Underwater life
 

It happens to many of us, we make one of the biggest purchases we will
ever make and soon after we begin making payments we find ourselves
“underwater” on it with it being worth less than we owe. Should we
just walk away or stay in it? If you just stay with it for long
enough and continue making payments, eventually you will be above
water but that will take a long time. Maybe I should ask for a
bailout. If I call my loan for my new truck a mortgage do you think I
will qualify for the Obama bailout?

Underwater life
 

On Thu, 19 Feb 2009 07:33:55 -0800 (PST), Frogwatch
wrote:

It happens to many of us, we make one of the biggest purchases we will
ever make and soon after we begin making payments we find ourselves
“underwater” on it with it being worth less than we owe. Should we
just walk away or stay in it? If you just stay with it for long
enough and continue making payments, eventually you will be above
water but that will take a long time. Maybe I should ask for a
bailout. If I call my loan for my new truck a mortgage do you think I
will qualify for the Obama bailout?

I know you're being facetious but almost all vehicle loans are
underwater from day one unless you put up a really substantial down
payment.

Underwater life
 

On Feb 19, 1:24 pm, Wayne.B wrote:
On Thu, 19 Feb 2009 07:33:55 -0800 (PST), Frogwatch

wrote:
It happens to many of us, we make one of the biggest purchases we will
ever make and soon after we begin making payments we find ourselves
“underwater” on it with it being worth less than we owe. Should we
just walk away or stay in it? If you just stay with it for long
enough and continue making payments, eventually you will be above
water but that will take a long time. Maybe I should ask for a
bailout. If I call my loan for my new truck a mortgage do you think I
will qualify for the Obama bailout?

I know you're being facetious but almost all vehicle loans are
underwater from day one unless you put up a really substantial down
payment.

You miss the point. Why should "underwater" mortgages be bailed out
when underwater auto loans are not, the concept is the same thing.
Both will eventually be above water.

Underwater life
 

On Thu, 19 Feb 2009 10:36:52 -0800 (PST), Frogwatch
wrote:

On Feb 19, 1:24 pm, Wayne.B wrote:
On Thu, 19 Feb 2009 07:33:55 -0800 (PST), Frogwatch

wrote:
It happens to many of us, we make one of the biggest purchases we will
ever make and soon after we begin making payments we find ourselves
“underwater� on it with it being worth less than we owe. Should we
just walk away or stay in it? If you just stay with it for long
enough and continue making payments, eventually you will be above
water but that will take a long time. Maybe I should ask for a
bailout. If I call my loan for my new truck a mortgage do you think I
will qualify for the Obama bailout?

I know you're being facetious but almost all vehicle loans are
underwater from day one unless you put up a really substantial down
payment.

You miss the point. Why should "underwater" mortgages be bailed out
when underwater auto loans are not, the concept is the same thing.
Both will eventually be above water.

What I haven't heard any of the "talking heads" mention about the
mortgage problem mitigation is whether those who refi-ed their home to
buy a boat or auto qualify.
I can see reducing interest rates to keep "qualified" people in their
home. Not good, but if stabilizes the economy it might be worth it.
Might make a 15-30 mortgage a 50-year mortgage to reduce the vigorish.
The banking industry and not the taxpayer should take the big hit
on this. Principal loan amount should *not* be reduced.
Those who refi-ed to pull money out of their so-called equity should
not qualify. They were irresponsible and should live with that.
Same with owners of more than one home.
It's going to be a nightmare to administer this.

--Vic

Underwater life
 

"Frogwatch" wrote in message
...
On Feb 19, 1:24 pm, Wayne.B wrote:
On Thu, 19 Feb 2009 07:33:55 -0800 (PST), Frogwatch

wrote:
It happens to many of us, we make one of the biggest purchases we will
ever make and soon after we begin making payments we find ourselves
“underwater” on it with it being worth less than we owe. Should we
just walk away or stay in it? If you just stay with it for long
enough and continue making payments, eventually you will be above
water but that will take a long time. Maybe I should ask for a
bailout. If I call my loan for my new truck a mortgage do you think I
will qualify for the Obama bailout?

I know you're being facetious but almost all vehicle loans are
underwater from day one unless you put up a really substantial down
payment.

You miss the point. Why should "underwater" mortgages be bailed out
when underwater auto loans are not, the concept is the same thing.
Both will eventually be above water.

************************************************** ***

Can't you Repugnicans stand on your own two feet?
We have JustHate looking for a $7 K handout so he can buy a new vehicle and
now you want to weasel out of a contract you signed 'in good faith'.
JohnnyHs panhandling hobby is catching on.

Underwater life
 

On Feb 19, 2:20*pm, Vic Smith wrote:

What I haven't heard any of the "talking heads" mention about the
mortgage problem mitigation is whether those who refi-ed their home to
buy a boat or auto qualify.

Those who refi-ed to pull money out of their so-called equity should
not qualify. *They were irresponsible and should live with that.
Same with owners of more than one home.

--Vic-

While I loosly agree with your points, you're worrying about a small
fraction of the people in trouble.

Someone who has enough equity to have an equity line of credit and
uses it to buy a boat or car has been in the house for a long time, or
had a large down payment when they bought the house. They have a
sizable investment in the house, and are typically responsible enough,
and tied to the house enough, to not walk away or get in that far over
their heads.

The problem is with the people that got a mortgage for 100% of what
their house was worth when bought, and/or signed up for payments that
they simply can't make. They have no real equity built up, and since
they have no personal investment in the house (down payment), they
feel they have no reason to keep making payments on something that is
no longer worth what they mortgaged.

I struggled for a while to understand why so many people were walking
away from houses. I finally realized they aren't losing anything but
their credit rating, which probably wasn't so great to begin with.

Underwater life
 

On Thu, 19 Feb 2009 13:07:16 -0800 (PST), wrote:

On Feb 19, 2:20Â*pm, Vic Smith wrote:

What I haven't heard any of the "talking heads" mention about the
mortgage problem mitigation is whether those who refi-ed their home to
buy a boat or auto qualify.

Those who refi-ed to pull money out of their so-called equity should
not qualify. Â*They were irresponsible and should live with that.
Same with owners of more than one home.

--Vic-

While I loosly agree with your points, you're worrying about a small
fraction of the people in trouble.

Someone who has enough equity to have an equity line of credit and
uses it to buy a boat or car has been in the house for a long time, or
had a large down payment when they bought the house. They have a
sizable investment in the house, and are typically responsible enough,
and tied to the house enough, to not walk away or get in that far over
their heads.

The problem is with the people that got a mortgage for 100% of what
their house was worth when bought, and/or signed up for payments that
they simply can't make. They have no real equity built up, and since
they have no personal investment in the house (down payment), they
feel they have no reason to keep making payments on something that is
no longer worth what they mortgaged.

I struggled for a while to understand why so many people were walking
away from houses. I finally realized they aren't losing anything but
their credit rating, which probably wasn't so great to begin with.

It's hard to get a handle on it. I read about a guy named Frank
Torres who "barricaded" himself in his house for a while in protest of
it being foreclosed.
You can look him up. I don't remember all the details, but he bought
the house in California in 2002 and paid $180k. He refied twice and
when he lost the house he owed $284k. Those numbers might not be
exact, but they're close.
I don't want to bail this guy out. You've probably heard that many
people did this kind of thing as house values appreciated in the
bubble. There's been talk for years about people using their homes as
a bank, buying boats and cars with refi's..
On the other hand I've seen a woman on TV that put down 30k on a 200k
house but not being savvy got in over her head because she was sold
an ARM with an outrageous rate adjustment.
Then you got your flippers.
Then you got responsible people on the edge because they lost their
job.
It's just the biggest damn mess you can imagine.

--Vic

Underwater life
 

On Feb 19, 4:32 pm, Vic Smith wrote:
On Thu, 19 Feb 2009 13:07:16 -0800 (PST), wrote:
On Feb 19, 2:20 pm, Vic Smith wrote:

What I haven't heard any of the "talking heads" mention about the
mortgage problem mitigation is whether those who refi-ed their home to
buy a boat or auto qualify.

Those who refi-ed to pull money out of their so-called equity should
not qualify. They were irresponsible and should live with that.
Same with owners of more than one home.

--Vic-

While I loosly agree with your points, you're worrying about a small
fraction of the people in trouble.

Someone who has enough equity to have an equity line of credit and
uses it to buy a boat or car has been in the house for a long time, or
had a large down payment when they bought the house. They have a
sizable investment in the house, and are typically responsible enough,
and tied to the house enough, to not walk away or get in that far over
their heads.

The problem is with the people that got a mortgage for 100% of what
their house was worth when bought, and/or signed up for payments that
they simply can't make. They have no real equity built up, and since
they have no personal investment in the house (down payment), they
feel they have no reason to keep making payments on something that is
no longer worth what they mortgaged.

I struggled for a while to understand why so many people were walking
away from houses. I finally realized they aren't losing anything but
their credit rating, which probably wasn't so great to begin with.

It's hard to get a handle on it. I read about a guy named Frank
Torres who "barricaded" himself in his house for a while in protest of
it being foreclosed.
You can look him up. I don't remember all the details, but he bought
the house in California in 2002 and paid $180k. He refied twice and
when he lost the house he owed $284k. Those numbers might not be
exact, but they're close.
I don't want to bail this guy out. You've probably heard that many
people did this kind of thing as house values appreciated in the
bubble. There's been talk for years about people using their homes as
a bank, buying boats and cars with refi's..
On the other hand I've seen a woman on TV that put down 30k on a 200k
house but not being savvy got in over her head because she was sold
an ARM with an outrageous rate adjustment.
Then you got your flippers.
Then you got responsible people on the edge because they lost their
job.
It's just the biggest damn mess you can imagine.

--Vic

It's a big mess and I have no sympathy.
Flippers took the risk and should pay.
Equity borrowers should pay too
People who made zero down mortgages will never be good credit risks
and they have nothing at risk, I have no sympathy for the lenders in
that case.
Who but an idiot would go for an ARM when the fixed rates were so low?
STUPID SHOULD HURT

Underwater life
 

On Thu, 19 Feb 2009 14:48:53 -0800 (PST), Frogwatch
wrote:


It's a big mess and I have no sympathy.
Flippers took the risk and should pay.
Equity borrowers should pay too
People who made zero down mortgages will never be good credit risks
and they have nothing at risk, I have no sympathy for the lenders in
that case.
Who but an idiot would go for an ARM when the fixed rates were so low?
STUPID SHOULD HURT

ARMs are nearly always lower than fixed.
I did a 3-yr ARM refi at 2.75 when the lowest fixed 15 yr was @6.
Anyway, my eyes were wide open and I had a backup plan if the rates
went up hard when they reset.
The woman I mentioned works and can afford to pay her mortgage
at a real market rate.
Purely a victim of predatory lending. I don't care if she isn't a
sharp tack financially. She shouldn't be taken advantage of like
that.
If your mutual fund suddenly went negative due to malfeasance, you
wouldn't be calling yourself stupid.
You're welcome to call yourself stupid if you've suffered equity
losses legitimately however. You rolled the dice.
But I don't think predatory lending is the root cause of the disaster.
Most of it is interest-only loans, flippers, and equity pullers.
Not "poor people" in most cases, though they might be now.
Again, until somebody actually collates the defaults, it's hard to get
a handle on it.
This is a case where the gov temporarily hiring 10,000 out of work
accountants/investigators to sort things out would pay off.
Get it done fast, and don't pay off the deadbeats.
Things will get back to normal. And by normal I don't mean what's
been normal for the last 10 years or so.
I mean previous home market normal.
20% down and proven income to afford the note payments.
Home prices will adjust to that supply/demand reality.
Hardly the rocket science we boaters are accustomed to here.
Wait....I don't have a boat yet.
Hmmmmm, maybe I can refi and pull some cash out for that.
Reminds me of a commercial that was running until recently, maybe
Geico.
"Cash out some of that equity!"
Aw, ****. How did we get where people thought that was the way to go?

--Vic

Underwater life
 

On Feb 19, 7:33 pm, Vic Smith wrote:
On Thu, 19 Feb 2009 14:48:53 -0800 (PST), Frogwatch

wrote:

It's a big mess and I have no sympathy.
Flippers took the risk and should pay.
Equity borrowers should pay too
People who made zero down mortgages will never be good credit risks
and they have nothing at risk, I have no sympathy for the lenders in
that case.
Who but an idiot would go for an ARM when the fixed rates were so low?
STUPID SHOULD HURT

ARMs are nearly always lower than fixed.
I did a 3-yr ARM refi at 2.75 when the lowest fixed 15 yr was @6.
Anyway, my eyes were wide open and I had a backup plan if the rates
went up hard when they reset.
The woman I mentioned works and can afford to pay her mortgage
at a real market rate.
Purely a victim of predatory lending. I don't care if she isn't a
sharp tack financially. She shouldn't be taken advantage of like
that.
If your mutual fund suddenly went negative due to malfeasance, you
wouldn't be calling yourself stupid.
You're welcome to call yourself stupid if you've suffered equity
losses legitimately however. You rolled the dice.
But I don't think predatory lending is the root cause of the disaster.
Most of it is interest-only loans, flippers, and equity pullers.
Not "poor people" in most cases, though they might be now.
Again, until somebody actually collates the defaults, it's hard to get
a handle on it.
This is a case where the gov temporarily hiring 10,000 out of work
accountants/investigators to sort things out would pay off.
Get it done fast, and don't pay off the deadbeats.
Things will get back to normal. And by normal I don't mean what's
been normal for the last 10 years or so.
I mean previous home market normal.
20% down and proven income to afford the note payments.
Home prices will adjust to that supply/demand reality.
Hardly the rocket science we boaters are accustomed to here.
Wait....I don't have a boat yet.
Hmmmmm, maybe I can refi and pull some cash out for that.
Reminds me of a commercial that was running until recently, maybe
Geico.
"Cash out some of that equity!"
Aw, ****. How did we get where people thought that was the way to go?

--Vic

If the interest rate truly determines whether or not you can pay a
mortgage, then in my opinion you should borrow less. Using the ARM
rate to justify overborrowing is silly. ARMs are ALWAYS risky.
If you borrow needing two incomes to pay and you lose one income, no
sympathy from me.
HOWEVER, if you buy a small house and your payments are less than 25%
of a single income and then you lose your job, OK you have my
sympathy.
Other peoples failure to plan for contingencies should not allow them
to rob me to pay their bills.