Walking away from a mortgage, This cannot be good.

[Retire Soon]

Originally Posted by brewer12345

I call shenanigans (get out the brooms!). You said: "In another section of the forum, RockOn pointed out a graph that shows the history of mortgages that have been securitized."

Again, the ABX does not show the history/perfoormance/other sematics term of mortgages that have been securitized. All it shows is the price history of some derivative contracts.

The point that you choose to continually misinterpret is that Collateralized Debt Obligations (subprime mortgage tranches) are generally worth far less now then they were in August 2007 as shown on the Historical ABX Graphs.

Historical ABX Graphs

"The ABX is an imperfect but nonetheless useful proxy for the value of subprime mortgage securities." Now, who is the shenanigan?

Subprime layers and the ABX Index

[brewer12345]

Originally Posted by Retire Soon

The point that you choose to continually misinterpret is that Collateralized Debt Obligations (subprime mortgage tranches) are generally worth far less now then they were in August 2007 as shown on the Historical ABX Graphs.

Historical ABX Graphs

"The ABX is an imperfect but nonetheless useful proxy for the value of subprime mortgage securities." Now, who is the shenanigan?

Subprime layers and the ABX Index

Great, but you stated that the ABX was an indicator of mortgages that have been securitized. That is unequivocably not true. The ABX just shows the derivative price for a contract with a notional pool of reference securities. Has very little to do with the actual mortgage loans, and frankly doesn't have that much to do with the specific reference securities.

[Milton]

Originally Posted by newguy888

Troubled borrowers are walking away from their homes - Feb. 6, 2008

This topic was already discussed [Home foreclosure - sound business move?].

[Independent]

Originally Posted by Marquette

Yes, simple and flat would be my preference. Realistically, though, I could easily go with 'simple' right now... if I didn't try and use any loopholes, it'd be simple. So, I guess I only want simple if it reduces my overall burden ;-)

On the surface, it seems easy, flat tax of, say 15% across the board. Home owners don't receive a benefit over renters. People that max out their 401(k) are no better off (from a tax standpoint) than someone that can't even spell 401(k).

In practice, though, how does that work out. I donated a car to charity last year. It's not altruistic because I'll be able to claim the blue book value on my taxes... not bad! Would charitable giving go down across the board? I'd like to think not, but I'm not so sure.

I think that "charitable" giving, borrowing for mortgages, group health insurance purchases, etc. would all go down. The purpose of the deductions is to give a shove to get people who are sitting on the fence to do things that they weren't quite ready to do, and it probably works.

However, the impact would be at the margin, most of us would continue to do the things like buy houses because that's what we want to do anyway.

I'm of the opinion that the additional amount of these things that the code encourages isn't worth the trade-offs. I'm also skeptical that the gov't should really be in the busyiness of bribing us to do things that "are good for us".

Then we've get all the complexities of where to draw the line - so we have to decide whether a contribution to your alma mater's new football stadium is really a "charitable contribution".

Seems like very little good for a lot of cost.

[BunsGettingFirm]

Originally Posted by Retire Soon

I am just happy to have been able to sell my bag of potatoes in East San Diego County in July 2006.

Really? We must be soul brothers when it comes to selling potatoes. The thing that's been on my mind though is with everyone down and out on the real estate market, it may be time to think about getting back in.

[BunsGettingFirm]

Originally Posted by HFWR

Assuming you'd want to move there...

God Bless

Why? It's beautiful with cities that are modeled on Brasilia, varied geography, great weather, and great culture and night life. Who wouldn't want to live in NJ?

[Retire Soon]

Originally Posted by BunsGettingFirm

Really? We must be soul brothers when it comes to selling potatoes. The thing that's been on my mind though is with everyone down and out on the real estate market, it may be time to think about getting back in.

Actually, we've never left the market as we purchased a home in Oregon in May 2004. After we ER'd, we moved into that home. DW and I have considered buying another house in SD when we think prices have bottomed out. We, however, think there's a long ways to go before we reach bottom as the subprime foreclosures have a couple of years to take their course.

[ladelfina]

When I lived in MA.. on state taxes you were allowed to deduct rent (or a certain amt. of it).. to try and balance the breaks on interest ded'n. the homeowners got. Commies!

More walkaways:

NEW YORK, Feb 11 (Reuters) - Luxury builder Toll Brothers Inc (TOL.N: Quote, Profile, Research), hurt as many buyers to try to get out of contracts for new homes amid falling prices, says a member of its founding family is trying to walk away from an agreement to buy a new condominium.

The daughter of Vice Chairman and co-founder Bruce Toll informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase, the company said in a regulatory filing.

Toll Brothers went on to say that it intends to pursue its rights under the agreement of sale with Toll's daughter, Wendy Topkis.

Toll relative walks away from new condo - filing | Industries | Financial Services & Real Estate | Reuters

[Milton]

Originally Posted by Gumby

While we're getting the government out of the housing finance market, why don't we go ahead and eliminate the mortgage interest deduction, which acts as a hidden government subsidy (cue anguished screams).

Worth reading:

(1) reportonbusiness.com: U.S. mortgage tax break has got to go

(2) Who Needs the Mortgage-Interest Deduction?

(3) Goodbye, My Sweet Deduction - New York Times

[myself]

Originally Posted by Milton

Worth reading:

(1) reportonbusiness.com: U.S. mortgage tax break has got to go

(2) Who Needs the Mortgage-Interest Deduction?

(3) Goodbye, My Sweet Deduction - New York Times

Further suggested reading:
"The Millionaire Mind" by Thomas Stanley.
The truly wealthy don't get a bigger mortgage than they can afford.
And although a lot of people think it's better to pay $60,000+/yr in interest, just to get back $21,000. I'd have to say that they are simply fools.
The numbers I chose were simply because the mortgage interest deduction is for the primary mortgage debt limit of $1,000,000, and an interest rate of 6% (which it's doubtful you'd see that rate on that much money).
Now, if I had an income stream that produced about $6,000/month over and above my other living expenses (food, etc.). Then I might actually consider getting such a "tax break".

Interestingly enough, the first article noted that about 1/2 of the homeowners in the US make use of the interest deductibility on mortgage debt. So, they're suggesting cutting out 1/2 of the population, just because the other half doesn't take advantage of the deduction?

[Independent]

Originally Posted by Milton

Worth reading:

(1) reportonbusiness.com: U.S. mortgage tax break has got to go

(2) Who Needs the Mortgage-Interest Deduction?

(3) Goodbye, My Sweet Deduction - New York Times

Yep, they are good reading.

Unfortunately, they are probably preaching to the choir. Most Americans aren't ready to consider this one, even if it makes all the sense in the world.