Mortgages...I thought this was interesting...

kaiser715

kaiser715

Doing hard time
Joined
Jun 1, 2006
Location
7, Pocket, NC
I know personally of more than a few folks around town that have just walked away from a mortgage. Situation being their credit already in the dumps, and in a few years the ding will be wiped away, so they figure what do they have to lose. Two that I know of in our neighborhood bought new cars just before foreclosure.

Anyway, I read this in an article tonight. Probably the way it ought to be.

Canadian mortgages are generally full-recourse, meaning the bank can seize other assets to cover the unrecoverable portion of the debt and limiting a 'throwback the keys' scenario,
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Give no quarter...
 
Pay what you owe and signed up for. I know people who have walked away and in a few years got another mortgage. I knew of their circumstances of how and why they got into the big mortgages and didn't agree with them doing it in the first place. Markets and economies can and do go bad all the time but if you don't buy over your head in the first place, you can usually withstand the storm when it hits.
 
R Q said:
I knew of their circumstances of how and why they got into the big mortgages and didn't agree with them doing it in the first place.
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So much truth here. That's what caused the real estate bubble to grow and pop. Banks giving loans to people who should have never been given loans.
 
Personal responsibility. Just another tenant taught by an ancient text we move further and further from each day.

The most infuriating thing I have ever witnessed I watched go down back in 08-10.
Friend re-marries.
Both of their second marriages.
New wife lives in a house in Ballantyne she kept from divorce. Mortgage completely in her name paid for buy alimony from husband #1.

House was bought for $650k sometime around 05 or 06 in 08 had a value of $375. They quit paying. Saved the monthly payment. She was eventually foreclosed on. At this point they were co-habitating not married. They moved into an apartment for about 6 months until HE bought the house back on a short sale for $340k.

In January they sold the house for just over $700k.

They think they did nothing wrong or immoral and that it was smart business.
I cant really associate with them anymore because I cant look at them the same.
 
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I think a few other countries are full recourse as well, maybe the UK? That sticks in my head because I watch UK shows fairly often.
 
Ron said:
Personal responsibility. Just another tenant taught by an ancient text we move further and further from each day.

The most infuriating thing I have ever witnessed I watched go down back in 08-10.
Friend re-marries.
Both of their second marriages.
New wife lives in a house in Ballantyne she kept from divorce. Mortgage completely in her name paid for buy alimony from husband #1.

House was bought for $650k sometime around 05 or 06 in 08 had a value of $375. They quit paying. Saved the monthly payment. She was eventually foreclosed on. At this point they were co-habitating not married. They moved into an apartment for about 6 months until HE bought the house back on a short sale for $340k.

In January they sold the house for just over $700k.

They think they did nothing wrong or immoral and that it was smart business.
I cant really associate with them anymore because I cant look at them the same.
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That's crazy. I'm all for getting ahead, but that's some shady business.

We had a neighbor that quit paying on his house....Not sure how many years that went on for, but I know it was a while. Ended up buying a new King Ranch F350 before the bank foreclosed.
 
Ron said:
Personal responsibility. Just another tenant taught by an ancient text we move further and further from each day.

The most infuriating thing I have ever witnessed I watched go down back in 08-10.
Friend re-marries.
Both of their second marriages.
New wife lives in a house in Ballantyne she kept from divorce. Mortgage completely in her name paid for buy alimony from husband #1.

House was bought for $650k sometime around 05 or 06 in 08 had a value of $375. They quit paying. Saved the monthly payment. She was eventually foreclosed on. At this point they were co-habitating not married. They moved into an apartment for about 6 months until HE bought the house back on a short sale for $340k.

In January they sold the house for just over $700k.

They think they did nothing wrong or immoral and that it was smart business.
I cant really associate with them anymore because I cant look at them the same.
Click to expand...

I won't say I feel warm and fuzzy about that, but I guess it depends on how you look at it. Are you looking at a home as a commitment or an investment? If a commitment, fine, conversation over. If an investment, you have stock that starts to tank, are you going to hold on to it because you made a commitment or dump it? When you pay taxes and find ways to mitigate your liability, do you look at it as smart business and playing within the rules, or immoral? I agree, kinda slimy and not something I could do, but they were playing within the rules to make over $350k in 8 years.
 
I couldn't do that just Bc I would feel so convicted of screwing someone over.


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UTfball68 said:
I won't say I feel warm and fuzzy about that, but I guess it depends on how you look at it. Are you looking at a home as a commitment or an investment? If a commitment, fine, conversation over. If an investment, you have stock that starts to tank, are you going to hold on to it because you made a commitment or dump it? When you pay taxes and find ways to mitigate your liability, do you look at it as smart business and playing within the rules, or immoral? I agree, kinda slimy and not something I could do, but they were playing within the rules to make over $350k in 8 years.
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I understand your point. To me there is no grey here. The house or investment portion is irrelevant.

When I signed a mortgage that says I will pay Bank A $XXX in exchange for their loaning me the money to buy this item, I am then morally obligated to pay them that money. There isnt a man walking the face of this earth that can say I have ever owed them a debt that I didnt pay, and that wont change.

I could also argue that they weren't playing within the rules because they were capable of paying but chose not to. I have a very strong conviction on honoring one's obligations.

The stock analogy is a poor one. I bought stock and I sold it. I wouldnt begrudge someone for selling a house without paying it off and letting the bank maximize their profits. I would begrudge them from walking away from their committed obligation. Last time I checked when I bought stock there wasnt a signature that said I agree to hold this stock for X amount of time or not to sell it for $Y
 
Yeah...Like I said, I agree with you, but I can understand how/why folks would do it. If they're moral compass isn't pointing true north and, and they look at a house as any other investment...I get it.
 
When we were looking for a place to live up here - back in summer '08 - I chased a guy down about an ad for a townhouse rental that was a fabulous deal, but said "only for 12-14 months MAX". Met him out there, it was a great place, priced well below what it should have. A personal listing, not an agency.
Before jumping on it, I was nervous about the time limit and asked the guy. He looked at me deadpan and said, "The vale on this place has fallen below what I owe on it, so I just stopped paying the mortgage. It should take about 15 months for the foreclosure to finish."
I was like, WTF? Aren't you worried about credit? The debt? Having somebody paying rent in the meantime?
He just shrugged and said, "Nah. This was an investment. Some work out, some don't. It's time to jut walk away. I work in the credit industry and know the guys who write the files. In about 3 years it will all go away. I have 2 other places in this subdivision that are similar situation. All you need to worry about is being gone in a year. In the meantime we both get a great deal."

I just shook my head and said, No, thank you. I don't want to be any part of this.
I've thought about that guy many times after seeing the prices here rise and crash and hearing of friends genuinely trying to avoid foreclosures. A personal goal is to ensure my kids are never THAT guy.

As an aside, this is a real problem in Baltimore, landlords defaulting but keeping renters there. Turns out there is some law restriction whereby banks foreclose, go to the property (after a year+) and finde renters there - but they don't have the legal authority to evict them. The police have to, but eviction take several months. Meanwhile tenants didn't even know.
 
Ron said:
When I signed a mortgage that says I will pay Bank A $XXX in exchange for their loaning me the money to buy this item,
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I never bite off more than I can chew and I hope I never get in some dire situation that would cause me to lose my home (paid for but I am making a point) or other land. This said, the contract says that you pay the note or they get the house. That is the consequence to foreclosure, along with ruined reputation and credit. You lose the property and the money you paid toward it. Sometimes the bank is stuck, sometimes they are not. That is the risk they accept.

What I mean is that there is no moral wrong, only a failure to complete the payment schedule. The contract was followed, you said "f it" and the bank picks up the pieces. People get in all sorts of jams and I agree it is stupid to bite off a huge mortgage when you have sketchy income, but the bank is as much to blame for lending it (like pre-'08 crazy lending where all you needed was a pulse).

A change in contracts to show home buyers are responsible for the difference like in the OP would surely make folks be more serious.
 
Ron said:
Personal responsibility. Just another tenant taught by an ancient text we move further and further from each day.

The most infuriating thing I have ever witnessed I watched go down back in 08-10.
Friend re-marries.
Both of their second marriages.
New wife lives in a house in Ballantyne she kept from divorce. Mortgage completely in her name paid for buy alimony from husband #1.

House was bought for $650k sometime around 05 or 06 in 08 had a value of $375. They quit paying. Saved the monthly payment. She was eventually foreclosed on. At this point they were co-habitating not married. They moved into an apartment for about 6 months until HE bought the house back on a short sale for $340k.

In January they sold the house for just over $700k.

They think they did nothing wrong or immoral and that it was smart business.
I cant really associate with them anymore because I cant look at them the same.
Click to expand...

I wouldn't be able to sleep at night.
 
ponykilr said:
I never bite off more than I can chew and I hope I never get in some dire situation that would cause me to lose my home (paid for but I am making a point) or other land. This said, the contract says that you pay the note or they get the house. That is the consequence to foreclosure, along with ruined reputation and credit. You lose the property and the money you paid toward it. Sometimes the bank is stuck, sometimes they are not. That is the risk they accept.

What I mean is that there is no moral wrong, only a failure to complete the payment schedule. The contract was followed, you said "f it" and the bank picks up the pieces. People get in all sorts of jams and I agree it is stupid to bite off a huge mortgage when you have sketchy income, but the bank is as much to blame for lending it (like pre-'08 crazy lending where all you needed was a pulse).

A change in contracts to show home buyers are responsible for the difference like in the OP would surely make folks be more serious.
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First I totally understand things happen. Good people go down sometimes and I begrudge no one for defaulting on a loan they honestly cant pay. Now I may judge their decision making that got them in that position, but that is an entirely different story.

To your point about the contract; this is only my opinion and my personal conviction, not a judgement on any others.
The contract states, "I agree to pay....." anything else after that is irrelevant TO ME FOR ME. Sure they include language to litigate what happens if I fail to honor my obligation, but my obligation is to pay. Just because the police have the right to arrest me if they catch me stealing from you doesn't give me the right to steal from you and suffer the consequences. Again just speaking from my personal experience.

And I can speak from personal experience of what I would do. Because I have lived it. In 2001 I had my own business and we were rocking. I was young and dumb and aggressive. I let about 85% of my business fall in one account. We had a $3.MM contract for work at Charlotte Douglass International Airport. In mid August I set roughly $1MM of material in a lay down yard on the ground. We know what happened on 9/11. Around 9/20 the project was cancelled and the FAA agreed to pay all in progress work. The GC filed bankruptcy after receiving the draw for my billings but before paying me. As I struggled for 5 months to keep it floating I made progess payments to everyone I could. I mortgaged my house, which at the time was paid for just to make a couple months payments to keep the supply accounts open. Through the bankruptcy proceedings we were "awarded" 60%of owed. Blessed compared to many others in similar situations. Our company had since folded, the LLC dissolved but never filed bankruptcy. I sat there with an $84k mortgage that I didnt have three months ago. Had sold my truck and every tool my business owed. In total I owed my 3 outstanding creditors right at $300k. My distribution payment was $278k. My attorney begged me to file the paperwork retroactive and I could pocket $278k. (Im probably messing the particulars up there but it was an option somehow) To reclaim the personal investment from mortgaging my house, selling my wife's car etc. I refused. I walked in and sat down with each of the 3 creditors. Explained my intent to each of them close to off and continue to pay off the rest in time. One of the three voluntarily agreed to take their profit out of the deal (roughly $35k) and allow me to make whole with all 3. I did. I found out that the salesman who had helped me win several jobs from the company who made that decision without his input was to be back charged his roughly $5k commission he had already been paid. I drove that night to his house and wrote him a personal check.

I went home thanked God for allowing everything to work out and for blessing me with a happy and healthy wife and child and slept like a baby. Ive never once regretted that decision.

Again no judgement is passed on anyone who would choose differently. I am just expressing my beliefs amongst friends.

::beer::
 
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