Website sells 'peace of mind' for walking away from mortgage

[KrazyHorse]

Kid, if I enter a contract promising to either repay a loan or give the creditor my house, and wind up doing the latter, I've fulfilled my contract. There's nothing dishonorable or unethical about fulfilling my contract.

In most states mortgages aren't actually non-recourse. The problem is that even in those which are not, it is generally not worth the lender's efforts to collect anything other than the home itself.

In a recourse state, you have agreed to a contract and have decided to shield yourself against punitive action by the costs of litigation. This is less than honourable (in the states where mortgages are explicitly non-recourse I fully agree with you).

For those of you claiming that banks "would do the same to you", banks are actually pretty fastidious about keeping their contracts. Because they have significant assets, it's always worth suing a bank. Banks behave substantially more honestly than most individuals do.

[Solomwi]

Shh. I've learned to keep it as simple as possible with Kid, though it usually just winds up being less effort than a full explanation for the same lack of results.

[KrazyHorse]

Kidicious, where's your thread about the Magnetar (http://www.propublica.org/feature/th...g-bubble-going) which caused society far more problems through far less ethical and equally legal actions? Oh, I know where it is, it doesn't exist because you only choose to address the symptoms rather than the disease.

That piece is hilariously ignorant of both finance and economics.

[Asher]

I myself am $180,000 underwater on my house.

San Diego

[Az]

For those of you claiming that banks "would do the same to you", banks are actually pretty fastidious about keeping their contracts. Because they have significant assets, it's always worth suing a bank. Banks behave substantially more honestly than most individuals do.

I have no idea how this is with banks, especially in the states, but here if we are looking at corporations top percentile individuals, they reneg on subsidiary debt all the time, and while legally these are different issues, in my opinion the difference is cosmetic at best.

check out this guy right here:

http://www.globes.co.il/serveen/globes/docview.asp?did=1000558908&fid=942

you see that Beny Steinmetz fellow? he just sold his stake in an african mining operation for 2Bil EUR. He is liquid as hell. meanwhile, his loans and debt paper of this real estate company is going to the ****ter.

This isn't the first time he has done this, too.

[Ben Kenobi]

Are you retarded?

Umm, no.

Say you have a house at 250k. You've owned it for 10 years, and the current value of the house is the same as when you've bought it. Say you've paid off half the mortgage and the current equity in the home is 125k.

Say the housing market plummets 50 percent. Your home is worth 125k. You are not underwater because of the equity in your home.

Now, say you have someone starting out with a 0 percent downpayment. Say the housing market drops by 10 percent. This means that you've got a 250k loan out on a 225k house and you are 25k underwater.

This is one of the reasons why they insist on 20 percent downpayments, (as well as reducing the monthly payment) and why 0 percent down is a bad idea.

[giblets]

Umm, no.

Say you have a house at 250k. You've owned it for 10 years, and the current value of the house is the same as when you've bought it. Say you've paid off half the mortgage and the current equity in the home is 125k.

Say the housing market plummets 50 percent. Your home is worth 125k. You are not underwater because of the equity in your home.

Now, say you have someone starting out with a 0 percent downpayment. Say the housing market drops by 10 percent. This means that you've got a 250k loan out on a 225k house and you are 25k underwater.

This is one of the reasons why they insist on 20 percent downpayments, (as well as reducing the monthly payment) and why 0 percent down is a bad idea.

This isn't what you said the first time around. You said this:
[q=Ben Kenobi]Most mortgages when they start out will be underwater, simply because the principle is much larger than the equity. [/q]

This is incredibly stupid because a mortgage will start out with a principal that is less than or equal to the equity. Common sense dictates that no one would borrow more than they need to buy the house. Now you're claiming that if the price of the house falls below the principal at a later date it "started out underwater". This is false because, as any non-retarded English speaker knows, the term "start out" actually refers to the very beginning.

[Asher]

And he claims to be a tutor.

[C0ckney]

Common sense dictates that no one would borrow more than they need to buy the house.

while this is generally true, prior to the whole financial crsis, some banks and mortgage companies would offer mortgages greater in size than the value of the house. northern rock in the UK, for example, famously offered 125% mortgages.

[KrazyHorse]

This isn't what you said the first time around. You said this:
[q=Ben Kenobi]Most mortgages when they start out will be underwater, simply because the principle is much larger than the equity. [/q]

This is incredibly stupid because a mortgage will start out with a principal that is less than or equal to the equity. Common sense dictates that no one would borrow more than they need to buy the house. Now you're claiming that if the price of the house falls below the principal at a later date it "started out underwater". This is false because, as any non-retarded English speaker knows, the term "start out" actually refers to the very beginning.

a) "equity" generally refers, in this context, to homeowner equity, ie value - debt
b) "underwater" refers to a situation in which homeowner equity is below 0

[giblets]

a) "equity" generally refers, in this context, to homeowner equity, ie value - debt
b) "underwater" refers to a situation in which homeowner equity is below 0

So Ben was saying that value - debt is less than zero because debt is larger than value - debt? That makes no sense.

[rah]

The insinuation that BK is retarded is still valid.

[Thoth]

And he claims to be a tutor.

"Those that can, do. Those that can't, teach"

[KrazyHorse]

So Ben was saying that value - debt is less than zero because debt is larger than value - debt? That makes no sense.

No ****.

[Kidlicious]

Kid, if I enter a contract promising to either repay a loan or give the creditor my house, and wind up doing the latter, I've fulfilled my contract. There's nothing dishonorable or unethical about fulfilling my contract.

So then what if you lent me money with no collateral? Then I could just default and that wouldn't be unethical?