Consequences of Massive Bailouts

[Andy A]

Full disclosure- I ran to the water, swam all day with the locals and now I'm drowning.

Simple. You stayed in too long.

 

[LuciferSam]

No Sir never stated or implied that.
Tarp was massive bailout 1 and it went to we all know who. The stimulus was another massive bailout and what has gone out has mainly been to state and local governments.

Only a tiny fraction of any bailout has gone to an individual property owner/mortgagee in the form of a legitimate modification.

Those former property mortagee's the subject of the article will lose, their home all their downpayments, fees to banks and taxes, monthly mtg. payments, equity, credit rating.

I-banks win initial fees and charges, bailout cash, the hard asset to sell again, zero interest borrowing, and future bailouts unnamed and several times as large as the tarp.

On a scale of 1 to infinity i don't hold much anomosity toward....guess who?

Yeah I adressed that a couple of posts earlier. I made that logical conclusion, because I think some people do feel that way.

 

[30ashopper]

Fair enough. Let me ask you this-

If one bets and loses and in the process of trying to stick it out ends up losing everything including their ability to pay their mortgage-

What do you believe should happen next?

They stop paying, the bank forecloses, they lose everything they've invested, and the house.

(actually, I guess they've already lost everything they've invested to the downturn in the market, so they end up losing the house as well, and get stuck with a rotten credit score taboot for seven years. Totally sucks.)

 

[DuneAHH]

Yeah I adressed that a couple of posts earlier. I made that logical conclusion, because I think some people do feel that way.

Am I correct in that you chose not to own, but rather to rent?

 

[scooterbug44]

One thing I don't understand with all the talk of "upside down" and "walking away". If you are upside down in your primary residence and the estimated value is expected to rebound long before your mortgage is due to be paid off, why does it matter so much?

Aren't you just saving on taxes w/ a lower assessment in the meantime?

Are people just fixated on the supposed value of their "asset" when it is really a roof over their head?

Or I am just missing the point because the Scooterbug clan tends to stay in houses for decades/generations?

Another question - what happens if you stop paying your mortgage, then start paying again when your situation improves? Can you avoid the whole mess, but just have more interest racked up?

 

[LuciferSam]

Fair enough. Let me ask you this-

If one bets and loses and in the process of trying to stick it out ends up losing everything including their ability to pay their mortgage-

What do you believe should happen next?

Geo, if I got into a real jam I would have no reservations about using all legal means to do what I needed to do. I wouldn't care what other people thought and I wouldn't ask them for advice. I would try to find a good affordable lawyer. [edit] About the only possible way I think this could happen would be job loss.

 

[LuciferSam]

Am I correct in that you chose not to own, but rather to rent?

No, I don't understand how you arrive at that.

 

[Geo]

They stop paying, the bank forecloses, they lose everything they've invested, and the house.

(actually, I guess they've already lost everything they've invested to the downturn in the market, so they end up losing the house as well, and get stuck with a rotten credit score taboot for seven years. Totally sucks.)

This all sounds very reasonable to me. I guess I had the impression that folks wanted more blood.

Actually- for many, the ability to start out from zero/with zero is like the promised land.

 

[scooterbug44]

This all sounds very reasonable to me. I guess I had the impression that folks wanted more blood.

That's more for the people who are working the system, squatting in their houses after they have stopped paying, destroying the houses' interiors, whining about how none of it is their fault, flush with assets, and wanting to buy again soon.

Noone wants blood from people who are getting foreclosed upon due to hardship and who truly can't pay - though I do think if you are foreclosed upon you should not be allowed to buy a house for 10 years - no exceptions.

I have an issue with people choosing foreclosure to game the system, just as I have an issue with someone declaring bankruptcy to avoid creditors, yet being well off financially a year later because they transferred all their assets to a family member, then got them back.

 

[DuneAHH]

One thing I don't understand with all the talk of "upside down" and "walking away". If you are upside down in your primary residence and the estimated value is expected to rebound long before your mortgage is due to be paid off, why does it matter so much?

Aren't you just saving on taxes w/ a lower assessment in the meantime?

Are people just fixated on the supposed value of their "asset" when it is really a roof over their head.

Or I am just missing the point because the Scooterbug clan tends to stay in houses for decades/generations?

It's an immediate cash flow issue.

Payments fall behind &/or unable to make the FULL house payment due to unemployment (or under-employment), tapped savings, illness or care giving health expenses, rising basic maintenance costs like food & utilities, etc. etc.

Banks won't accept/apply $$ that are LESS than FULL payment/arrears. So any $$ paid end up in a bank limbo account. Then the bank goes down (partly from mismanagement & shortsightedness) the FDIC takes over, paperwork gets shuffled and lost along with the $$ floating in the nebulous limbo that the originating (failed) bank refused to apply to the mortgage loan.

SO... the only remaining option is to sell the house for enough to cover the outstanding mortgage principal. The house doesn't sell... for any amount of money... short or otherwise.