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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsAs home prices fall, more borrowers walk away
As home prices fall, more borrowers walk away
2 hours ago
By John W. Schoen, Senior Producer
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"It's a looming problem that's in the shadows," said Jason Kopcak, a mortgage trader at Cantor Fitzgerald who advises lenders on how to value the loans on their books. "It's very worrisome to mortgage lenders."
Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is the estimated 12 million homes that are underwater, meaning the owners owe more than they are worth.
Until recently, borrowers like Martin and many industry analysts held out hope that a housing recovery would reverse the rising tide of "negative equity." But after stabilizing this summer, home prices began falling again, dropping 7.5 percent in the third quarter alone and leaving more homeowners underwater.
Even if prices stabilize this year, millions of underwater borrowers face a long wait before they can sell their homes without having to write a big check to their lender to cover the shortfall. Economists at Goldman Sachs recently forecast that after bottoming in 2013 house prices won't recover their 2006 peak until 2023. (No, that's not a typo.)
Many homeowners simply can't wait that long.
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Huey P. Long
(1,932 posts)Response to Huey P. Long (Original post)
LaurenG This message was self-deleted by its author.
Huey P. Long
(1,932 posts)screwing the citizens of this country, this is our only recourse for some. Hell, corporations do this ALL THE TIME.
Just walk away from 'obligations', with little to no penalty! Fuck it.
Response to Huey P. Long (Reply #5)
LaurenG This message was self-deleted by its author.
Huey P. Long
(1,932 posts)My advice to anyone thinking of buying a house is if you walk away, buy a double.
The rental income will help you out a lot. Just stash all that away.
The thing to do is be proactive, imo. Don't wait too long that you don't have 'options'.
Some are stuck because they waited too long and are at the mercy of the market or the banks.
Lance_Boyle
(5,559 posts)It's a good stretch for people who think of their homes as investments that absolutely must build value daily, but not for those to think of their homes as a building in which to live. I'm sure a bunch of would-be flippers are just burned up by the news, though.
Huey P. Long
(1,932 posts)Snake Alchemist
(3,318 posts)
sufrommich
(22,871 posts)to either buy or rent with a bad credit rating would be a problem.
Snake Alchemist
(3,318 posts)sufrommich
(22,871 posts)is of no consequence, than you have no business walking away from your home.
Snake Alchemist
(3,318 posts)It is an investment like any other.
Huey P. Long
(1,932 posts)
Romulox
(25,960 posts)
Bragi
(7,650 posts)Bragi
(7,650 posts)People are doing strategic defaults.
Gormy Cuss
(30,884 posts)The first group obviously is in a good financial position and is walking away to cut losses.
JDPriestly
(57,936 posts)Fool Count
(1,230 posts)It does not matter what other assets you have or don't have, if you can avoid having to
give a multi-thousand dollar gift to your bank, it is only foolish to not use that option.
Remember, the money you unnecessarily overpay the bank comes directly from your
retirement fund and from college fund for your kids.
Romulox
(25,960 posts)In order to buy a home, one has to get a mortgage and an appraisal to support the amount of that mortgage.
In shopping for homes, I'm seeing too many that are demanding "what is owed" for the home, rather than what it's worth.
I don't know the answer, but this is one problem our government has far too little attention to, whilst we blew up X and rebuilt Y in our overseas adventures.
Huey P. Long
(1,932 posts)These people will NEVER get 'what is owed' until a decade or more later. Meanwhile the wasted time and tied up finances will destroy them.
Romulox
(25,960 posts)more in line with our lowered wages and lowered expectations for the future.
snooper2
(30,151 posts)giving my home a "lower valuation" or any of my neighbors properties
Romulox
(25,960 posts)Them that's got shall get
Them that's not shall lose
So the Bible said and it still is news
Mama may have, Papa may have
But God bless the child that's got his own
That's got his own
snooper2
(30,151 posts)
Romulox
(25,960 posts)snooper2
(30,151 posts)
Here, I got one for you----
We're on our way
To help a friend
And save the day
We're not too big
And we're not too tough
But when we work together
We've got the right stuff
Romulox
(25,960 posts)"No, I just wasn't born in 1940"
Neither was I--it's just that I'm not a cretin. Enjoy your cultural myopia and keep working on those "you're OLD!" cracks, though. It's a PERFECT cover up for your ignorance. Really!
snooper2
(30,151 posts)Had I been born in 1940 the Internet would have been here 10 years earlier LOL...
Oh, and Tupac would still be alive 
PS- I am ignorant of a number of things. The difference is, I know what those are
Romulox
(25,960 posts)between an important jazz musician and your juvenilia.
snooper2
(30,151 posts)wow we's are seribus today all about...
Thank you!
That's the only decent thing I've seen posted on the new DU3
Huey P. Long
(1,932 posts)
MattBaggins
(7,901 posts)you and your neighbors have no control over the worth of your houses. We all got screwed because of wall street gimmicks.
Snake Alchemist
(3,318 posts)Should homeowners always expect their home to increase in value. Should it be over a 1 year period, 5 years, 20 years? These are all questions that need to be answered.
xiamiam
(4,906 posts)
ms.smiler
(551 posts)You appear to be a reasonable and well informed individual, but there is another option for you to consider.
You stated, “That’s why just walking away is the answer.”
We both understand the reasons why homeowners may choose to strategically default. Leaving the home for the banksters though, is not in the homeowners’ best interest. The homeowner has more money in the property than the banksters.
The homeowner owns the home, it is their property. Given the failed and fraudulent securitization of mortgage loans, it is very unlikely that any party can prove a valid debt and a valid lien upon the property.
If the homeowner would instead find competent legal counsel and file a Quiet Title suit, the homeowner could hold the banksters accountable for their wrongdoing, obtain a valid Deed, clear their property Title, relieve themselves of supposed debt, and obtain money damages.
I filed suit because I came to understand that there were parties who owed me more money than I MIGHT owe on my mortgage loan.
Walking away is one answer, but not the best answer. Years from now these strategic defaulters will be surprised to learn that they legally still own these homes.
Fool Count
(1,230 posts)We are talking about underwater mortgages here - when the money owed exceeds (often severely)
the value of the property. It is a matter of simple mathematics that one is better off walking away
from such debt. You can use the money which you refused to present to the bank to buy equivalent
property and still have some left over for other needs. Sure, if your mortgage is only slightly underwater
it may not be worth the trouble and the fees and the credit score, but we are talking about people who
could save tens of thousands of dollars. Then it is simply irresponsible towards one's family to put
interests of the bank before their well-being.
ms.smiler
(551 posts)I certainly didn’t mean that if a homeowner had made plenty of payments, and had a great deal of money already invested in the property, it should be some type of factor or consideration.
Those words were to address the fact that the banksters never funded these loans and aren’t due any money. If a homeowner made only 1 payment, they would have more money in the property than the banks.
The properties are underwater because the banks created a bubble in housing with fraudulent appraisals, putting the homeowners on the hook for imaginary home values. The MBS market blew up as planned. The banks collected their Swaps and sold the failed MBS to the buyers of last resort, the U.S. government and the Federal Reserve. The banks, via the servicing companies they own continue to collect mortgage payments for loans they never funded and never owned.
A securitized mortgage had a second set of books over on Wall Street that was never combined with the set of books that was maintained for homeowners here on Main Street. The banks used MERS, their private land records system to conceal the owner of the loans and the history of the loans.
It simply isn’t possible for the homeowner to determine who owns their loan or what amount is actually due on the mortgage loan. That is by design.
Oh believe me; I would never suggest to anyone that they put the interests of a bank before the wellbeing of their family. I am contributing more often to these discussions because I’m hoping that homeowners will develop a better understanding of their mortgage loans.
I think it’s possible that people can learn from my research and experience: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=2412603&mesg_id=2412603
I do support strategic default if the homeowner also files suit. The homeowner should obtain their Deed and compensation for the damage done to them and their property Title. The banksters shouldn’t only be held accountable for fraud by MBS investors, they should also be held accountable by homeowners, the other party the banks defrauded.
I think we both have the homeowners’ interest in mind, but rather than tens of thousands of dollars for the homeowners, I’ve got my eye on 6 figure damages.
snooper2
(30,151 posts)LOL...
I don't know what people were thinking....or that's the problem
I bought my house in 2005 for 113K, have put about 8-9K in materials remodeling, can probably sell it right now for 122-125K...
Been pretty flat in my area
Also keep in mind, there are 132,000,000 housing units in the U.S.
Romulox
(25,960 posts)Huey P. Long
(1,932 posts)trumad
(41,692 posts)before the Bubble.
Put another 50 grand into it.
The house is now valued at 280,000.
That's how much housing values have fallen in Central Florida.
So the question now is--- should I continue throwing money down the toilet?
snooper2
(30,151 posts)That seems absolutely nuts, haven't heard of that anywhere else...
So what was it "valued" in 2006, 1.2million?
trumad
(41,692 posts)That's right---$610,000
I have neighbors who bought their homes during the bubble, and are completely upside down with the value of their home.
I had people sending me letters asking to buy my home --probably flippers--- and wanting to pay in the mid 500's.
Wish I would have.....
A house down the street from mine with the same floor plan---plus pool, just sold for 275,000.
You want to hear about it---come visit my neighborhood in Ovideo, Florida.
snooper2
(30,151 posts)I know a few people upside down here in Texas but only about 10-20% of actual value...
Most everybody else has equity or it's just stayed "flat" like my house
trumad
(41,692 posts)Crooked appraisers working for mortgage companies who were inspired to appraise at a higher value.
Of course mortgage companies like New Century, Countrywide, Option One, etc... being encouraged by Wall Street to make the loans in the first place.
During the bubble I'd Zillow my neighborhood and marvel at home values---all in the 500 to 600 range.---all overinflated.
Again--- people bought during the bubble and those folks are hopelessly under water.
I bought 4 years before the bubble... and can say I am upside down.
Walking away should be nothing more than a business decision--just like big business who do it all the time.
Hell Morgan Stanley walked away from a whole city block in San Fran.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLYZhnfoXOSk
coalition_unwilling
(14,180 posts)sold for $495K at the height of the bubble. They now routinely go for <$250K. By my math, that's a decline of > 50%.
quaker bill
(8,224 posts)rented for a year or two, and then bought two or three houses with the profits last year. Some folks around me did and now have a paid for house and one or two rentals . Oviedo is tough.
quaker bill
(8,224 posts)I am lucky enough to still be right side up. I bought a nicked up older house under market very near downtown 15 years ago. It is down in value 40 - 50 percent from the 2006-7 peak of the bubble, but I paid less than even that in '97. It has been alot of work to fix it up, but I am pretty good with most tools.
I may yet be able to sell it for a profit, but I will probably be here for another 5 or 6 years regardless.
I expect selling now would be selling at or very near the bottom of the market. However given the #s you report, it will be a long time before you get back in the black.
MineralMan
(146,284 posts)you're planning to live in that house. My house has also dropped significantly in value, but I plan to die in it, so what does it matter to me?
Historic NY
(37,449 posts)Thankfully I owe only a small amount on my revolving fund home equity around me I have 4 vacant homes. The bank has repaired one and its being rented out. A similar home in very poor condition was sold for 50k, it was completely gutted and just resold for 169k. The fomer owners has literally turned the 2 bdrm. house and property into a dump. My neighbors bought a very simlar house as mine for 305k with pool....spent a fortune so far in updates. This will be a second tiime an owner there is underwater.
There is a ready marketing campaign geared towards empty nesters and seniors, some are getting picked clean thinking downsizing is going to be cheaper. Building or buying that retirement home today is quite expensive especially if your relying on the equity in your old property.
snooper2
(30,151 posts)Romulox
(25,960 posts)snooper2
(30,151 posts)
Nye Bevan
(25,406 posts)but there isn't. If someone can save hundreds of thousands of dollars by using their right to walk away, it is strictly a business decision. The banks have no morals whatsoever when it comes to things like foreclosing on people who are unable to pay their mortgage because of huge medical bills; they treat everything as business, so we should too. Take legal advice, be sure you know what the implications are, but there is nothing immoral about walking away.
Huey P. Long
(1,932 posts)closeupready
(29,503 posts)nt
Delphinus
(11,830 posts)Hard to swallow, as that guilt-trip is HUGE, but you are right.
Corporations, as people, get treated way differently that real people. No shame when they walk away.
ms.smiler
(551 posts)Unfortunately, most homeowners simply don’t understand their securitized mortgage, which of course works in the banksters favor.
I prefer to see homeowners retain their property, rather than banksters receive compensation yet again upon the same loan.
If anyone wishes to know more, my own story is located here: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=2412603&mesg_id=2412603
I have plenty of equity in my home, it's just that I came to understand this scam. The securities fraud that took place on Wall Street is directly connected to our mortgage loans here on Main Street. Once I realized I would never receive a valid Deed and clear Title, I decided to fight the banksters.
If you lack an understanding of securitized mortgages, please inform yourself. All that has happened in our economy, will make much more sense to you.
Huey P. Long
(1,932 posts)Bigmack
(8,020 posts).. if they don't have positive assurance that the bank/lender/whoever can actually produce a deed when the loan is paid off.
And I have seen NO information that says the banks/lenders/whoever have straightened out the securitized mortgage mess.
Huey P. Long
(1,932 posts)all! See we could have paid off the mortgage for EVERYONE so that we all own our homes, but that would free us all.
That is not the goal. The goal is to enslave us all, and have us pay for that enslavement, and produce even more profits to the criminals in charge. The politicians protect the criminals.
closeupready
(29,503 posts)Gotta love how warped our politics has become.
cyberpj
(10,794 posts)snip-
The following is a list of the limits, if any, that states have imposed on deficiency judgments after a foreclosure action. Not every state limits the amount of such judgments, while other states do not allow them at all. Any limitations on suing borrowers after foreclosure and related issues can be found by searching the statutes and codes of the state.
more:
http://www.foreclosurefish.com/blog/index.php?id=994
CanonRay
(14,097 posts)that we were all forced to buy if you had less than 20% equity in the property. It was supposed to pay off the mortgage in case of default, but you never hear about it. I would think with all the defaults, the PMI companies would be going under. It's virtually never mentioned. Anybody know?
Huey P. Long
(1,932 posts)With all the guilt tripping and getting homeowners to 'ride it out' so that they do not take the hit.
Dreamer Tatum
(10,926 posts)ms.smiler
(551 posts)Prior to that, when the MBS market blew up, the banksters collected their Credit Default Swaps and that insurance was sometimes twice the value of the loans. Nice deal since it wasn’t their money at risk in the first place. It was investors’ money that funded the loans.
Then, the banks collected again on the loans when they sold trillions of dollars of the failed MBS to the U.S. government and Federal Reserve.
The banks use document mills and foreclosure mills to re-create the loans here on Main Street, and steal real property from homeowners who mistakenly believe their loan is in default and that money is due. The banksters do collect the PMI as yet an additional occasion to profit upon the same loan.
Those same document mills are used for Satisfactions of Mortgage when homeowners refinance or have paid the supposed debt. I’d like homeowners to come to understand that the documents in their mortgage loan are just as invalid and fraudulent as the ones used in wrongful foreclosures.
The banksters submit a credit bid at auction and obtain a Sheriff Deed. The banksters can market the home, keep it in the shadow inventory or they sometimes Title it over to Fannie. I suspect but haven’t yet confirmed to my satisfaction that the banksters are compensated by Fannie for the Title. If true, it is yet another opportunity for the banksters to defraud taxpayers.
The banksters can also Title the property over to a “bottom feeder,” a debt collection company that pays about .30 cents on the dollar for the supposed loan. Those companies sometimes “work” with homeowners and offer them better interest rates or reduced principal. The bottom feeders may also Title the home over to a government sponsored entity for close to the full amount of the loan.
I do believe that many Title companies will fail as a result of the mortgage securitization scheme.
Homeowners shouldn’t wonder how much remains due on their mortgages, they should instead wonder how many times the banksters have already collected payment on the mortgage loan.
I’ve researched mortgage/foreclosure fraud for just over 3 years and filed suit against my mortgage servicer. The trial is presently scheduled for May of 2012.
CanonRay
(14,097 posts)Liberal_in_LA
(44,397 posts)Response to Huey P. Long (Original post)
Mosby This message was self-deleted by its author.
whistler162
(11,155 posts)going to refund th difference of the monies they recieved and the new lower price!
joshcryer
(62,269 posts)Housing prices should follow inflation, not be inflated by false market mechanisms.
Yo_Mama
(8,303 posts)The article is using sloppy terminology.
This guy is facing a situation in which when he and his wife retire, they will not be able to pay the mortgage. That's a completely different issue than walking away, which is when you can afford to pay the mortgage but don't find it financially advisable to do so. He hasn't abandoned the place yet, but eventually either the creditor works out something affordable for this couple or the creditor gets stuck with a bad mortgage. The man is 68, for heaven's sake. How many more working years does he have?
And btw, any bank that tried to file for a deficiency judgment on a retired couple that can't afford to pay the mortgage would be excoriated in public opinion and probably not treated much better by the judge. Usually retirement assets are protected from such judgments. In most states, you can't file for deficiency judgments on purchase money - only on cash-outs.
In Washington state, to get a deficiency judgment on a mortgage you have to foreclose through the courts, which is more expensive. And you are barred from getting one on a property abandoned for six months before the foreclosure, so his chance of facing a deficiency judgment are very slight.
