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Reply #42: And how is that any different from a person who has less to spend on [View All]

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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-01-11 11:05 PM
Response to Reply #38
42. And how is that any different from a person who has less to spend on
Edited on Tue Feb-01-11 11:06 PM by pnwmom
a family's other expenses because he bought a house and put some cash into a downpayment? If the market goes down, that person has lost his cash, just as much as the people who are underwater. Are you saying that no one should buy a house anymore? Or, at least, have any equity in one?

Why is it overpaying a bank to pay the amount that you agreed on in the first place? When you buy a house, shouldn't you be prepared for the fact that values can go up or down?
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  -Why is there so much media concern about "underwater" mortagages pnwmom  Feb-01-11 07:17 PM   #0 
  - Underwater houses are far more likely to go into foreclosure  CreekDog   Feb-01-11 07:18 PM   #1 
  - I wonder if part of the reason for that  pnwmom   Feb-01-11 07:21 PM   #3 
  - I suppose some people think it's stupid to pay back money you owe. nt  wtmusic   Feb-01-11 07:23 PM   #5 
     - Some financial bloggers do. One, in particular,  pnwmom   Feb-01-11 07:25 PM   #7 
     - You can write off what you lose, you can't write off what you owe.  wtmusic   Feb-01-11 07:27 PM   #9 
        - Technically, no. But don't short sale agreements and foreclosures  pnwmom   Feb-01-11 07:30 PM   #11 
           - Your credit will be in the toilet for a good long while  wtmusic   Feb-01-11 07:35 PM   #19 
              - Not the distant past, unfortunately.  pnwmom   Feb-01-11 07:43 PM   #25 
                 - Amazing.  wtmusic   Feb-01-11 07:48 PM   #27 
                    - You missed the period of "no doc" loans.  pnwmom   Feb-01-11 07:51 PM   #30 
                       - I guess I did.  wtmusic   Feb-01-11 07:52 PM   #33 
     - It is stupid  MattBaggins   Feb-02-11 08:21 AM   #46 
     - Deleted sub-thread  Name removed   Feb-02-11 09:00 AM   #49 
     - Morgan Stanley thinks it's stupid  SOS   Feb-02-11 09:14 AM   #50 
  - Foreclosure and negative amortization are two symptoms of the same problem  slackmaster   Feb-01-11 07:31 PM   #13 
  - Because if Investor Y has to sell his house he'll still owe $40,000 to the bank.  wtmusic   Feb-01-11 07:20 PM   #2 
  - So the real concern is that the banks won't have enough equity?  pnwmom   Feb-01-11 07:23 PM   #4 
  - The concern is that the home "owners" can't sell without a short sale...  PassingFair   Feb-01-11 07:25 PM   #8 
     - But if a homeowner doesn't need to sell,  pnwmom   Feb-01-11 07:28 PM   #10 
        - That's true, if she has enough job security and savings to wait for a while  wtmusic   Feb-01-11 07:31 PM   #12 
        - We brilliantly bought in July 2007, so we've seen a huge loss.  pnwmom   Feb-01-11 07:34 PM   #16 
           - Prices will likely return.  wtmusic   Feb-01-11 07:41 PM   #23 
              - Yeah, I try to stay away from Zillow.  pnwmom   Feb-01-11 07:46 PM   #26 
        - The problem is that wages are falling...  PassingFair   Feb-01-11 07:34 PM   #15 
        - I wasn't trying to make people say anything in particular.  pnwmom   Feb-01-11 07:37 PM   #20 
        - No but even there the risk is strategic default.  Statistical   Feb-01-11 07:52 PM   #31 
        - In the case of such an individual, you're right  customerserviceguy   Feb-01-11 09:38 PM   #39 
        - But why should the homeowner pay off 140k in debt when they could move into similar accomodation...  JVS   Feb-02-11 06:33 AM   #45 
  - Bingo.  PassingFair   Feb-01-11 07:24 PM   #6 
  - Because it generally makes the house unsellable, increasing the odds of foreclosure.  Xithras   Feb-01-11 07:32 PM   #14 
  - It's probably not so good for your friend's credit rating, either....n/t  PassingFair   Feb-01-11 07:35 PM   #18 
  - Nope. Speaking from experience, it does quite a bit of damage.  Xithras   Feb-01-11 07:43 PM   #24 
  - Thanks. n/t  pnwmom   Feb-01-11 07:40 PM   #21 
  - Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis  enough   Feb-01-11 07:35 PM   #17 
  - OR...they understand proper economics.  flvegan   Feb-01-11 07:50 PM   #29 
  - interesting cryptic post. Please expand. (nt)  enough   Feb-01-11 08:09 PM   #34 
     - Well you see  flvegan   Feb-01-11 08:35 PM   #36 
        - Most businesses walk away from underwater mortgages.  jtown1123   Feb-02-11 10:26 AM   #53 
  - As I stated above; "It's good business"  MattBaggins   Feb-02-11 08:41 AM   #47 
  - Part of it is probably the psychological aspect...  Curmudgeoness   Feb-01-11 07:40 PM   #22 
  - When the middle class walks away their irresponsible; when the rich walk away  Dappleganger   Feb-01-11 07:50 PM   #28 
  - Or  pnwmom   Feb-01-11 07:52 PM   #32 
     - Duh! Of course, it's better to lose bank's money than  Fool Count   Feb-01-11 09:10 PM   #38 
        - And how is that any different from a person who has less to spend on  pnwmom   Feb-01-11 11:05 PM   #42 
           - This is different in a very simple and obvious way:  Fool Count   Feb-02-11 12:37 AM   #43 
  - If you have equity in the house you can take the loss and sell  dkf   Feb-01-11 08:29 PM   #35 
  - Your comparison is apples and kiwis  social_critic   Feb-01-11 08:38 PM   #37 
  - If Family X got their house with a variable rate mortgage  customerserviceguy   Feb-01-11 09:41 PM   #40 
  - Good point.  lumberjack_jeff   Feb-01-11 09:42 PM   #41 
  - The reason there is concern is that underwater mortgages are actually better off defaulting and...  JVS   Feb-02-11 06:31 AM   #44 
  - Because MANY "underwater mortgages" are that way because people used houses like ATMS  SoCalDem   Feb-02-11 08:49 AM   #48 
  - I always figure being underwater only matters if you HAVE to move, or have to  TwilightGardener   Feb-02-11 10:07 AM   #51 
  - It does not matter if home values come back in some  Fool Count   Feb-02-11 05:06 PM   #54 
  - Look at it this way: 90k house, 30 yr loan, will cost you 250k+ - will be underwater either way  The Straight Story   Feb-02-11 10:22 AM   #52 
  - For a lot of people the majority if not all of their assets are invested in their home  NNN0LHI   Feb-02-11 05:41 PM   #55 

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