Home foreclosure - sound business move?

[brewer12345]

I guess it wouldn't occurto me to walk away because it was financially attractive to do so because I would never willingly put myself in that leveraged a situation. I would walk away and stiff the lender if it meant being able to take care of my kids, though.

As for why anyone would invest in a bank, well, not all banks are created equal. Some actually remembered all that stuff about the "four C's" of credit and underwriting and stuff. Those who forgot about all of that probably won't forget again for at least the next decade, assuming they survive.

 

[ChrisC]

It reminds me of the Costco return policy. It can be part of the normal cost of doing business until people abuse it en masse.

Of course, the lenders never thought California would see a 3.5% default rate (and growing).

And it can be another tragedy of the commons if negative equity pushes lots of people into foreclosures. Why negative equity matters - Paul Krugman - Op-Ed Columnist - New York Times Blog

 

[Independent]

And it can be another tragedy of the commons if negative equity pushes lots of people into foreclosures. Why negative equity matters - Paul Krugman - Op-Ed Columnist - New York Times Blog

Good article by Krugman. Thanks for the link.

 

[Ishith]

Hey!

Thanks for sharing all this information. Truly interesting posts!

------------------
Home foreclosure

 

[jclarksnakes]

I have had two careers in my life. I spent 20.5 years as an army warrant officer flying helicopters and am now 13 years into a second career as a registered nurse. Not being TOTALLY honest in either of these careers can cause serious injury or even death. When I sign a mortgage the small print probably does read like some of the points people have brought up here but the gist of the contract is that they agree to loan me money and I agree to repay it. It truly surprises me that so many of you are comfortable with a level of honesty that would be totally unacceptable in either of my careers.
Jeff Clark
CW4 USA (ret.)
RN, BSN

 

[Milton]

Hello Jeff,

The 'small print' in a contract is not inconsequential: any more than the fine print in instrument approach charts, or notes on a clinical chart. Relying upon such provisions has nothing to do with honesty or lack thereof.

Aviation and health care both involve professional ethics and high standards of behaviour. For better or worse, commerce is a different world, governed only by legal rights and obligations. Large corporations always rely upon the small print, and it's only fair that individuals can too. Keep in mind that (i) the banks drafted the contracts, and (ii) 99 times out of a 100, the small print is used to stick it to the little guy.

I spent 20.5 years ... and am now 13 years into a second career.

What about ER?

 

[tryan]

Fortunately 90% of the upside down mortgage holders will suck-it-up and make the payments. Most will even live to see thier notes turn right side up.

Here's a decent link supporting the 90% number:
http://www.bos.frb.org/economic/ppdp/2008/ppdp0803.pdf

 

[Marquette]

Fortunately 90% of the upside down mortgage holders will suck-it-up and make the payments. Most will even live to see thier notes turn right side up.

Here's a decent link supporting the 90% number:
http://www.bos.frb.org/economic/ppdp/2008/ppdp0803.pdf

Thank goodness there are always some scare stories to go along with reality, though:

Is America's suburban dream collapsing into a nightmare? - CNN.com

 

[jclarksnakes]

Milton,
...A fair amount of that fine print on loan contracts is there because of the truth in lending act and is specifically required to protect the consumer. I hope I do not sound like too big a fan of the lending institutions. They deserve the problems they have created for themselves. If I stopped to quibble about the right or wrong of the fine print on an approach chart or a medical chart people could die. I will not seperate my life into one part that believes in total honesty and another that believes in situational ethics. Most people do not read the fine print on a contract anyway. They sign a mortgage with their own understanding that they will repay it. To later decide to not repay when they can is a decision that makes their word and their signature worthless. If everyone's word and signature were worthless trade and commerce would come to an end.
...I have been working parttime for several years waiting for DW to retire. She is about 4 years away. She likes her job and also seems to want a lot more $$ in retirement than we will be able to spend. I will probably be totally retired within the next 12 months. I tell DW that I will send her postcards from my retirement.
Jeff

 

[Westernskies]

I think it boils down to a simple ethics question- "would you walk away from a contractual obligation that you could afford to pay?"

NO. Under this scenario I shook hands with them contractually and have the abilty to pay. It's my obligation, not other bank customers, their shareholders or my fellow taxpayers.

Just the way I was raised, I guess.

I hope the bank hunts them down and kills them with a thousand paper cuts.

 

[Milton]

I hope I do not sound like too big a fan of the lending institutions. They deserve the problems they have created for themselves.

Yes, I agree Jeff. That's really my point ... not that borrowers should feel free to walk away from binding obligations.

FWIW, I know someone who is a twice discharged bankrupt and constantly complains about how unfairly the banks treat him. That sort of approach yields no sympathy from me.

If I stopped to quibble about the right or wrong of the fine print on an approach chart or a medical chart people could die.

Yes, I understand that.

I will not seperate my life into one part that believes in total honesty and another that believes in situational ethics.

Well, I don't know you and perhaps you really do believe in total and complete honesty at all times, without exceptions; but most people occasionally tell harmless 'white lies' (see generally The 15 Most Common White Lies and Why | Marc and Angel Hack Life).

In any event, as I previously noted, following the letter of a contract rather than its perceived spirit is not "dishonest". At worst, it is arguably "dishonourable".

I have been working parttime for several years waiting for DW to retire. She is about 4 years away. She likes her job and also seems to want a lot more $$ in retirement than we will be able to spend. I will probably be totally retired within the next 12 months. I tell DW that I will send her postcards from my retirement.

Good for you!

 

[jclarksnakes]

Milton,
....Is being dishonorable better or worse than being dishonest? Have I told someone I was glad to see them when I really wished they would go away? Yes.
Jeff

 

[Westernskies]

Milton,
....Is being dishonorable better or worse than being dishonest? Have I told someone I was glad to see them when I really wished they would go away? Yes.
Jeff

Milton! I am glad to see you on this thread.

 

[Milton]

Well, it's certainly possible to be dishonourable without being dishonest, but one cannot often be dishonest without also being dishonourable (IMO, anyway).

Also, dishonesty is ultimately objective, whereas dishonour is quite subjective.

So I would think that dishonesty is worse.