I'm really disappointed at the number of ARFcom'ers and Americans outside of here that think its ok to just walk away from a mortgage, because they either decide they don't want the house anymore or the market has changed and the house is worth less than it was when they signed.....
http://www.ar15.com/forums/topic.html?b=1&f=75&t=1161309&page=1

While I understand this is far from an option for most people I solved this issue a long time ago: I do not buy things I can't afford to pay for when I buy them. I would rather have a 60k home that is paid for from day one then be paying a mortgage on a 120k home.
I can understand in today's economy trying to get out from under a house that you can no longer afford, but to walk away from your responsiblities simply because you can get a better deal else where should be criminal.

I don't understand why some people panic over the value dropping. It's not good, but if you weren't planning to sell it shouldn't make any difference. I guess it's the same people who panic and sell stock when the value drops.

Thread must be in Team.

But it's ok for the bank to do it?

Don't get me wrong, I agree with you......however, if the bank is allowed to back out, I should be able to as well.

yes it is

this is how the topic starts




I am wondering how they are able to get a new mortgage after they walked away from the previous one. If the walk away they should not be able to get another mortgage and if a bank does provide financing than I would guess they must be okay with this. If I where in the banking business and somebody would apply for a mortgage and I did my research I would find out they have a previous obligation thus I would wonder are they planning on walking away at some point.

double tap

I am happy my the Value went down on my house, now I pay less taxes :)

My home increased in value. Stupid new highschool they just completed has the market around my house unusually high. Two foreclosures on my block were sold within 4 months.

The bank backs out when you don't fulfill your contractual obligations i.e. making the payments you agreed to pay when you signed the loan contract.  If a bank walks away and you have fulfilled all of your obligations, they are in breach of contract and should be held accountable.



So in other words if everyone did as they agreed to do, this wouldn't be an issue.





 

I must be missing something.  It wouldn't be the first time, so with that said.

If the bank backed out of the deal/loan, then they would be knocking on the mortgage payer's door demanding the money owed - in full - on the house.  OR, they would be kicking the mortgage payers out on the street even though they were paying their mum'flees on time.

My mommy used to tell me "two wrongs do not make a right"

Unfortunately, the amount of ethically challenged people does not surprise me.

I sometime wish I had a nicer, bigger house till I think about making the payments on that house and then I just remind myself how happy I am with a nice small house.(1100sq ft)

  I see alot of people living way beyond their means and losing their houses when they have a little trouble.

I don't believe in walking away from a mortgage or filing bankruptcy. I gave my word and that means something to me.

OK, I'll happily play double Devil's advocate here.

On a philosophical/ethical level, what "ethical" obligations does the bank/lender maintain to you?  I'd argue, none.  First, as a non-human, its basically by definition an amoral actor.  Second, the actual duties and requirements of the lender are spelled out in law and regulation.  

You are not in a "ethical" relationship with the bank.  Any ethical considerations cannot be reciprocated.  

Second, the bank/lender entered into a relationship with you in a fair, "arms length" manner.  You had a requirement, and the bank had a product.  If you fail to meet your obligations, the bank has recourse. If the bank fails to meet its obligations, you have recourse.

Really, are you under some moral and ethical obligation to hold onto stock that fallen in value?  To only sell a car for its KBB value, not more or less? To not use coupons?

You are in a business relationship predecated on the ability of the lender to provide money and you to pay it back.  There are consequences for both parties if they fail to meet those obligations.

I'm not saying that its right or good to walk your mortgage.  I am saying that any morality you put on the action is misplaced.  Its not a moral issue.  Perhaps its a legal one, if fraud or deception was used to secure the loan in the first place, but even then, the lender has all sorts ways to cover that base.

You are 100% correct. What most people don't understand is that 99% of the lending institutions leveraged your mortgages, all of them, not just the high risk loans, to make even more on top of the interest they charge you using foreign investors. They didn't cut us in on that piece of the pie did they? Where is your half, they sold your obligation to pay your mortgage as securities overseas. What got us into the hot water was when they gave out loans to anyone to get more mortgages to sell. However, when the deal went sour guess who got to pay? Yup, we did, with our tax dollars and the bailout. This is exactly what the bailout was about. And we didn't just pay for the sour investments here, we paid all the firms overseas that lost money too. Basically the US taxpayer got the screws while the New York mortgage bundlers and your mortgage holder made a shit ton of extra money. They made great big bonuses on top of their six figure salaries.



To top it all off, none of it was legal. The banks totally breached our mortgage contracts, they broke a shit ton of mortgage laws doing it. They continue to do it today. Now they have unlimited bailout money from the Treasury Dept. that does not need approval from congress... in other words we will not be privy to future bailouts. You can thank the last "financial reform" Dodd-Frank that got shoved through last year for that one.



I feel no obligation to any bank, they are snakes and will slit your throat in a heartbeat as long as they can get away with it, legal or not. It's like saying lying in a poker game full of liars is unethical.



If backing out of a mortgage with these bandits will improve your situation do not hesitate based on moral obligations, you are nothing but $$$ to them.

I've had a house for sale for a year now.  5 yrs ago, it was worth around 90K....Now I can't get a sniff at 75K!!!  Sucks big time!!!!!

I seriously doubt this is as widespread as what people are saying it is.  I'm pretty sure any loan officer that looks at these second house mortgages are looking closely at the equity position on the first house before they approve a second house mortgage.  Banks aren't exactly throwing money out the doors nowadays so I'm sure they're also looking at repayment ability a lot more than they used to as well.

To the liars and welchers that are actually able to pull that deal off, I say fine.  That's one less person I'll have to compete with for a loan in the future after they're credit is shot.  

I agree however, it is still disappointing to see the number of arfcommers that advocate making a promise and then not following through with it.  I guess they don't get the fact that in the business world, as my boss told me years ago, "Your credit is your word."  If your credit is no good, that's a good indicator that your word is no good either.

Vote.

Really.  That's about it.  When bailouts come back, and they will...kick and scream, or at least explain to your neighbors how the .gov has decided that some pigs are more equal than others.

Irrelevant.  IRA programs are voluntary and top of that you have the choice of which funds to include in your portfolio, and not all funds have mortgage based securities.  On the flipside mortgage securities were the exact reason your IRA/401K tanked two years ago, have your fully recovered from that yet?  The mortgage crisis is really the mortgage securities crisis, and it toppled the stock market.  The entire reason we had high risk mortgages was due to mortgage securities.  They needed more motgages to leverage.  It's all documented.



Mortgage backed securities are not voluntary on your end.  You have no choice.  The big legal problem rests with who actually owns the loans.  Even though you get a statement for your mortgage payment with First National Bank on it, First National Bank is now only the mortgage servicer, it has sold your loan to a mortgage bundler or bundled it itself and sold it.  I used to work for Citigroup, we had an entire department that did this all day long.  Your mortgage has been sold many times over without the legal title conveyance needed for a transfer of ownership.  The other big problem is that mortgages were included in more than one bundle, meaning your mortgage is used in two or more securities at the same time.  In other words they lied, cheated, and stole, using you and your personal finances as the bases of it all.

What's this mortgage you speak of?  I thought everyone on ARF lived in ma's basement.  I built alot during the boom, and always wondered how the hell a family of 4 with one car could afford a $400,000 home on a 50k a year income.  I used to do twice that and knew I couldn't afford that expense.

I am in our LV office right now.  There are a lot of people here (in LV in general, not the office) that got up and walked away).  one of the problems here at least is how much the property values dropped.  they dropped so much that it made a lot of people seriously upside down in thier morgage.  so much so that the banks either needed people to change rates to put the houses into a much higher risk account (aka much higher interest rates) or you had to pony up something to offset the difference.  most can't do either....