the #1 skill requirement for Fed chairman.
Ayn Rand was a superb manipulator! (I have read almost all she wrote). "Objectivism?"! Greenspan was Objective!! His objective was to help BFNYC and Corporate Crooks of America screw working-class Americans. He was a great success.
Jas
"the value is now equal to the loan amount." Ohh, the humanity! I never would have bought it if I thought it was only worth what I was going to pay for it!
Scav,
look at posts by "Incredulous" around 1.50 and you'll see what Seb was talking about
I, for one, enjoy Jas's comments...he is radical, but not a troll, IMO
"Will jingle mail mean that people escape their property taxes?"
No, it means that the lender will be getting the tax bills after foreclosure. Now if the lender also decides to walk away, then the county gets the keys.
In extremely distressed areas, where a vicious cycle of foreclosure and falling home prices sets in, this is going to happen. Probably already has happened somewhere.
alec said: "And Sebastian can't post in 90% of all threads until another one is started so he can have an opportunity to have the last word."
I rest my case.
Although why you would hang on my every word (since how else would you know this?) is beyond me.
S.
"Each of us is by turns honorable and horrible, so let's not kid ourselves that the posters here (or some long ago generation of people that never existed in reality) are some kind of moral and pure sect."
CA Credit Risk
Say amen, somebody
IIRC Greenspan was technically the gofer and secretary to Rand's inner circle, not a full member of the inner circle himself.
Cranky
Incredulous --
You noted, "Also: I'm quite surprised the gay Americans haven't latched onto this as unfair taxation, hell they can't even filed jointly."
This gay American has his hands full just trying to get basic human rights. But, as soon as that happens, I promise I'll get right on your unfair tax situation. In the meantime, enjoy all the rights that you do have. The unfair taxes you pay may just have something to do with the rights most citizens enjoy in this country.
Jas,
When you count the votes...the prudent saver will get screwed by the politicians and the speculator and/or deadbeat will get rewarded.
I live in an expensive home in the RTP area of NC with a large jumbo (about 45% equity though), I think that when my home becomes eligible for a conforming loan from the GSE's, I will do a cashout refi, ship the money out of the country and then become an "American Victim" of the terrible people who force me litterally force me to borrow. And Credit Cards too! Hey, maybe those moslem guys around the world have it right...gee if they are charged with sexual assault or rape in the US they can tell the judge...but judge...she had a bikini on, I couldn't resist, I am not responsible, "I am the victim" and she should be punished for "tempting" me.
How does a culture go down hill so fast? I am old enough to remember that when I make a commitment...I make a commitment. Now it is if the house goes up, I am a genius at the cocktail party...if it goes down...I was forced into it. The same with American women, when the income goes, the romance isn't far behind out the door. The marriage vows are now...for better and better, for healthier and healthier, and for richer and richer. If something goes wrong, how does she say it to her girfriends..."WE GREW APART".
We are in serious s**t as c culture. Who in the hell would be stupid enough to lend us the money now?
"Granted, things like pension funds probably hold a lot of mortgage debt, but who has a pension now-a-days?"
Public employees and some union workers. Not as many as once upon a time, but still a lot.
The beauty of the public pension plans is that if they can't meet their obligations because of financial problems, that bag could be handed to taxpayers, unless I am much mistaken.
I just took a gander at Conjure's link re: bank borrowings from the federal reserve. It is striking, but I have no idea what it means. The banks, it seems, are borrowing from the fed at unprecedented rates. Who would like to expound on the significance of that.
"This gay American has his hands full just trying to get basic human rights."
--MR
Reminds me of a New Yorker cartoon--the old curmudgeon sitting with his wife on his sofa, watching the TV news, muttering: "So now it's marriage for gays? Haven't they already suffered enough?"
Now let's see? If this guy can make a rational decision to exercise his "put" and walk (after all that is the rational and american thing to do), why can't a lender (after lending at 5% for 30 years realize after the long term rate goes to 10% and he is under water), reneg on the contract? It's the california/american way...n'cest pas?
In regards to the Greenspan/Rand issue, I wonder, how rich/powerful/influential does one have to be to before his immediate friends become his "inner circle"?
Perhaps I should have the people who hang out on the couch in my apartment and watch TV sign some sort of "inner-circle" non-disclosure agreement, specifying that neither I, nor any schools of thought associated with me, can be held liable for their words and deeds. I should probably also add a clause specifying a share of any proceeds they earn from appearing on any form of E, A&E, or VH1 channel special program in regards to me.
Or I could just make sure there is always beer in the fridge so they are never tempted to go off into the outside world.
--
"Was it ever different any time or place in the history of primates?"
That shows gross ignorance of history. It has varied greatly over time and over civilizations.
Dopes under-estimate the role religion beliefs played in making primates behave against their "natural" instincts for the good of the whole, i.e., most, even when some, e.g., priests, benefited from those beliefs.
Jas
It seems that to a dope anyone who is not a dope like him, or her, is a troll!
How dare you think so differently than I!
Jas
I admit to being deeply skeptical of all arguments that are rooted in nostalgia for past times that were never in fact as good as remembered.
Strawman arguments are just as dull a phenomenon on the Internet as hasty comparisons to Nazis.
Good Lord, I don't log on for an hour and look at what happens!
mp and conjure....OMG. Now that's a graph.I'd like to see what proportion of that spike went to which institutions. That would tell us a lot now, wouldn't it?
On the taxes...well...I am childless and I do pay my share, in fact, my taxes are usually more than the median income so please excuse me if I take a little umbrage at the fact that I get less back because I am single and childless. And to those of you that think your children will take care of me, think about the fact that all of that hard-earned money I made will be paying their salaries to do so. So I'm sure it's a wash in the end. But on the whole, I actually don't mind paying taxes at a first-world rate because I want first-world services, something this administration has worked hard to destroy. So maybe that will change.
But like another poster, I'll worry about that after I get my basic rights that all other citizens get that I don't because I'm gay. Except marriage. That one I don't want
but all the gays can feel free to fight for it if they want, all I want is my SS to go to a partner just like it does for everyone else.
And on the Jas thing...just skip over his posts like I do. I don't feel deprived because I don't read them or the responses. It's just like a ringing phone...don't answer it if you don't feel like talking!
This is probably too late and too far gone in the thread to bring up, but sue me...my daughter just linked me to an AFP story on the saddest victims of these walk-aways: family pets left to starve to death inside the houses. I know it's hard to believe anyone could do this, but evidently it's been going on for awhile now.
Just thought you should know.
John Stark
That spike is the utilization of the TAF.
There is power in numbers. If enough people rebel against predatory loan practices, the banks will have to deal or risk total collapse. Call it a Financial Revolt. Storming of Wall Street. This time it's upside down home squatters taking back control. Jefferson said it best:
When, in the course of human events, it becomes necessary for a people to advance from that subordination in which they have hitherto remained, and to assume among the powers of the earth, the equal and independent station to which the laws of nature and of nature's god entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the change.
People are smart.
Walking away is an option. It use to be that you would receive a Form 1099-C from the IRS for a mortgage debt forgiveness from a short sale or forecloser (where the bank could not recover their losses). However, a recent bill - The Mortgage Cancellation Tax Relief Act of 2007 (HR 1876) which was passed in December will amend the tax code to generally exclude debt forgiveness on principal home mortgages from treatment as income. The bill approved as an amendment to H.R. 3648 creates a three-year exception for debt forgiveness on home loans helping families already unable to meet their mortgages to avoid incurring large tax bills as well. This bill will only allow debt forgiveness on aquistion debt. Other debt such as Helocs and refinanced mortgages where not related to the orginal acquisition may not be covered. Check with your lawayer or walkaway.com for information.
Translation:
I buy a house in California and it is foreclosed on. Assuming that I only have my aquisition loans, I walk after a few months (lets assume 8 months) and the bank takes the house. Since the state is a non recourse state, the bank can not come after my assets and the IRS can not bill me for the fogiven debt.
Now, do you understand why it is time to walk away. If you can save your mortgage for 8 months (assume 8 * $2000 = $16,000) and rent a cheaper place, you probably will be able to get a place after two years with a government loan. And yes, the government programs only look at the last two years per my HUD loan years. They will note the forecloser but will base most of the financial decision on the last two years.
Are we all screwed yet?
--
ipodius,
We all have the right to remain ignorant as well as be wedded to our prejudices.
I respect your right to your view of the world, which is obviously different than mine. It is a good feeling to be in a cocoon, I suppose, or be like a frog in the well.
Jas
I was always kind of creeped out by Greenspan's (a FED chief!) relationship with Ayn Rand.
I read Ayn Rand and thought she was cool. . . in high school.
Then I grew up.
how did he qualify for mortgage #2 with mortgage #1 tying up his credit!?
ahhahahahaha, this thread should be printed out and skewered on a pike... to sort of ward of other threads like this.
nazis, gay baiting, poor starving pets in abandoned homes! yahhahahaha!
What will we do with all the puppies locked in closets?
I wish someone would go into a tirade about the Plunge Protection Team ruining their sure-fire shorting..
Tell me, without contributing to the school system now, where do you think the doctors will come from when you get older?
The same place they come from now - Asia.
Stealthwii--it seems they didn't even ask. This is, of course, a report from the individual concerned, so he may simply be lying--can a bank actually be that stupid?
If jingle mail becomes widespread, I think it will have a major impact on mortgage lending. Banks will have to rethink the risks involved with underwriting mortgages and price it accordingly. If we return to 80% LTV and much lower debt-to-income ratios, home prices will have much further to fall. This will create a self re-enforcing downward spiral; more people underwater walking away from their homes, causing tighter lending standards...on and on.
At least once a month, back in the 1999-2000 time frame, the LA Times' Sunday real estate section carried an article on whether you should walk away from your upsidedown mortgage.
Great question today!
My take is a deed-in-lieu of foreclosure option is a legal choice made by a borrower in distress. there should be no moral judgement, it's just a legitmate business decision, imo.
the pick-a-pay, interest only, minimum payment, 2/28 or 3/27 subprime or non conforming loan push was perhaps more about Wall Street Greed than unethical mortgage brokers or dishonest home buyers; though commission based originators (95%+ of the market) had incentives to fund loans. the bigger the loan the greater the pay day. interest only favored buying more house than one could qualify for; and the bigger the loan the higher the broker yield.
and in California, not to mention the embedded conflict of interest whereby the Department of Real Estate licenses both real estate agents and loan officers. am i missing something here??
also, the underwriting of then new condo purchase loan (the subject of the LA Times blog poll) is based on the buyer's history or performance, NOT future intentions to legally "manage" the liability side of his balance sheet.
a perfectly legal and sensible choice, IMO.
Let me echo the comments of an earlier poster: if a business walked away from an unprofitable investment, nobody would bat an eyelash. When individuals do it it becomes "immoral".
Grumpy realist--no, the guy is not lying, one of my clients did the same thing about 10 months ago. He didn't lie on his application to the best of my knowledge. And, as to my client, I don't think he will default, unless there is a death or the usual default causes. He is an older man, and this is a one-shot thing with him. My client put 30% down on the 2nd house, so it would take a really big drop to put him underwater.
I just noticed this forum and thought it was interesting. I work at youwalkaway.com They are really helping people who don't have any other options. They actually turn away people that can either do a short sale or have equity in their home. There are many people out there who are facing enormous stress and it is affecting everything from their job to their family. $995 isn't a whole lot of money for 8 months worth of service and peace of mind.
Kriste
lawyerliz--thanks for the info. I'm definitely getting a kick out of the heat and light over a decision which, if a business had done it, would be considered a "sound business decision", but magically when it is done by an individual, now somehow mutates to "immoral."
I also think that the people getting involved in "jingle mail" are seeing the walk-offs the CEOs involved in these messes received and think: heck, I'm supposed to keep my nose to the grinder and keep paying out for the benefit of one of these twirps?!
Basically, banks and mortgagers were riding on their "fiduciary image" for a long time, and now the fact that they treated people like used-car salesmen is now coming around to bite them in the fundament.
My wife and I have no kids, don't plan to.
I have no problem paying taxes for schools etc to educate kids, keep them healthy etc. Fully support it, it's the price you pay for a stable society.
What gets me is the superior attitude coming from some parents, who are loud and obnoxious enough to outweigh all the very nice ones.
Seriously, having kids isn't that hard - lots of girls I was at school with managed it as teenagers and they were drunk. So don't pretend you are so great because you had them. Where you are great, is if you can raise them well, so they don't cause havok in society around them, and you don't expect the others around you to foot the bill, either in time or money, to raise your progeny.
Most parents seem to fall into the 'former' category. I want to play violent video games, but you want to stop that because you can't be bothered to vet what your kid does and plays. I want to watch films that have bare nipples, but you make it hard because little Timmy might see it and you can't take the 10 mins to check it out before hand. I can't have a nice meal at a restaurant in peace because you can't police your kids and they are running screaming around the restaurant. I get looks in a pub at 9pm because I'm drinking with my friends and poor Jane's ears are sullied by swearing.
So parents, here's the summary - we don't mind paying the costs needed for a stable and productive society. But stop taking the piss, don't put the burden of raising your child onto others, do the job yourself, and don't then look down your nose at us because we decide a different path in life from you.
There is power in numbers. If enough people rebel against predatory loan practices, the banks will have to deal or risk total collapse.
I'm surprised there haven't (AFAIK) already been stealth attempts by non-recourse states to switch to recourse. If not now, then right after elections.
The degree to which renting is an attractive option depends on various aspects of renting, e.g., cases in which the landlord defaults on his mortgage and the tenant gets evicted.
Hey Journeyman,
Take your head out of your ass. I LOST my 350K downpayment. I did not purchase with 0% down.
I'd like to see how you swallow a hit like that, pal.
With respect with the poll....you expect people to treat the mortgage industry with integrity? Must be a newcomer to this blog.
Kristen, I'm fascinated. How did this company start? When? You're sure you're 100% legit? I assume you screen by states (recourse vs. non).
Walking away might be smart. As much as the lenders may be responsible for setting themselves up for this jingle mail, I think that the guy who signed the dotted line has to also take a hit too. If nothing happens to the jingle mailer then this will be rampant. It just seems anarchic and chaotic.
The more I learn the more the whole system appears to be heading toward Armageddon.
When I read the other day that to avoid mortgage insurance someone could piggy back their loans and this is an acceptable practice, I found that in of itself problematic. The safeguards put in to prevent financial uncertainty and collapse have been removed to make more business and more mortgages without really any thought to why these practices were instituted in the first place.
Re. that Fed Borrowing Chart that Conjure posted:
I don't know what's more interesting, the spike up this year or the flat line during the Great depression. Both lines are impressive.
OMG! Just scrolled down and commented. Is this the most insane idea yet? No, don't tell me, I know it is!
We haven't even begun to see the GSE losses yet....be Afraid..be very Araird...totally a Bear now, and worried for all of our futures.
I just voted in the L.A. Land poll.
40% think it's irresponsible.
60% think it's smart.
Majority rules. It must be smart.
rich | 01.25.08 - 1:46 pm | #
Once, I saved all my bills, and at the end of the month, paid them.
Then, to goose their late fees, companies started to send bills at strange times, with offset due-dates, and now I have to pay bills constantly, all month long.
A small thing, but a line has been crossed. If we lived in the former world (pay bills once-a-month), walking would be irresponsible. Now, I'd have to agree: walking is smart.
And I hate that I live in a world where I am saying that.
As to morality in this thread:
Two evil institutions of Platonic Greek "Republic": Lawyers and Physicians, the thrive of the former represents moral decay, the high salary of latter physical decay. Unfortunately, American has both.
When the deans of Medical School and the presidents of Universities start having titles like CEOs, how much morality is left for future in a plutocratic society.
The main goal of corporate American is economic stablity. Humanity and Freedom are not the options. My hope is that they will find the optimal equilibrium that was brilliantly prophesied in Huxley's " Brave New World" not some individualistic new world.
As to those interesting seditious intellectuals like Jas Jains ( though I agree with most of his comments, though it is difficult to have objective abstract discussions), they will be sent to remote islands as exiles. We will be left with a peaceful, sterile landscape.
It is absurd to describe the current financial system as an implementation of Free Market Capitalism.
The trick is to call it FMC, because FMC can be vigorously defended using the moral arguments that I presented when I was one of the living.
The truth, is that you live under corrupt crony capitalism. And it seems to be falling apart rather quickly.
Oh my, look at the time. Gotta get back to the grave. Bye!
"It is absurd to describe the current financial system as an implementation of Free Market Capitalism. "
Very well said.
Re: Fed Borrowing Chart
It doesn't really mean much at all. All of the spike is accounted for by the new Term Auction Credit facility. FRB New York drains the increased reserves created by this borrowing by open-market purchases. So what happens is borrowed reserves go up, while non-borrowed reserves go down. The net effect on high-powered money is zero.
I agree,he saw the light and is cutting his losses.
To those who have their view set in stone and sit upon then like a throne,
I seek not to change, for you would not.
The GAO has said "we" will be 53 Trillion in debt,
I don't recall asking them to spend that much.
And CorpCow gives you tomorrow's milk, not at today's prices, but for free.
Don't expect ERISA to be a fix.
Unfunded liabilities? Thanks,but no thanks.
And "we" (This so-called mass of humanity owe,and can't walk away from it,
for the so-called greater good),will end up poor for it.
As they say in Australia, "Good on ya, mate!" He's exactly right. There's nothing immoral about walking away. It's the smart thing to do. When the bank makes the loan, the law and the contract make clear that the bank is your partner in taking on real estate risk. If you put little or no money down, the bank is taking on more risk and is compensated for that risk in the form of a higher interest rate. If it so happens that bank took on stupid risks and lost the gamble, there is no obligation for a borrower to shield the bank from the consequences of its actions.
W.C. Varones Blog: Jingle mail, jingle mail, jingle all the way