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how is the economy effecting you?
saint:
--- Quote from: shmokes on August 13, 2010, 02:51:24 pm ---
--- Quote from: saint on August 13, 2010, 02:11:32 pm ---
You did notice the little economic blip we had recently, right?
--- End quote ---
Sure . . . but I don't see how that is necessarily related. I know that banks were handing out loans to people who weren't remotely qualified, but I don't see why that automatically means they'd be handing out non-recourse loans. I mean, maybe they were . . . but . . . were they?
--- End quote ---
I was going off the "There doesn't seem to be much business sense" statement -- not sure there was much business sense being used for a while :)
Dartful Dodger:
Maybe in neck/back injury law school there isn't any difference in a mortgage or a credit card loan.
I'm going by what the lawyer told me. If the bank forecloses on me I'll owe nothing(on the mortgage). He said my credit would be shot and it’ll take a long time to get it back. If I can work out a deal with them and do a short sale, my credit will be shot, but I'll be able to make a comeback sooner.
polaris:
--- Quote from: Dartful Dodger on August 13, 2010, 05:49:43 pm ---Maybe in neck/back injury law school there isn't any difference in a mortgage or a credit card loan.
I'm going by what the lawyer told me. If the bank forecloses on me I'll owe nothing(on the mortgage). He said my credit would be shot and it’ll take a long time to get it back. If I can work out a deal with them and do a short sale, my credit will be shot, but I'll be able to make a comeback sooner.
--- End quote ---
does a foreclosure go to court there? over here the court will look at your other assets and bank account and see youve chosen to stop paying as you're in negative equity but you can afford to pay, i don't think a judge would let you keep your assets and write off a debt to the bank when you display the ability to pay the debt.
i think you should ask another lawyer to be sure cos i doubt our banking systems are that different
danny_galaga:
--- Quote from: shmokes on August 13, 2010, 01:00:53 pm ---You're wrong. If you borrow $400,000 from the bank you owe them $400,000 plus interest. Your loan is secured by your house (or any other security you give them), but that is just to reduce the bank's risk so they'll give you the loan. You owe them $400,000 period, because that's the amount of money they gave you. If the Bank forecloses and only gets $200k for the house (so long as they weren't negligent in conducting the sale) you still owe the bank the difference between what the house brought and what you owe them. Think about it . . . of course this is the way it works. People get mortgages all the time for way more than the house is worth so they can buy furniture and appliances or put in a swimming pool or renovate. What would stop you from just walking away with the extra couple hundred thousand and say, "Sorry bank . . . sell the house."
Now . . . banks may frequently ignore the deficiency since it will cost them more money to pursue and since you've already shown that you can't pay for the mortgage they'd likely not get anything, but that doesn't mean that taking your house settles the loan. It doesn't. You owe the deficiency and if the house sells for more than your mortgage the bank owes you any surplus.
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And thus the sub prime crisis was born. The value of the defaulted mortgages is worth more than the value of the houses the banks suddenly have a bucketload of...
Endaar:
--- Quote ---The value of the defaulted mortgages is worth more than the value of the houses the banks suddenly have a bucketload of...
--- End quote ---
True, but let's not forget something...IF someone bought a house they could afford, it wouldn't matter to them if it was upside-down. The value of the house doesn't impact your ability to pay since it doesn't change the payments - IF you took a conventional mortgage. It's no different than buying a new car; most new car buyers are upside-down on their loans the second they pull off the lot, but this doesn't lead to huge numbers of repos.
Yes, the lenders got VERY loose with credit, although there are some complicated political reasons that somewhat forced their hands in this area. But many buyers who are now in or at risk of default are there because they took an interest-only or other short term loan with the expectation they could either sell at a profit a few years down the road or refinance with a conventional mortgage at favorable terms because of the equity in the house. Without that equity, both options disappeared, and when a lot of these ARMS adjusted or principal started to be owed, the buyers couldn't afford the payments.
Maybe it makes me cold hearted, but I don't have a lot of sympathy for those who did so.
Endaar
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