Comments on: Young and Upside Down on the Mortgage: What Would You Do?

By: Mark

Mark — Fri, 05 Mar 2010 17:22:13 +0000

We live in central florida and are over 120,000 upside down plus alot of dept. Everybody’s situation is different and we have decided to short sale the house. Morals or not, it is definitly the best option for us, acturally our only. It’s business. I’ve got three children to think about. My wife has worked around the clock the last few years to pay for this house and it can’t continue. Her pay has gone down. So has mine a little. We make our payments, but just barely. I also work non stop. We will be better off in a rented house so we can pay off our depts and stop being a slave to it. We can rent something for way less then our current morgage. I’m getting closer to 50 and I will never have retirement money if I stay here. WE WILL NEVER IN OUR LIFE TIME BE ABLE TO HAVE MONEY FOR ANYTHING WITH THE 120,000 WE OWE EXTRA ON THE HOUSE….PLUS THE INTEREST THAT GOES WITH IT, and the high morgage..

By: Fed Up

Fed Up — Mon, 22 Feb 2010 14:32:33 +0000

I live in Central Florida. We bought a home well within our means in 2001 – long before the crisis. However, my husband was laid off – started his own business and has seen his income drop to about 1/3 of what it was. We refinnced and paid off all our debts in 2004. We didn’t go anywhere near the full value (hyperinflated) we could have. However, my home is now worth less than what I paid in 2001. Not only that, the builder (who went bankrupt) did a poor job and a house that is 10 years old has had 2 showers collapse from poor work, cracks in the foundation, and the roof and rafters need to be replaced for shoddy work. I did have a home inspection, but it didn’t catch any of this. So I am below the level of what my house was worth 9 years ago. It will probably take 30k to fix the issues – and of course I can not get a loan to do so. I have defaulted on medical bills in order to still pay the mortgage. I drive a car with over 125k miles on it.

Why are we in this situation? Well, the people who shouldn’t have gotten the loans in the first place have already defaulted. Then there was the flipping. Own for a month make 50k profit. We also had fraud here – where the mortgage companies artificially inflated the value which drove up the surrounding market values for the “responsible” people. I have struggled with this decision…but I cannot see continuing to struggle to pay a mortgage on a property that will continue to decline, will not apreciate, can’t be a short-sell because of the condition, and the crash of the market was caused by the government’s irresponsible policy’s and they are bailing out the top dogs with very little trickle down to those at the bottom. When it’s time for me to retire, do you think the CEO of CitiBank is going to help pay for my nursing home? I don’t think so!

By: Lee

Lee — Fri, 12 Feb 2010 23:13:32 +0000

We can afford it, but walking in Phoenix. This was a bank generated problem and now I am being asked to pay for their greed. Please

By: jman

jman — Thu, 04 Feb 2010 00:22:35 +0000

i couldn’t agree with you more! i am in the exact same situation. we bought responsibly, in a neighborhood that wasn’t our first choice, but it is where we could afford. had we bought more than we could afford, we’d be getting bailed out right now. i’m walking. i’ve had enough and i am not going to sink my family’s financial future on one horrendous condo that was supposed to be a “wise” investment. turns out it wasn’t wise, so like any good bank or financial institution, i am going to mitigate my losses and walk. i’ve gotten over the moral obligation in this mess.

By: jman

jman — Thu, 04 Feb 2010 00:18:28 +0000

we are walking. our condo in san diego is $180K under and it doesn’t make sense to stay from a financial perspective. sure we have a sense of moral obligation to fulfill our debts, but the bottom line is we signed a financial contract that has very specific language in it providing an out clause. if we want out of the deal, we have to give back the house. ok, here you go chase, take it. i also read that morgan stanley recently gave back 5 large office buildings in san francisco. they certainly felt no moral obligation to fulfill that debt…they were looking out for their best FINANCIAL interest. they either maximize profits or minimize liabilities. i’ve called the bank countless times and i get the same response, “we can’t help you, let alone talk to you unless you have missed payments.” the banks play on our “moral” obligation to their advantage. they took risk in this contract by loaning me money to buy an extremely overinflated property. i own my half, and i will fulfill it by returning the condo and taking the credit hit. the banks are not playing by the same moral rules that homeowners are and they are as culpable, if not more so than the average joe in this mess. walk people, walk! maybe if enough people walk the banks will be forced to change their ways. heck, they were bailed out with MY tax money, so i don’t feel the least bit sorry for them.

By: Mario

Mario — Fri, 08 Jan 2010 07:30:14 +0000

Speaking strictly financial terms and not ethics, in a lot of cases it does not make sense to continue to hold onto a house that is extremely over leveraged. Attempt to do a mortgage modification with your lender, to be fair to the lender. the truth is that the loan modifications are a joke. they don’t approve 99 percent of the people and when they do, it is taking missed payments and adding them to the normal payment making it even harder to pay. To be clear… because no one has completely got it right… if the house is your primary residence the TAX BURDEN from the loss (if the lender decides to 1099 you) will not effect you. Understand that your 2nd mortgage (if u have one) can still choose to go after you for their loss. Foreclosure is last choice. i suggest you do a short sale. They are sloooooow and annoying but it will have a significantly less negative effect on your credit than a foreclosure. If the person that is buying the house has a lot of experience negotiating with lenders they will have a much greater chance of success than your typical real estate agent who has done a couple. I know how bad the FL market is right now because i have been buying down there (vegas, az, oh, ca, mi r bad also). FYI the 2nd mortgage still can attempt to recoup its loss in a short sale but it would be no different than a foreclosure. If they do you can attempt to negotiate the balance down or file bankruptcy. In some cases the lender will not attempt to get the loss from you. If the person doing the negotiating knows what they are doing, they will 1st attempt to include in the negotiations to have the lender not only release the lien but to also consider the debt satisfied. ultimately its up to the lender but its much better then holding onto a house for 15-20 years and still not catching up to what’s owed. that is a terrible investment and its only a matter of time before you want/need to sell and will have to sell it at a loss anyways. get it done now and move on with your life. if you have any questions about the process let me know i would be happy to help. I was an agent and now i am just buying houses in similar situations. Good luck.

By: Laurie

Laurie — Sat, 19 Dec 2009 05:43:12 +0000

I would be happy to sell my home for a loss of over $100K but are lenders willing to help someone with a high income and reasonable credit score do this? How do I find this information? We cannot stay in our home because my husband’s contract ended and he has relocated.

By: Pam

Pam — Sun, 04 Oct 2009 15:30:11 +0000

I live in SWFL as well – condo MIGHT be worth $75k and we paid $250 in Jan 2005. After sticking my head in the sand for a long time, I’ve decided it is better in the long run to have bad credit and cash in the bank. If we rented for 5 years, we would easily have $50k in the bank (or under the mattress!) rather than throwing it into a black hole. Can we afford to stay? Yes. Ethically, should we stay? Maybe… but long term, it is NOT what is best for our family. To all the people saying that people in upsidedown mortgages should stick it out no matter what – you’re not in our situation are you?? Easy to pass judgment when you’re not paying through the nose for a losing investment. Goodbye 2B, 2B… I’ve already lost enough on you!

By: Iryn

Iryn — Sun, 06 Sep 2009 18:37:54 +0000

We are upside down on our mortgage but can afford to pay. Just like the person that started this thread, the reason we can pay is because we are not extravagant and have not decorated and equipped the house like we would have loved, no dream vacations, home cooked meals everyday – aka living within our means or being responsible. But I can’t help noticing the quality of these foreclosed homes. These folks lived it up! And probably continue to to do as they would abandon the homes and rent another well decked home somewhere else and still continue to live bloated lives.

What hacks me off is that our Government is enabling such practices by extending help to such. There is no help for us because we can afford to pay our mortgage – no credit to some of the sacrifices that we have to make daily in order to continue to afford our monthly payments!

I think the banks, government need to take a long hard look at those who are trully committed to upholding the economy and ethics by paying their mortgages despite the loss of equity and communicate a big THANK YOU! Extend a temporary 3-5yr loan modification for ALL on record without them having to call and submit all kinds of paperwork and proof of this or that. If they did that on their own, this will go a long way to appease those that are at the verge of walking away.
We can still salvage whatever is left of this great economy.

By: DS

DS — Tue, 21 Jul 2009 20:58:19 +0000

I’d sure like to weigh in on this discussion to express my thoughts on how things are unfolding with these upside-down mortgages.

Situation #1
Yes, there are those who engaged in the game of flipping and were caught with upside down mortgages and are now paying the price. There are also those who bought too much house for their budget and got brought down by the Taxes and rising costs. However, there are traditional investors that put their money into the RE market banking on long-term investments to secure their future and they are also paying one heck of a price for calculated risk. In this situation one must, of course, weigh in the balances the ups and downs of the RE market which is perfectly healthy. However, what has happened here in the US is that anyone investing here since early 2004 has seen any chances of even breaking even swept away for many decades and maybe even permanently.

Why is this the case? Financial institutions have been given carte blanche to do as they please with our deposits and “creative” financing and have caused, not only the collapse of RE, but of the entire Financial system. This has been REAL Voodoo economics at it’s best. Their cavalier attitudes toward managing the Financial well-being of this Country has resulted in this disaster and, yes, they have been bailed out, in some cases twice! Why???? Where is the help for the consumer (investor)? Nowhere! The investors mentioned above did not have to invest their life savings in our Country to boost our economy but they did. They could have gone somewhere else.

The irresponsible notion that I have heard from so many Politicians and others this year that “RE investors are some kind of demonic entities” is pure rubbish! Investing in Real estate has a positive ripple effect on entire communities as anyone with a shred of economic education fully well understands. Lenders should be held accountable for sucking in unsuspecting investors with predatory lending practices. These are the same demons that are sending your 16 year old Credit Card offers in the mail that are laden with traps that they are currently unaware of. I am entirely against the suggestion that investors are bad people. If these Banks and large Corporations are the Engines that drive the economy as some in high positions have suggested do not forget that WE (consumer/investor) are the Oil that runs that Engine. To simply write off the Consumer is insane and the Economy will NEVER recover without oil in the engine.

Situation #2
I have an Associate who bought a 1 Bedroom, 1 Bath Condo in Miami in 2004, actually downgrading from a 2Br, 1Ba that he had sold in California that same year. He bought the 1Br because he was single and it suited the needs for one person, paying $100,000 less than he sold the condo in CA for. By definition, this could not have been considered an investment as he would either have moved upscale with his equity or bought two for the price of one.

This 1Br was his home for three years. He then got married to a Lady with one child in 2007. Obviously, the 700 sq ft. 1Br was insufficient for 3 people therefore he investigated the possibility of selling it and buying a larger unit. Unfortunately, the Property was now worth half the mortgage so he was unable to sell. Alternatively, it was necessary for him to rent a home. Due to the terms of a second mortgage on the Condo he was not technically allowed to rent the 1BR out, therefore, he was stuck with a monthly rent payment plus servicing a value-less mortgage and inflated Taxes based on the mortgage not the value of the home. What to do? Prior to depleting all of his savings toward the end of 2008 he reached out to the Lender for assistance via a “Loan Modification”. One would think that with all the bailing out going on with Lenders and the like, that this guy could get some help. He didn’t and so was unable to continue paying the mortgage. Now, his credit has been destroyed and he is looking at foreclosure since the Lender is dragging their feet, providing (frankly) the most embarrassing excuses, mixing up the paperwork of different Mortgage holders and generally acting like Abbott and Costello. Again, he feels that he is being treated like a Demonic investor who is getting what he deserved for buying the place in the first place and has no representation in the “System”. What do people like this do especially when seeing real criminals, the Banks, get bailed out? I personally believe that the Banks (Lenders) should be held accountable in this entire process. Banks should be bailed out ONLY on the condition that every one of their Clients be given fair and equitable solutions to the problems that Lenders created in the FIRST PLACE.

We’re not looking to avoid paying mortgages, we just need to see the values of those mortgages adjusted to reflect the new worth brought on by a RE collapse caused by these very Lenders. As Joe Consumer, I will NEVER have faith in this Country’s Banking system again. I’ve seen the pattern of unethical behavior demonstrated since the 80’s with the S&L debacle and it simply has taken a new shape in some other sector as time goes by. I’ll find some place to lock my money away so that I can invest abroad in Real Estate some day in the future, never here! There are way too many thieves in high places in this country making billions through real uncalculated risk taking. Nobody does anything but slap their hands while they have their billions well protected. I have nothing against wealthy people only those that stole other people’s hard earned money.

Long live the economy nurturing Investor and those who simply seek the American Dream!