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This is a discussion on Everyone's Defaulting, Why Don't You? within the Loan Safe Lounge - Anything goes here! forums, part of the Mortgage Advice category; Everyone's Defaulting, Why Don't You?If billionaires don't feel guilty about walking away from their debts, should homeowners?
By Daniel GrossPosted ...
Strategic defaults—the phenomenon of people who could continue to make payments on the mortgages on their homes deciding to walk away from their obligations—are rising. According to the Wall Street Journal, strategic defaults are likely to exceed 1 million in 2009. This is making some worry about the very future of capitalism. Georgetown University business ethics professor George Brenkert told the Journal that borrowers who can afford to stay current are morally required to do so, and that were Americans to conclude they could just walk away from obligations, it would be disastrous. Mortgage Bankers Association CEO John Courson wondered about "the message they will send to their family and their kids and their friends?" Blogger Megan McArdle expressed disdain for people who chose to indulge themselves on consumer goods and services while not keeping current with their mortgages. Um, do any of these people read the Wall Street Journal?Strategic defaults are the American way, and I'm not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time. Morgan Stanley, for example, is a gigantic corporation. As of the second quarter, it boasted total capital of $213.2 billion. It certainly has the ability to make good on obligations incurred by its many operating units. But earlier this month Morgan Stanley said it would turn over five San Francisco office buildings to lenders rather than pay the debt on them. Why? Morgan Stanley foolishly paid top dollar for the buildings in 2007, when prices were really high. The values have plummeted, and tenants are hard to come by. "This isn't a default or foreclosure situation," spokeswoman Alyson Barnes told Bloomberg News. "We are going to give them the properties to get out of the loan obligation." Smells like a strategic default to me.
It's not just happening in real estate. According to Standard & Poor's, through Dec. 18, 262 corporations had defaulted on bonds they had sold to the public, twice the total of 2008 and "the highest default count since our series began in 1981." Like mortgages, corporate bonds are legal arrangements in which parties—in this case companies, or partnerships, or limited liability corporations—agree to pay money back. Sometimes companies default on these bonds because they're broke (see: Lehman Bro.). But sometimes they simply default because they don't want to pay out for them. Investors and managers, who have spent hundreds of millions of dollars on personal toys, aircraft, headquarters buildings, and compensation, simply can't seem to find the cash to stay current on debts. KKR, the original private-equity firm, manages about $55 billion. Its founders are billionaires several times over. But when Canadian door-maker Masonite, one of KKR's portfolio firms, ran into trouble staying current on $2 billion in debt, the partners were content to let the firm miss an interest payment and file for Chapter 11. Of course, the debt in this case rested on Masonite, not KKR. But firms whose business model rests on constantly borrowing large sums of money should, in theory, be taking heroic steps to avoid defaulting on debt.
Or take amusement-park operator Six Flags, which filed for Chapter 11 because it couldn't make good on a $300 million interest payment coming due. The company didn't have the resources. But its biggest shareholders sure did. Bill Gates owned about 11 percent of the shares through an investment vehicle. Daniel Snyder, the Redskins owner and marketing wunderkind who had taken control of the company in 2005 and installed his own management team, owned 6 percent. Snyder could have sold off the Redskins or tapped into his personal fortune to stay current on Six Flags' debt. But he chose not to. And most analysts and investors think he would have been stupid for doing so.
Sometimes, investors and managers take heroic, self-abnegating efforts to stave off bankruptcy and make their debt payments. Frequently, however, they don't. They don't want to throw good money after bad. They realize that some investments were so poorly conceived that there's no prospect of them working out in the long term. And the system doesn't hold it against them.
There's no doubt that homeowners are defaulting strategically. And the surprise may be that, given market conditions, there aren't more strategic defaults. A paper by University of Arizona law professor Brent White suggests that bourgeois values are actually keeping people from walking away from bad home loans. Most people underwater on their mortgages stay current "as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure's perceived consequences." In addition, he notes, societal norms push individuals "to ignore market and legal norms under which strategic default might not only be a viable option, but also the wisest financial decision."
Of course, corporate managers and financiers don't suffer from these neuroses. Do you think billionaire investor Sam Zell feels any guilt or shame because his buyout of the Tribune Co., which had $12.9 billion in debt, ended in a Chapter 11 filing last December? Rather than worry about whether Americans will take cues from modest homeowners who make a tough decision not to stay current on debt, perhaps we should worry about middle-class Americans taking cues from billionaires and Fortune 500companies who make the rational decision not to stay current on debt.
PHOENIX -- Should I stay or should I go? That is the question more Americans are asking as the housing market continues to drag.
In good times, it would have been unthinkable to stop paying the mortgage. But for Derek Figg, a 30-year-old software engineer, it now seems like the best option.
Mr. Figg felt trapped in a home he bought two years ago in the Phoenix suburb of Tempe for $340,000. He still owes about $318,000 but figures the home's value has dropped to $230,000 or less. After agonizing over the pros and cons, he decided recently to stop making loan payments, even though he can afford them.
Mr. Figg plans to rent an apartment nearby, saving about $700 a month. Strategic Defaults by State
A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.
A standard mortgage-loan document reads, "I promise to pay" the amount borrowed plus interest, and some people say that promise should remain good even if it is no longer convenient.
George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay -- and weren't deceived by the lender about the nature of the loan -- have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says. Discuss the Ethics
Walking away isn't risk-free. A foreclosure stays on a consumer's credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card.
In addition, many states give lenders varying degrees of scope to seize bank deposits, cars or other assets of people who default on mortgages.
Even so, in neighborhoods with high concentrations of foreclosures, "it's going to be really difficult to prevent a cascade effect" as one strategic default emboldens others to take that drastic step, says Paola Sapienza, a professor of finance at Northwestern University. A study by researchers at Northwestern and the University of Chicago found that as many as one in four defaults may be strategic.
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Kendrick Brinson/Luceo Images for The Wall Street Journal Derek Figg sits in his Tempe, Ariz., home on Tuesday. He stopped making mortgage payments in September.
Driving this phenomenon is the rising number of households that are deeply "under water," owing much more than the current value of their homes. First American CoreLogic, a real-estate information company, estimates that 5.3 million U.S. households have mortgage balances at least 20% higher than their homes' value, and 2.2 million of those households are at least 50% under water. The problem is concentrated in Arizona, California, Florida, Michigan and Nevada.
Josh Cotner, who owns an insurance agency, says his mortgage balance is about $100,000 more than the market value of his home in Gilbert, Ariz. Mr. Cotner could rent a bigger home nearby for $600 a month, far below the $1,655 he now pays on his mortgage, home insurance and property tax. He says he recently stopped making mortgage payments because his lender wouldn't help him reduce the principal on his loan under a federal program in which he believes he is qualified to participate. Given the sometimes lengthy legal process of foreclosure, he may be able to stay in the home for at least another nine months without making any payments.
Banks warn they may get tough with strategic defaulters by pursuing legal claims on a borrower's other assets. "We will try to reduce people's payments if they have a hardship," says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co. "But we have a financial responsibility to get people to pay what they owe if they can afford it."
Steven Olson, a loan officer and roof installer in Roseville, Minn., defaulted in 2007 on a plot of land in Florida he had bought as an investment. "I thought I could move on with my life," he says. But the lender, RBC Bank, a subsidiary of Royal Bank of Canada, sued him, seeking to make him pay more than $400,000 to the bank to cover its losses on the loan. Mr. Olson has hired a Florida lawyer, Roy Oppenheim, to resist the claim. An RBC spokesman declined to comment.
States where lenders generally can pursue such legal claims include Florida and Nevada but not California and Arizona, where laws generally prohibit lenders from pursuing other assets of mortgage borrowers. A new Nevada law will protect many borrowers from these judgments if they bought a home for their own use after Sept. 30, 2009.
Another risk for defaulters is that banks could sell the rights to pursue claims to collection agencies or other firms, which could then dun the borrowers for up to 20 years after a foreclosure. Such threats appear to deter some borrowers. A recent study from the Federal Reserve Bank of Richmond found that under-water borrowers were 20% more likely to default in a state where mortgage lenders can't pursue claims on other assets than in those where they can. Journal Community
Brent White, an associate law professor at the University of Arizona who has written about this issue, says homeowners should make the decision on whether to keep paying based on their own interests, "unclouded by unnecessary guilt or shame." He says borrowers can take a cue from lenders that "ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility."
But it isn't just a matter of the borrower's personal interest, says John Courson, chief executive of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: "What about the message they will send to their family and their kids and their friends?" From the Archives
In Mesa, another suburb of Phoenix, low prices are helping to draw buyers who may walk away from other homes. Christina Delapp bought a house out of foreclosure in July for $49,000 in cash. She says she will stop paying the mortgage on another home she still owns in Tempe if she can't sell in the next few months for more than the $312,000 that she owes.
Ms. Delapp, who has been jobless for 18 months, says that the new home is part of her survival strategy. "I feel very fortunate," she says. "Regardless of what happens to my credit, we've managed to put together the best safety plan that I possibly could."
Mr. Figg says that deciding to default on his loan was "the toughest decision I ever made." He worried that if he ever loses his job he would be marooned in a home that he couldn't sell for enough to pay off his loan, limiting his ability to find work in other parts of the country: "I couldn't move up. I couldn't move down. I couldn't move out of the city. It was a very claustrophobic situation."
By moving to an apartment, Mr. Figg expects to lower his costs by about $700 a month. He plans to put that into his savings account and says he is willing to rent for the next five years or so.
Lenders are guilty of having "manipulated" the housing market during the boom by accepting dubious appraisals, Mr. Figg says. "When I weighed everything," he says, "I was able to sleep at night."
Snyder could have sold off the Redskins or tapped into his personal fortune to stay current on Six Flags' debt. But he chose not to. And most analysts and investors think he would have been stupid for doing so.
Sometimes, investors and managers take heroic, self-abnegating efforts to stave off bankruptcy and make their debt payments. Frequently, however, they don't.They don't want to throw good money after bad. They realize that some investments were so poorly conceived that there's no prospect of them working out in the long term. And the system doesn't hold it against them.
This in essence says what I have been feeling for a while now. I just couldn't express it in these words. I see honest hard working people trying to do the right thing (morally, ethically, emotionally) and fight to stay in their homes that if someone with some cash could easily step and buy for pennies on the dollar. And of course I am in the same boat. It really sickens me to death to read all of the anguish here in this forum because I know I am up against the same battle.....or am I?
Read on more from this article:
Quote:
Originally Posted by Garry
Most people underwater on their mortgages stay current "as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure's perceived consequences." In addition, he notes, societal norms push individuals "to ignore market and legal norms under which strategic default might not only be a viable option, but also the wisest financial decision."
So financially speaking, should I really stress over trying to stay in my home that has declined in value to a point that the recovery or break even point may not happen in my lifetime? Should I fight to get a interest reduction on $250K when the home next door to me just sold for $80K? Should I subject myself to the shenanigans of my servicer who absolutely has no interest in helping me stay in home? And whose only motivation is to drain every penny out of me with shady business practices despite the fact that I do have the means to make a payment to them if they would just cave in just a wee bit?
Now if I didn't have a change in circumstances, specifically a huge reduction in pay (been working in automotive for 20 plus years in the metro Detroit area) that has made my home unaffordable for me anymore, then more than likely I would just continue to pay my obligations without any problems...despite the market conditions because I still have to pay to live somewhere.
Quote:
Originally Posted by Garry
Of course, corporate managers and financiers don't suffer from these neuroses. Do you think billionaire investor Sam Zell feels any guilt or shame because his buyout of the Tribune Co., which had $12.9 billion in debt, ended in a Chapter 11 filing last December? Rather than worry about whether Americans will take cues from modest homeowners who make a tough decision not to stay current on debt, perhaps we should worry about middle-class Americans taking cues from billionaires and Fortune 500companies who make the rational decision not to stay current on debt.
This is how the rich stay rich. Middle class americans taking the brunt for all of the millionaires. Its a cut throat world that has nothing to do morals, ethics or any emotions. These are *Business Decisions* that these corporations make. The bottom line is if these corporations deem that this so called investment is no longer a viable asset that will make money for them, they quickly relieve themselves of the money pit.
__________________ 1-19NACA submitted my file to Wilshire 3-01Wilshire transferred my loan to BAC 3-12NACA submitted a new proposal to BAC since the loan mod from Wilshire more than likely is lost in hell. 3-22Assigned negotiator and told mod is scheduled for completion 4/20 4-21Received & accepted proposal from BAC
4-28Received permanent docs. Yippee!!!
5-10Sent perm docs & pmt to BAC
When businesses or business people like Donald Trump do it, we call it "just a good business decision". BUT when consumers do it they are called names such as deadbeat and credit and scores sink.
I actually believe that we all need to make good personal business choices and that the credit industry will adjust their reports and scores to reflect society's new attitude.
__________________ Call and fax your mortgage servicer EVERY DAY! Call first and then fax a "thank you" to them after each call. Do this EVERY DAY!
I am striving to have 10,000 people call their mortgage servicers day after day after day until they do on of two things - Make It Right or Make Them Gone!
And if you tell everyone you know we may have 100,000 people calling day after day after day. They WILL want you to quit calling....
It's almost like a ghost town here. I have worked near the Chrysler Tech Center in Auburn Hills since 1997. You know, Chrysler's Headquarters that is some 5 million sq feet housing thousands of employees. In the hayday before all this mess hit, it would take me no less than 1 hour travel time each way to and from work. It is only 15 miles from where I live. Now it only takes me about 45 minutes round trip .
When I drive down the same roads that I have done since 1997 it is very surreal to see that there is hardly anybody on the streets. Businesses that were once booming are now closed. Places that people once populated in droves sit vacant. Yes things have changed drastically here in the last 5 years so if things are any better for you since you left, then you definitely did the right thing.
__________________ 1-19NACA submitted my file to Wilshire 3-01Wilshire transferred my loan to BAC 3-12NACA submitted a new proposal to BAC since the loan mod from Wilshire more than likely is lost in hell. 3-22Assigned negotiator and told mod is scheduled for completion 4/20 4-21Received & accepted proposal from BAC
4-28Received permanent docs. Yippee!!!
5-10Sent perm docs & pmt to BAC
When businesses or business people like Donald Trump do it, we call it "just a good business decision". BUT when consumers do it they are called names such as deadbeat and credit and scores sink.
I actually believe that we all need to make good personal business choices and that the credit industry will adjust their reports and scores to reflect society's new attitude.
Yep and don't forget that along with a deadbeat your moral responsibility too! Doesn't matter one bit if they lenders did something shady that the homeowner did not know.
Its ironic how businesses can close down due to economic conditions. Because? Now here's a new one. That can't pay!
The media nor consumers have as bad of an attitude towards these businesses. Its almost like these businesses get the sympathetic ear. And I am speaking only about the legit businesses, not scam artists. Do you think that these businesses closed down and didn't owe anybody? A business owner can close down one business and open up another the next day under a brand new name. No association whatsoever with the previous business (if they do it right). The homeowner gets to carry their bad history with him for the next 7 to 10 years.
Does that ever make you go hmmmm
__________________ 1-19NACA submitted my file to Wilshire 3-01Wilshire transferred my loan to BAC 3-12NACA submitted a new proposal to BAC since the loan mod from Wilshire more than likely is lost in hell. 3-22Assigned negotiator and told mod is scheduled for completion 4/20 4-21Received & accepted proposal from BAC
4-28Received permanent docs. Yippee!!!
5-10Sent perm docs & pmt to BAC
It's almost like a ghost town here. I have worked near the Chrysler Tech Center in Auburn Hills since 1997. You know, Chrysler's Headquarters that is some 5 million sq feet housing thousands of employees. In the hayday before all this mess hit, it would take me no less than 1 hour travel time each way to and from work. It is only 15 miles from where I live. Now it only takes me about 45 minutes round trip .
When I drive down the same roads that I have done since 1997 it is very surreal to see that there is hardly anybody on the streets. Businesses that were once booming are now closed. Places that people once populated in droves sit vacant. Yes things have changed drastically here in the last 5 years so if things are any better for you since you left, then you definitely did the right thing.
Actually I went from bad to worse, I got caught in the west coast housing bubble when I came to AZ, I'm right on the CA boarder. Now I'm seeing the same thing here with businesses closing, it just took a little longer to hit the west coast.
The American Economic Association’s annual conference was held in Atlanta over the last few days of this new year. Robert Shiller, developer of the Case-Shiller U.S. Home Price Index and author, Irrational Exuberance, was in attendance.
His prediction for 2010 speaks directly to this issue of strategic defaults. Robert Shiller, Yale University:
“Strategic default on mortgages will grow substantially over the next year, among prime borrowers, and become identified as a serious problem. The sense that ‘everyone is doing it’ is already growing, and will continue to grow, to the detriment of mortgage holders. It will grow because of a building backlash against the financial sector, growing populist rhetoric and a declining sense of community with the business world. Some people will take another look at their mortgage contract, and note that nowhere did they swear on the bible that they would repay.”
Any guess from the members of this forum/thread as to how we think the mortgage holders/banks will respond to this new threat?
The American Economic Association’s annual conference was held in Atlanta over the last few days of this new year. Robert Shiller, developer of the Case-Shiller U.S. Home Price Index and author, Irrational Exuberance, was in attendance.
His prediction for 2010 speaks directly to this issue of strategic defaults. Robert Shiller, Yale University:
“Strategic default on mortgages will grow substantially over the next year, among prime borrowers, and become identified as a serious problem. The sense that ‘everyone is doing it’ is already growing, and will continue to grow, to the detriment of mortgage holders. It will grow because of a building backlash against the financial sector, growing populist rhetoric and a declining sense of community with the business world. Some people will take another look at their mortgage contract, and note that nowhere did they swear on the bible that they would repay.”
Any guess from the members of this forum/thread as to how we think the mortgage holders/banks will respond to this new threat?
As far as how the banks will respond, I don't really care! Now we have to teach everyone to Strategically Default on CREDIT CARDS. Everyone is doing it!
Published: January 7, 2010 John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay.
Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?
Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials. Former Treasury Secretary Henry M. Paulson Jr. declared that “any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation.” (Paulson presumably was not so censorious of speculation during his 32-year career at Goldman Sachs.)
The moral suasion has continued under President Obama, who has urged that homeowners follow the “responsible” course. Indeed, HUD-approved housing counselors are supposed to counsel people against foreclosure. In many cases, this means counseling people to throw away money. Brent White, a University of Arizona law professor, notes that a family who bought a three-bedroom home in Salinas, Calif., at the market top in 2006, with no down payment (then a common-enough occurrence), could theoretically have to wait 60 years to recover their equity. On the other hand, if they walked, they could rent a similar house for a pittance of their monthly mortgage.
There are two reasons why so-called strategic defaults have been considered antisocial and perhaps amoral. One is that foreclosures depress the neighborhood and drive down prices. But in a market society, since when are people responsible for the economic effects of their actions? Every oil speculator helps to drive up gasoline prices. Every hedge fund that speculated against a bank by purchasing credit-default swaps on its bonds signaled skepticism about the bank’s creditworthiness and helped to make it more costly for the bank to borrow, and thus to issue loans. We are all economic pinballs, insensibly colliding for better or worse.
The other reason is that default (supposedly) debases the character of the borrower. Once, perhaps, when bankers held onto mortgages for 30 years, they occupied a moral high ground. These days, lenders typically unload mortgages within days (or minutes). And not just in mortgage finance, but in virtually every realm of our transaction-obsessed society, the message is that enduring relationships count for less than the value put on assets for sale.
Think of private-equity firms that close a factory — essentially deciding that the company is worth more dead than alive. Or the New York Yankees and their World Series M.V.P. Hideki Matsui, who parted company as soon as the cheering stopped. Or money-losing hedge-fund managers: rather than try to earn back their investors’ lost capital, they start new funds so they can rake in fresh incentives. Sam Zell, a billionaire, let the Tribune Company, which he had previously acquired, file for bankruptcy. Indeed, the owners of any company that defaults on bonds and chooses to let the company fail rather than invest more capital in it are practicing “strategic default.” Banks signal their complicity with this ethos when they send new credit cards to people who failed to stay current on old ones.
Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them.
In some states, lenders also have recourse to the borrowers’ unmortgaged assets, like their car and savings accounts. A study by the Federal Reserve Bank of Richmond found that defaults are lower in such states, apparently because lenders threaten the borrowers with judgments against their assets. But actual lawsuits are rare.
And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value. White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms. In theory, this could produce a wave of loan modifications — the very goal the Treasury has been pursuing to end the crisis.
No one says defaulting on a contract is pretty or that, in a perfectly functioning society, defaults would be the rule. But to put the onus for restraint on ordinary homeowners seems rather strange. If the Mortgage Bankers Association is against defaults, its members, presumably the experts in such matters, might take better care not to lend people more than their homes are worth. Roger Lowenstein, an outside director of the Sequoia Fund, is a contributing writer for the magazine. His book “The End of Wall Street” is coming out in April.
Thank you for all this information! We are one of the strategic defaults. We stopped making payments about 5 months ago d/t $100,000 under water & being on an ARM. We struggled with the ethical thing to do & what our moral obligations were. We then came to the decision that the moral & ethical thing would be for the bank to find a happy medium with us BUT they will not. So we decided that, for once, we would take care of ourselves & our family.
I don't answer the bank calls anymore...why keep saying the same thing over & over? We have not told our families, figure I would invite them to a "party" aka "Housewarming" when it is over
The whole housing & banking system is a big mess and it scares me! Does anyone see it getting better or ever changing?
Thank you for all this information! We are one of the strategic defaults. We stopped making payments about 5 months ago d/t $100,000 under water & being on an ARM. We struggled with the ethical thing to do & what our moral obligations were. We then came to the decision that the moral & ethical thing would be for the bank to find a happy medium with us BUT they will not. So we decided that, for once, we would take care of ourselves & our family.
I don't answer the bank calls anymore...why keep saying the same thing over & over? We have not told our families, figure I would invite them to a "party" aka "Housewarming" when it is over
The whole housing & banking system is a big mess and it scares me! Does anyone see it getting better or ever changing?
Well honestly I don't see it getting any better anytime soon. I think some of the homeowners that persevere will finally get some resolve (modifications), but it will only be by the luck of the draw. The rest will walk and in 3 to 5 years will more than likely be better off financially.....not to mention emotionally.
The real deal is that there as increasingly part of the population who does not want to pay 3 or 4 times the price of their home when there is an out which is to walk. They will recover from the hit on their credit and their pocket book will grow too. So until the banks are willing to pass on some of the relief they received to the homeowners, I don't think we will see much if any change.
__________________ 1-19NACA submitted my file to Wilshire 3-01Wilshire transferred my loan to BAC 3-12NACA submitted a new proposal to BAC since the loan mod from Wilshire more than likely is lost in hell. 3-22Assigned negotiator and told mod is scheduled for completion 4/20 4-21Received & accepted proposal from BAC
4-28Received permanent docs. Yippee!!!
5-10Sent perm docs & pmt to BAC
I am wondering if, before defaulting on our loan, should we get a forensic audit of our loan and work with a lawyer to see if they can use leverage to get the bank to do a legitimate modification first? And if a forensic audit is the way to go, where do you start? Has anyone heard of www.mymortgagewar.com? They offer these for around $350 or so. Or, will your lawyer just do it for you?
I am wondering if, before defaulting on our loan, should we get a forensic audit of our loan and work with a lawyer to see if they can use leverage to get the bank to do a legitimate modification first? And if a forensic audit is the way to go, where do you start? Has anyone heard of www.mymortgagewar.com? They offer these for around $350 or so. Or, will your lawyer just do it for you?
I would be careful with paying anyone to "help" you with these situations, look around on this site and you'll find more stories about people paying big money only to be taken advantage of with little or no results.
The best leverage appears to hold back a payment or two, that’ll get the banks attention pronto, sadly that's about the only way to go about it. I've been waiting since December 17th for a negotiator to be assigned to me from BofA, since I'm current they keep telling me that I have to wait. BS, they're not getting paid anymore, I will be out of a job in September and I'm trying to do the right thing to keep my house, if I don't get a mod it's a short sale, or worse by not paying BofA will start foreclosure proceedings, I don't want that to happen but if they're not willing to work with me why should I work with them?
The best leverage appears to hold back a payment or two, that’ll get the banks attention pronto, sadly that's about the only way to go about it. I've been waiting since December 17th for a negotiator to be assigned to me from BofA, since I'm current they keep telling me that I have to wait. BS, they're not getting paid anymore, I will be out of a job in September and I'm trying to do the right thing to keep my house, if I don't get a mod it's a short sale, or worse by not paying BofA will start foreclosure proceedings, I don't want that to happen but if they're not willing to work with me why should I work with them?[/COLOR][/FONT]
And that is the most ironic thing about this whole process! You actually have to be in that exact frame of mind to win the battle. You gotta be prepared to put on your walking shoes. It is not what I want either. Of course I'd rather stay in my house. But if they don't want to play fair then they can kiss me where the good lord split me.
__________________ 1-19NACA submitted my file to Wilshire 3-01Wilshire transferred my loan to BAC 3-12NACA submitted a new proposal to BAC since the loan mod from Wilshire more than likely is lost in hell. 3-22Assigned negotiator and told mod is scheduled for completion 4/20 4-21Received & accepted proposal from BAC
4-28Received permanent docs. Yippee!!!
5-10Sent perm docs & pmt to BAC
"but if they're not willing to work with me why should I work with them?"
That is what even made me consider walking away was their lack of concern for my loan mod of any kind. I think their only way out is to do short-refi's. It's the only way I would consider staying at this point. I tried to get a loan mod when I was current to save my credit but you know what happened there so I stopped paying and ruined my credit but I got their attention but they lost the only thing keeping me from walking away. My credit is ruined for now if I stay with a mod that doesn't make financial sense or walk away. I'll take the hit I hope they can (not really, I could care less about those blood suckers). Good luck to all!!
Um, do any of these people read the Wall Street Journal?Strategic defaults are the American way, and I'm not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time.
By ROGER LOWENSTEIN
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