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Old 06-14-2012, 11:54 PM   #15
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Interesting discussion folks but please don't take it down a political path.

Thanks for your help.

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Old 06-15-2012, 01:09 AM   #16
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We have a home purchased in 2005. It is under water. We make payments each month, excellent credit and cannot refinance as it is not a Fannie Mae loan. I'm fine even with a refi for what we owe. Just want the option for the current rates.

There are others nearby who have walked away. It drives down our values further.

If we are honest, there was also greed on the part of homeowners during the boom. Most bought with little down and had an expectation of continued equity growth and moving up. Some flipped every 2 years or less. Now that things have tanked, many are happy to walk away even if they are fully employed and can afford the payment. I guess I still believe that what we borrow we should pay back - even if we were not wise in borrowing in the first place. Call me old fashioned and at odds with my generation. If I buy stock and the stock tanks, I don't get a refund.
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Old 06-15-2012, 01:29 AM   #17
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My take is simple. It's all business, it's not personal.

There's always greed in these deals. People borrow money for homes looking to make money. Banks lend money to make money.

The trouble is that too many people try and assert moral obligations into business deals and then become disappointed when others don't agree with their morals.

Me, if I have any "morals" it's the obligation to do what's best for my family, period. I know that may sound cold but ultimately, it's just business.

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Old 06-15-2012, 02:16 AM   #18
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We had our house built in '09, just the way we (she) wanted it. It's our
retirement and final home, we decided we are leaving this house feet first.
We have lived here for 3 years and every year our taxes go down, so
obviously we owe more than it is currently worth.
But we are lucky, we have a low interest rate (VA) that we can live with and so we
just keep on making the payments and are able to ride out the current
housing mess. But even if our house never regains the value we paid for it,
that's OK with us, we are never planning to sell.

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Old 06-15-2012, 02:32 PM   #19
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The trouble is that too many people try and assert moral obligations into business deals and then become disappointed when others don't agree with their morals.
This is true. However I also believe that when an agreement is made and a contract drawn, there is a legal obligation to follow the contract. There is NO GUARANTEE of a return on any investment. And there is no reason why others should have to pick up the tab for those who have made bad investments. Personal responsibility is at an all-time low.
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Old 06-15-2012, 02:49 PM   #20
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This is true. However I also believe that when an agreement is made and a contract drawn, there is a legal obligation to follow the contract. There is NO GUARANTEE of a return on any investment. And there is no reason why others should have to pick up the tab for those who have made bad investments. Personal responsibility is at an all-time low.
Sarah, don't get me wrong, I totally agree with your statement... however, it's not entirely complete. No one is saying that you don't follow the contract or the rule of law. The contracts certainly speak to defaults -- in fact, in most mortgage contracts there's far more contract about when things go bad than about the "when things go well"!

As far as government bailouts...well, that's a different and very political story.

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Old 06-16-2012, 02:06 PM   #21
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When the value if of any asset whether it be a home or an RV, goes down, somebody must take the loss. It can either be the owner, the stockholders of the bank, or the taxpayers. Seems to me that the choice is very clear. The owner should be responsible for any losses just like they claim any gains. Many people here in Florida, refinanced every year or two and took out the increase value for a new truck. This drove up the price of the houses but not the actual values. We sold a house that was in my opinion way over priced, but hey, we took the money. The new owner is way underwater. Who should suffer the loss? Pretty simple, the guy that paid too much.
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Old 06-16-2012, 06:14 PM   #22
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I guess we are different, we will buy the worst looking place on the block as long as its sturcturally sound then redo it ourselves if possible. Not so much so nowadays as hubby is gone and I can't do as much work as I once did on them, well and also choose not to. Most of ours are foreclosed houses sold as is as they had things like a non functioning furnace people would have to fix before closing on it. We also try to pay cash when possible. Most folks want the biggest fanciest they can get at any cost. But the way we have done it so that even in a recession we could break even or do better. I know this isn't the way for everyone but some of us folks out there.

Our current house was bought in 1992 for $25k, We had bought the previous one 3 years earlier for $22k, spent $3k on it and sold it for $52k, allowing us to pay cash for this one, its on almost 2 acres was a foreclosure, growed up all around it. Was empty for 5 years. Took us a year with backhoe and bulldozer to get the yard cleaned up. But it was a nice 3 bedroom, 2 bath brick house. We have added on a bathroom and closet, oversized two car garage, new dual pane low E windows, tech shield and metal roof. Hubby did that with a couple of hired guys to help and upgraded most everything. We have now a 95% fuel efficient furnace that only requires PVC for a chimney and all it puts out is steam basically, it recycles its own exhaust so that little goes into the atmosphere, cut our heating bill 1/3.

The neighbors house on 3 acres and it was an old wood frame just sold for $300k, so I have high hopes for this one if we decide to resell it. We never buy at the top of the market, never use exotic financing, if we do finance its a 30 year fixed and then we pay on it as much as we can fast as we can.

But we are old fashioned and cheap, also required a lot of hard work on our part but doesn't bother us. So you can also see why hubby didn't mind buying the old Eagle we did, just kind of a way of life for us. However, we know this one won't pay off, its just a labor of love on our part, not an investment for sure.

People need to stop and think, when you see things getting overheated and exotic financing then you should realize that that bubble is about to pop. Housing does that periodically, its cyclical.

Should they walk away or not? I guess that's just each persons choice, its not right to leave a contractual obligation and if you do the consequences will follow you for years, but some folks get into such a bind I suppose they don't have much choice.
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Old 06-17-2012, 07:24 AM   #23
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I guess my biggest heartburn on the idea that lenders should be required to renegotiate mortgages for houses that are underwater is that it just doesn't pass the common sense test when the emotion is taken out of the equation. Otherwise lenders should be required to renegotiate the loan I took out on that brand new car I just bought, or the RV, or the ... just because it's value went down the moment I took possession. We took a pretty hefty loss on our S&B when we sold it, but then again, that is what happens when you invest, sometimes you're the windshield and sometimes you're the bug. We could have chosen to pay rent to someone else and let them assume all the monetary risk, but chose to gamble that the market would go up and we would have some extra money to buy another house when we did move.
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Old 06-17-2012, 08:33 AM   #24
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Here is how I see the situation. Banks were giving mortgages to prople that didn't qualify .Prices went up due to demand.The people started walking away cause they couldn't keep up with the payments.Banks started dumping lowering values on those that stayed. Uncle Sam bailed the banks so the CEOs could get their bonuses and have parties.Our taxes went up to support the bailouts .And life goes on.
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Old 06-17-2012, 08:45 AM   #25
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You left out the part about banks being forced to give loans to people who had no chance of paying them back. It was called the Community Redevelopment Act.
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Old 06-17-2012, 11:50 AM   #26
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You left out the part about banks being forced to give loans to people who had no chance of paying them back. It was called the Community Redevelopment Act.
Lindsay, your statements and observations make entirely too much sense to be seriously considered.

I don't believe that you can be correct because none of your observations are presented to the American public on the national nightly news. LOL

WHY must excuses be made for the FUBARs that have become part of our national landscape. Do we have an obligation to ignore the elephants in the room???

Keep up the good work in explaining the obvious to those that don't have a clue.
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Old 06-17-2012, 04:08 PM   #27
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I didn't realize that started in 1974.

When Congress passed the Housing and Community Development (HCD) Act of 1974, it broke down the barriers of prevailing practice -- where under separate categorical programs, the Federal Government had made the decisions about every community development project undertaken by cities. The HCD Act departed from this model by creating the CDBG program. CDBG merged 7 categorical programs into a block of flexible community development funds distributed each year by a formula that considers population and measures of distress including poverty, age of housing, housing overcrowding, and growth lag. Grantees now determine what activities they will fund as long as certain requirements are met, including that each activity is eligible and will meet one of the three broad national objectives of the program.
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Old 06-17-2012, 05:24 PM   #28
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Sorry, right initials, wrong word. Community Reinvestment Act. Started in 1977 and amended, interpenetrated, and variously enforced through out the years. It started the subprime mortgage. Once the subprime mortgage was there, it started going downhill.
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