Walk away from that underwater mortgage?

[Steve]

Is walking away smart if home underwater? One expert says Americans would be ‘better off financially’ if they defaulted - Stop paying your mortgage. That's the underlying message from a University of Arizona law professor, whose new paper is hitting a nerve as the nation's housing crisis enters its fourth year. This is something, it makes you wonder if this concept is going to pick up steam and start happening on a large scale. The more you see it talked about in the media, the more mortgage holders will get comfortable with the idea and do it. If you look around at others you know who are underwater with their mortgage, do you feel they are wanting to simply walk away too? What's your take on this?

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[picframer]

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This is why I posted a couple of weeks ago that the USA economy is no where near being out of the woods, honestly and do not take this the wrong way, if your debt were, lets say a third world coultry, based on per capita, you are bankrupt. IMHO you will not see a turn around until the mentality changes, it has changed some but a long way to go.

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Andy
Halifax, Nova Scotia

This is a very interesting topic. So happens that a friend of mine called me just tonight asking me what I know about this. They are separating and are considering just walking away and leaving it since they can not afford to pay it anymore. She said they owe more than the house is worth and she was afraid they would "throw us in jail" if thy walked away from it. After I assured her that they would not be thrown in jail but could be made to pay the difference plus other costs incurred, she agreed they probably need to go talk to an attorney.

And Andy, you are exactly right. We will never fix this until the mentality changes. And most people will have to go through "hell and high water" before they change their mentality. And will forget what they learned as soon as they get out of hot water again.....

[swstout]

Originally Posted by picframer

This is why I posted a couple of weeks ago that the USA economy is no where near being out of the woods, honestly and do not take this the wrong way, if your debt were, lets say a third world coultry, based on per capita, you are bankrupt.

IMHO you will not see a turn around until the mentality changes, it has changed some but a long way to go.

I could not agree more with Andy. Mentality has changed and desperately needs to be changed back. The entitlement mentality has harmed America. Owning a house is a privilege not an entitlement. Credit is a privilege, not an entitlement. Employment is a privilege, not an entitlement. College is a privilege, not and entitlement.
　
Value comes from working for something, not having it being just given to you. I didn't put 20% down for my first house. I paid cash for the tax lien on it. There were restrictions on the purchase that I agreed with fully. The main restriction was that it could not be sold or rented out until I personally took up residence in it for 366 consecutive days. This stopped slumlords and speculators while securing the taxes that paid for schools and public services such as fire and police.
　
I lived in that house for 3 and a half years. I bought it for $1,990.00 dollars and sold it for $28,000.00. I used the profit from the sale to purchase another property. Cost $42,000.00. Financed the balance with a mortgage of $52.00 per month. I put more down than the (then required) 20% down. My next two homes were handled the same way. All profit went toward the next purchase. My fourth home was sold to cover medical expenses of a child with cancer after the insurance ran out.
　
It took me 12 years to save enough for a 20% down payment. 12 years I gladly spent.
　
Somewhere along the road, home ownership became an entitlement. Fanny Mae and Freddy Mack guaranteed the banks would be covered so the nothing down, no equity, no income real estate market came into existence. When you actually had something invested, you took care of it, worked to improve it, fought to save it. When it was just given to you, you had nothing to lose.
　
Well, the governments guarantee's went bankrupt. Property values tanked. Values were under water. TARP was passed to buy up Toxic Properties to stabilize the real estate market but was spent on bailouts and the purchase of banks and auto industries.
　
Has the mentality changed? Not nearly enough! Entitlements get votes. Entitlements that someday have to be paid for.
　
Steve

[Steve]

Somewhere along the road, home ownership became an entitlement. Fanny Mae and Freddy Mack guaranteed the banks would be covered so the nothing down, no equity, no income real estate market came into existence. When you actually had something invested, you took care of it, worked to improve it, fought to save it. When it was just given to you, you had nothing to lose.

I think you said that well. The thing I wonder is, can this ever be rolled back to where home ownership is a privilege and not an entitlement? Maybe things seemed to be rolling well for a while that everything seemed to need to be an entitlement. I think that, at a point, it became the American way. It really seemed to become all entitlement.

How does it get back to the point of it not being all about entitlement?

[swstout]

Originally Posted by Steve

I think you said that well. The thing I wonder is, can this ever be rolled back to where home ownership is a privilege and not an entitlement? Maybe things seemed to be rolling well for a while that everything seemed to need to be an entitlement. I think that, at a point, it became the American way. It really seemed to become all entitlement.

How does it get back to the point of it not being all about entitlement?

The "Rights" of American Citizens has been established for 233 years and set fourth in The Constitution and the Bill of Rights.
　
The Bill of Rights defines the rights of citizens and the government. If it is not in the Bill of Rights, it is not a RIGHT.
　
The 10th Amendment says it all!
　
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people".
　
If Congress wants to change the Constitution, there is only one way to do so. By Amendment. Congress can't "Legislate" change. The Supreme Court can't "Dismiss" it. No matter how hard they try, It can't be circumvented.
Steve

Originally Posted by swstout

The "Rights" of American Citizens has been established for 233 years and set fourth in The Constitution and the Bill of Rights.
　
The Bill of Rights defines the rights of citizens and the government. If it is not in the Bill of Rights, it is not a RIGHT.
　
The 10th Amendment says it all!
　
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people".
　
If Congress wants to change the Constitution, there is only one way to do so. By Amendment. Congress can't "Legislate" change. The Supreme Court can't "Dismiss" it. No matter how hard they try, It can't be circumvented.
Steve

I humbly bow in your presence! You have just stated this very well.

I do not believe that we have people representing us in Washington right now that I would trust to pass ANY Amendment that affected ANYTHING......

I was listening to The Derry Brownfield Show the other day and they had someone on who mentioned they do not trust any new "Amendment" that our currently elected representatives might try to pass. I have to wholeheartedly agree. Not even if it only affected the way toilet paper is sold! PERIOD.

As you said, "If it is not in the Bill of Rights, it is not a RIGHT." Our society does not know which of the things they have come to expect as SOP (like getting a loan with no credit, no job, and "stupid" written on their forehead.) are actually "rights" and which are merely privileges and which are stupidity on the behalf of the banks or who ever.

Just my thoughts,
Eli

P.S. If any of you all get a chance, I would highly recommend listening to The Derry Brownfield Show if it is broadcast in your area. Its a good 1 hour program. You can also go to their page and download podcast of their show. Worth your time and better than listening to some stupid music! lol