freedomatlast
Thinks s/he gets paid by the post
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Wow. After reading some of the posts here, I am wondering if there are some that would teach their kids that it's ok to steal from a thief.
Maybe a strategic default was not a great idea
- Thread starter Texas Proud
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The hard part is protecting the first group while keeping the second group in check. Intent matters. Which group bad_LNIP belongs to is another question.
This is just silly. Nobody is keeping anyone in check. Its a free for all, every man for himself. There is no calvary coming to save the day. I belong in the realist group.
Nope. Intent is irrelevant. You don't get extra FICO points because you defaulted and spent your life savings trying to stay afloat vs someone who strategically defaulted. Court's don't care about your intent to default or not or how hard you struggled or if you worked with the lender or not. It is completely irrelevant and the terms of the contract and remedies have been spelled out in advance. I never saw intent on a mortgage doc.
But debt defaults cost us all. Credit tightens, interest rates (at least on borrowing) go up. and taxpayers absorb a portion of the banks' write-offs.
Contrary to your belief, the world is not run on a communist ideology (not that a communist ideology is inherently bad, per se, I actually studied economics). We aren't all in this together and my decisions don't impact your life, at all. According to this nonsense, consumers would save money by tightening the bankruptcy laws, as the banks claimed, but that isn't what happened, is it? Interest rates and fees went up and consumers got screwed.
I swear by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine. - that's my ideology.
Wow. After reading some of the posts here, I am wondering if there are some that would teach their kids that it's ok to steal from a thief.
So thief's should get away with stealing then?
This is just silly. Nobody is keeping anyone in check. Its a free for all, every man for himself. There is no calvary coming to save the day. I belong in the realist group.
Nope. Intent is irrelevant. You don't get extra FICO points because you defaulted and spent your life savings trying to stay afloat vs someone who strategically defaulted. Court's don't care about your intent to default or not or how hard you struggled or if you worked with the lender or not. It is completely irrelevant and the terms of the contract and remedies have been spelled out in advance. I never saw intent on a mortgage doc.
But debt defaults cost us all. Credit tightens, interest rates (at least on borrowing) go up. and taxpayers absorb a portion of the banks' write-offs.
Contrary to your belief, the world is not run on a communist ideology (not that a communist ideology is inherently bad, per se, I actually studied economics). We aren't all in this together and my decisions don't impact your life, at all. According to this nonsense, consumers would save money by tightening the bankruptcy laws, as the banks claimed, but that isn't what happened, is it? Interest rates and fees went up and consumers got screwed.
I swear by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine. - that's my ideology.
Wow. After reading some of the posts here, I am wondering if there are some that would teach their kids that it's ok to steal from a thief.
So thief's should get away with stealing then?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think his point was targeted to those who justify strategic defaults because lenders are bad guys. It is just one thief (the strategic defaulter) stealing from another thief (the banks/lenders).
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This was our situation, we met the the bank folks foolishly bringing our "proof of income" with us. We told them our income, etc and offered the papers. They said they didn't need the papers, it was "no documentation".
Then they said we could buy a 1MM house, and would loan us the cash.
Immediately I thought how warm S. America would be with 1MM if I could learn Spanish quickly
However, being responsible, I told them no, we only wanted up to a 250K house, so that if one of us became unemployed, we could still afford the house.
We are still in the house, and have never been to S. America
timo2
Thinks s/he gets paid by the post
so that if one of us became unemployed, we could still afford the house.
The flip side of that, which DW picked up on, is that also allows one person to ER, like at 56 in DW case.
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Travelwanted
Recycles dryer sheets
I find your whole premise troubling. Your justification for essentially committing fraud is sad. You are no different than a disgruntled employee that embezzles money from their company because they feel underpaid. Most criminals can "justify" their crime.
You essentially admit you are hiding from your creditors as you likely have assets, otherwise why would you hide? Oh, yeah, they just can't "find" you.
I have dealt with folks like you. Needless to say they are a shady bunch. Unfortunately this PATTERN of behavior is not isolated. My advice to the board is avoid these types. When the $hit hits the fan...they are no where to be found leaving you the bag holder.
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
so that if one of us became unemployed, we could still afford the house.
The flip side of that, which DW picked up on, is that also allows one person to ER, like at 56 in DW case.
Your DW is smart.
We both retired at 56, and the house is fully paid for, which would not be the case if it had been 1MM.
I find your whole premise troubling. Your justification for essentially committing fraud is sad.
Where did I say that? What is the fraudulent act? Defaulting on a debt is not fraud. Down the slippery slope we go. Here's the difference, the banks actually comitted fraud, perjury, on a massive, coordinated scale. False swearing is actually a felony, crime in all 50 states.
You essentially admit you are hiding from your creditors as you likely have assets, otherwise why would you hide? Oh, yeah, they just can't "find" you.
I always take steps to protect #1. Asset protection isn't fraudulent either, its just good prudent action. Banks and businesses take care of themselves and make the self-maximizing business decision all the time. Why shouldn't I treat my personal finances like a business and make cold, simple math based decisions?
I have dealt with folks like you. Needless to say they are a shady bunch. Unfortunately this PATTERN of behavior is not isolated. My advice to the board is avoid these types. When the $hit hits the fan...they are no where to be found leaving you the bag holder.
You don't know me and have probably never met anyone like me. I agree on staying away from shady operators, so the question remains. Do you have any accounts with the major banks? Do you do business with them? They have shown time and again that they will screw their customers at every opportunity. Their pattern of behavior is clear, so do you do business with them?
I think his point was targeted to those who justify strategic defaults because lenders are bad guys. It is just one thief (the strategic defaulter) stealing from another thief (the banks/lenders
I understand the analogy, and while I don't agree necessarily that strategic defaults are justified just because the banks are bad actors (I say the math justifies strategic defaults and nothing else. It's just business.), I am just saying I wouldn't lose any sleep over the act because the banks are bad actors.
Some people quickly leap to the moral high ground on their soapbox and start casting judgment on others, and I say the banks lose the math argument and the hypothetical moral/ethical argument too because the banks are far, far dirtier than any consumer could be.
Doing bad things to bad people is a good thing, so I shed no tears for them any more than I shed tears for ISIS when they get smoked in an air strike.
According to the poster, the original thief (the banks) should not be stolen from, and should therefore get away with their initial theft, which I disagree with. Why should the initial thief get away with their crime? It just encourages more bad behavior and removes the moral hazard.
I don't see why if everyone is playing dirty pool that I shouldn't also. When in Rome and such.
Where did I say that? What is the fraudulent act? Defaulting on a debt is not fraud. Down the slippery slope we go. Here's the difference, the banks actually comitted fraud, perjury, on a massive, coordinated scale. False swearing is actually a felony, crime in all 50 states.
You essentially admit you are hiding from your creditors as you likely have assets, otherwise why would you hide? Oh, yeah, they just can't "find" you.
I always take steps to protect #1. Asset protection isn't fraudulent either, its just good prudent action. Banks and businesses take care of themselves and make the self-maximizing business decision all the time. Why shouldn't I treat my personal finances like a business and make cold, simple math based decisions?
I have dealt with folks like you. Needless to say they are a shady bunch. Unfortunately this PATTERN of behavior is not isolated. My advice to the board is avoid these types. When the $hit hits the fan...they are no where to be found leaving you the bag holder.
You don't know me and have probably never met anyone like me. I agree on staying away from shady operators, so the question remains. Do you have any accounts with the major banks? Do you do business with them? They have shown time and again that they will screw their customers at every opportunity. Their pattern of behavior is clear, so do you do business with them?
I think his point was targeted to those who justify strategic defaults because lenders are bad guys. It is just one thief (the strategic defaulter) stealing from another thief (the banks/lenders
I understand the analogy, and while I don't agree necessarily that strategic defaults are justified just because the banks are bad actors (I say the math justifies strategic defaults and nothing else. It's just business.), I am just saying I wouldn't lose any sleep over the act because the banks are bad actors.
Some people quickly leap to the moral high ground on their soapbox and start casting judgment on others, and I say the banks lose the math argument and the hypothetical moral/ethical argument too because the banks are far, far dirtier than any consumer could be.
Doing bad things to bad people is a good thing, so I shed no tears for them any more than I shed tears for ISIS when they get smoked in an air strike.
According to the poster, the original thief (the banks) should not be stolen from, and should therefore get away with their initial theft, which I disagree with. Why should the initial thief get away with their crime? It just encourages more bad behavior and removes the moral hazard.
I don't see why if everyone is playing dirty pool that I shouldn't also. When in Rome and such.
While the discussion is centering on banks and homeowners defaults, no mention of who ends up paying the bill.
If you don't think it affects you, perhaps you need to understand who ends up paying...
U.S. to ease repurchase demands on bad mortgages - LA Times
Who do you think owns the defaulted loans?
The "owed" $300,000 for that house that went into default is on the books somewhere, as an asset. The article above should give a hint. Who guarantees that asset?
If you don't think it affects you, perhaps you need to understand who ends up paying...
U.S. to ease repurchase demands on bad mortgages - LA Times
Who do you think owns the defaulted loans?
The "owed" $300,000 for that house that went into default is on the books somewhere, as an asset. The article above should give a hint. Who guarantees that asset?
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Ronstar
Moderator Emeritus
Banks weren't the only businesses ripped off by defaults. During the last recession, many individuals and businesses not only defaulted on their loans to the banks, they defaulted on their payments to other businesses as well. As a result, the businesses supporting the defaulters went out of business or significantly reduced personnel in order to stay afloat. Unemployment jumped in part due to less revenues caused by payment defaults. In addition, banks and other businesses that have less revenues due to defaults are also paying less taxes. So someone has to pick up the tab for the increased unemployment compensation and less corporate tax revenue. That someone is the taxpayer. We all pay for loan defaults by others.
Did the bank defraud you, personally, in the mortgage you defaulted on? Were you lied to about the terms of the mortgage? You specifically.
I'm not talking about the general case. There were bad actors on both sides. Here in San Diego there was a successful prosecution of a mortgage brokerage that lied to borrowers about the terms of their loan - preying on families that didn't have good English skills. (They had Spanish speaking and Tagalog speaking brokers that misrepresented the terms of the loan to the borrowers.) In that case - clearly the broker is less than honorable. Are you claiming that someone tricked you in the terms of your loan?
Birdie Num Nums
Thinks s/he gets paid by the post
Not fond of those who ATM'd their home equity, only to walk away when the water rose.
I am not understanding the vitriol. A contract is a contract--no less and no more. It places requirements on all parties, and contains measures that go into effect if either party defaults. In a strategic default, one party elects to allow these enforcement actions to go into effect. It is not fraudulent, it is not illegal, it is not morally wrong. Both parties signed the contract and agreed to the stipulations (and available enforcement actions) as being in their best interests. The borrower can elect to default at any time, and then the enforcement actions go into effect.
Now, if one of the parties commits fraud, then that is a different matter entirely.
The "banks are bad" line of reasoning is a dead end, and distracts from the issue. It doesn't matter what we think of banks in general, and their behavior, in general, is totally irrelevant to the case at hand. If a particular bank defrauded a particular customer, then that customer should seek a remedy against that bank (to include nullification of the mortgage contract).
No borrower is required to damage the financial position of themselves or their family by continuing to pay on a mortgage if defaulting on the loan leaves them better off (after all the enforcement actions are considered--damage to credit rating, seizure of assets, etc). If the banks wanted better defenses against this, they should have asked for greater guarantees or charged more for the loans. And as for investors who bought the loans downstream--the same things apply. If the banks/bundlers misrepresented the true nature of the underlying mortgages (which apparently happened a lot), then >they< committed fraud. If investors knew about the quality of the loans but were just reaching for an extra 1% yield, or hoping to sell the paper to a greater fool later, then they simply lost their bet. If the US government or a pseudo-government agency is guaranteeing lot of crappy mortgages because they didn't enforce the loan standards (to include the creditworthiness of borrowers, etc), then maybe we should learn a lesson and get them out of this line of business. Instead, real businesses with their own assets at risk can probably be counted on to make better lending decisions with more appropriate enforcement provisions that will reduce the incentive for borrowers to default.
Things are very different for a loan from a friend, etc.
Now, if one of the parties commits fraud, then that is a different matter entirely.
The "banks are bad" line of reasoning is a dead end, and distracts from the issue. It doesn't matter what we think of banks in general, and their behavior, in general, is totally irrelevant to the case at hand. If a particular bank defrauded a particular customer, then that customer should seek a remedy against that bank (to include nullification of the mortgage contract).
No borrower is required to damage the financial position of themselves or their family by continuing to pay on a mortgage if defaulting on the loan leaves them better off (after all the enforcement actions are considered--damage to credit rating, seizure of assets, etc). If the banks wanted better defenses against this, they should have asked for greater guarantees or charged more for the loans. And as for investors who bought the loans downstream--the same things apply. If the banks/bundlers misrepresented the true nature of the underlying mortgages (which apparently happened a lot), then >they< committed fraud. If investors knew about the quality of the loans but were just reaching for an extra 1% yield, or hoping to sell the paper to a greater fool later, then they simply lost their bet. If the US government or a pseudo-government agency is guaranteeing lot of crappy mortgages because they didn't enforce the loan standards (to include the creditworthiness of borrowers, etc), then maybe we should learn a lesson and get them out of this line of business. Instead, real businesses with their own assets at risk can probably be counted on to make better lending decisions with more appropriate enforcement provisions that will reduce the incentive for borrowers to default.
Things are very different for a loan from a friend, etc.
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MooreBonds
Thinks s/he gets paid by the post
Perhaps I don't have the correct view of this....but isn't a mortgage simply a loan to an individual secured by the house? Just as with a company that issues senior secured debt, the debt issued by the company is secured with first lien rights on that particular asset(s) of the company?
With the company, if the company goes out of business and the assets identified as the collateral for the senior secured debt somehow don't end up repaying all of the senior secured debt, the remaining unpaid debt owed to the senior debt holders isn't magically cast aside - it's secured by the other assets of the company before the unsecured creditors are paid off.
So how is it any different from a mortgage loan, or a car loan, or any loan to a consumer which is primarily secured by a specific asset? If someone gets a title loan on their car, and then gets in a wreck without auto insurance and totals their car, does the title loan company simply get screwed? No, they have recourse to be paid off for the debt. In this unfortunate incident, the value of the collateral (the totaled car) has dropped below what the lender can recover from, but the consumer still owes the title company the value of the debt - so why isn't the consumer still liable for repaying the car title loan as much as they are obligated to repay a house title loan?
The borrower still owes on the mortgage even if the home drops below the value of the loan. Different mortgages and different states vary as to the "recourse" available to the lender--the assets owned by the borrower that a court can seize and pass to the lender to satisfy the loan.
Thank you samclem. Very well stated indeed. I had just been drafting my position on this issue. But after reading your post, I'll just hit the delete button, and add an enthusiastic +1.
Can we all imagine what the banks would have learned if mass defaults had not happened, if laws weren't changed to protect consumers. God, imagine what that might have done next to boost EPS
Sent from my iPhone using Early Retirement Forum
Sent from my iPhone using Early Retirement Forum
Did the bank defraud you, personally, in the mortgage you defaulted on? Were you lied to about the terms of the mortgage? You specifically.
Not lied to, but they committed fraud/perjury in the course of repossessing the property. That is a crime, it is in writing, and it is illegal. You or I do it, and we go to jail for a felony. They do it, and I think they paid something around 1k as part of the national mortgage settlement. They did it to ME, specifically.
Things are very different for a loan from a friend, etc.
I agree here as well. Overall great post.
Not lied to, but they committed fraud/perjury in the course of repossessing the property. That is a crime, it is in writing, and it is illegal. You or I do it, and we go to jail for a felony. They do it, and I think they paid something around 1k as part of the national mortgage settlement. They did it to ME, specifically.
Things are very different for a loan from a friend, etc.
I agree here as well. Overall great post.
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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+1 as well. Do all you moral crusaders read the contracts you enter? Do you expect anything other than the terms that are in the contract to be the terms of the deal?
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I agree. The contract is the contract. What I find hilarious is when defaulters whine over being denied their next loan due to the default being on their record. Or when their tears flow because a lender is able to negotiate a judgement against them requiring them to pay or have assets seized when the terms of the judgement were part of the loan contract.
Going back to OP's original post, I'm glad to see that terms of the loan contracts are being enforced to the full extent allowable in the applicable jurisdictions. If this means seizing assets, downgrading credit ratings or whatever is possible under the terms of the contract, that's what should happen.
If lenders in non-recourse states are unhappy with the lack of remedies available to them, they should take the situation into careful consideration when making future loan decisions.
Government should stay out of the business of "encouraging" loans to borrowers who would otherwise not qualify. If government wants folks without a down payment and/or without the income to make payments to have a real estate loan, they should just give them an irrevocable cash grant. But government shouldn't pressure or even encourage lenders to make loans to people the lender would not otherwise lend to.
Sometimes I wonder what we've really learned from the whole debacle.
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brewer12345
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The contract is the contract. If the lender wishes to exercise all the rights they have when a default occurs, that is their right. Where things get messy is when you find out that the lenders did a whole bunch of shady and illegal things in the process of pursuing defaulting debtors. Most of the time, that is not an issue. In the housing bust, lenders got very, very sloppy and ay have ended up compromising a bunch of the rights they otherwise would have had.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I take it a step further. I think the lenders should always pursue contractually available remedies whenever a default occurs as long as the likely outcome would yield more than it costs to pursue it. When lenders just "let things go" because they are pressured by government and/or the media, they give a false impression that contractual obligations will likely not be enforced in the future.
When a strategic defaulter screams in disbelief that they can't get a fresh loan because their prior default is on their record or when they receive a court summons and need to hire a lawyer, etc., I wonder what they were thinking when they signed the contract. Did they think that because these kinds of provisions were sometimes not enforced in the past that they wouldn't apply to them now?
As you said in your previous post brewer, and I fully agree, "Do you expect anything other than the terms that are in the contract to be the terms of the deal?"
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haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This is a most interesting thread, for the occasional post that contains facts, such as the list of (mainly) recourse and mainly nonrecourse mortgage states. But even more so for all the posts about who is moral and who isn't and what the sinners did to the sinned against.
I have spent almost all my adult life either in CA or WA, and you can be sure that the first thing I made myself comfortable with was the laws regarding recourse on mortgage loans.
I for one do not see any moral difference between someone who is essentially broke and figured house prices always go up, so what if this house is overpriced and really beyond any zone of good sense for me, and another well financed person who wants to play house price momentum and sees to it that the recovery laws in his jurisdiction are lenient before taking out a loan. I would certainly prefer to be that second guy.
The housing crisis was not cause primarily by sharpies, it was caused by naïfs drunk on their sense of entitlement and the lenders who pandered to them. If the consumer will only cooperate we are about to go around again, with govt pushing for 3% down loans with more liberal underwriting. Only thing preventing it is all of us boomers pushing elderly status, and millennials who don't want much to do with any of this crap.
I read yesterday in Puget Sound Business Journal that so many millenials are choosing to live in in-city locations and renting (I am talking about Seattle). I read about 9 people who had tech jobs working for Amazon, Microsoft, Google, etc going together and renting a large 1920s Capitol Hill House. No matter how big the house, 8 people is a lot of roommates! There are going to be plenty breadcrumbs on those counter tops. Getting the roomies to pay up for the heat and light bills will be fun, as well as getting the fresh air freak to close his damn window. At least there won't be the telephone bills with $850 worth of long distance calls to some left behind lover in Norman, OK.
Ha
I have spent almost all my adult life either in CA or WA, and you can be sure that the first thing I made myself comfortable with was the laws regarding recourse on mortgage loans.
I for one do not see any moral difference between someone who is essentially broke and figured house prices always go up, so what if this house is overpriced and really beyond any zone of good sense for me, and another well financed person who wants to play house price momentum and sees to it that the recovery laws in his jurisdiction are lenient before taking out a loan. I would certainly prefer to be that second guy.
The housing crisis was not cause primarily by sharpies, it was caused by naïfs drunk on their sense of entitlement and the lenders who pandered to them. If the consumer will only cooperate we are about to go around again, with govt pushing for 3% down loans with more liberal underwriting. Only thing preventing it is all of us boomers pushing elderly status, and millennials who don't want much to do with any of this crap.
I read yesterday in Puget Sound Business Journal that so many millenials are choosing to live in in-city locations and renting (I am talking about Seattle). I read about 9 people who had tech jobs working for Amazon, Microsoft, Google, etc going together and renting a large 1920s Capitol Hill House. No matter how big the house, 8 people is a lot of roommates! There are going to be plenty breadcrumbs on those counter tops. Getting the roomies to pay up for the heat and light bills will be fun, as well as getting the fresh air freak to close his damn window. At least there won't be the telephone bills with $850 worth of long distance calls to some left behind lover in Norman, OK.
Ha
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youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1
I spent some time last year assisting my elderly MIL in defaulting on her reverse mortgage (covered in another thread). BIL and I spent a few bux for legal advise and determined that the remedies available to the lender, even in recourse-state Illinois, were approximately NIL in this case. So, we followed the path to MIL's best interest. Understanding the contract and the laws in Illinois was key to figuring out what she should do. The fact that we were working with a reverse mortgage seemed to make the situation a bit more complicated and we were happy to pay the legal fee for the advise and guidance.
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