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60 Minutes: A Million Have Walked Away; Trend Could Undermine the Fragile Economic Recovery

Sunday, May 9, 2010 - 7:45 PM
I just watched the 60 Minutes piece Strategic Default: Walking Away from Mortgages. According to the piece "there's a growing number who can pay but are simply walking away from houses that are now worth as little as half of what they paid for them." The more defaults, the more stress will be put on banks and the economy which won't be good for our deposit rates.
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Ken TuminKen Tumin5,441 posts since
Nov 29, 2009
Rep Points: 123,651
1. Monday, May 10, 2010 - 1:10 AM
I bought a home back in 1994 (which thankfully no longer has a mortgage).  After 12 years, the prices of the houses in my area doubled (i.e., $250K became $500K).  I thought the jack up in prices had no economic reason for it.  Banks were trying to get as many customers into their books since rates went down in the early 2000s.  Some were trying to do that "flip" technique that so many of these TV infomercials hucksters were promoting.  Now borrowing is nearly as cheap as it was in the early 2000s, but this time the people looking for loans are no longer there.
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AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,776
2. Monday, May 10, 2010 - 1:04 PM
Walking away from a mortgage while still being able to afford the payments is the height of irresponsibility. What's next, walk away from your car loan because you owe more than the car is worth? What is wrong with these people? Their greed was sure evident when home prices were going through the roof and they were taking home equity loans out to buy cars, boats, and other toys. Now that the bubble has burst they want out and have no compunction at just walking away from their debts. They should be forced to pay cash for everything forever. No credit cards, no installment loans, no car loans, and certainly no home loans.
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AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,776
3. Monday, May 10, 2010 - 9:57 PM
I'm in a similar situation as some of these people in the 60 minutes piece. Underwater from what I paid on my home to what I owe.

 

It's really simple.

The BANK and I, made a bad business decision when I purchase a home and the bank sold me a mortgage.

The bank has been happily sucking 95% of my payment every month in the form of interest (over $2k a month) on a mortgage that I've paid on time for the past 3 years.  I've called and called and called asking about every **** bailout type plan, refinancing plan, etc...that I hear about on the news.  They tell me that either it does not apply to me or that my mortgage type (FHA) is not eligible or that I'm not in financial hurt to be eligible.  Well, it's time for my job to move me (military) again and I am really left with no option but to just walk away.  Even the plan for military members (HAP) does not apply to me as I did not buy before the bubble reached the top!  Fortunately for me and many others, the military recognizes this problem and as long we are keeping everything documented and letting our commands know about our situation, it will not have a negative effect on our security clearances (even the military realizes this is nothing more than a bad business decision vice a bunch of deadbeats who don't pay their bills)!

 
1
AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,776
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