The predicament I find myself in.

[zzmegad]

Some background:

I have had one job as a machinist that I started part-time at age 15. Four years later in 2001 I bought a small house for 120k (about the cheapest houses were in this range). Fast forward to now after a few village SSA's (new roads, other improvments) I owe about 90k(5.2%fixed). With taxes included my monthly payment is just over $1000. In today's market I believe the place is worth 40-50k. I have good credit and have always paid my bills.


Within the last few years I cannot seem to get this idea out of my head:

1. Get the biggest loan possible with the intention of not paying back a dime and stop paying my mortgage.
2. Live here as long as possible until the bank finally kicks me out.
3. Go buy a better place with cash.


Now I know this sounds horrible and its attitudes like this that ruin the economy. I would basically be stealing the money from the banks. Seems like they stole it from me first, but I realize this happened to everyone and not just me. Other than my credit being totally f'ed what can the banks do? Can the garnish my wages? Take my stuff?(trucks, boats, bikes, stuff with titles) Like I said I've always paid my bills and I like where I live, but I didn't expect to be here 12 years later either. I know the right thing to do is ride out the 18 years left of the mortgage, but I do wonder about that.

I know a lot of you have knowledge and opinions about this kind of stuff and I look forward to the responses. Thanks for reading.

[Flyingw]

Get it apraised first and foremost. Not a market analysis such as a Realitor would do but a real apraisal and go from there. Walking away from mortgages seems to become the norm these days but the bottom line is you signed a contract with the lender. At a young age, you do not want to mess your credit up like that especially in todays world where your insurance rates and possible future job prospects will be effected by bad credit such as this.

In my opinion, if the house isnt hurting you financially and you are happy there, ride it out. Forget the value right now.

[just ben]

well, I lost a house once. it took 8 months before they changed the locks. the house sold for slightly less than I owed on it,I havn't heard a peep 6 years later. The house I am in now was worth 139k 8 years ago and was purchased for 100k and still owe 90sum and worth 75k now. If I didnt like the property so much I would be asking the same Q's as you are.

[El Camexican]

I theory they should get back up in value... someday. I'm thinking you'll be kicking yourself if you're living in an apartment with a bad credit rating when it does. I like Flyingw's advice as long as you can pay the bills.

[Scootertrash]

My opinion?

I have good credit and always pay my bills

Doesn't sound like you are in financial trouble to me, it sounds like you want an easy out by committing theft by fraud.Borrowing money and promising to pay it back with the intent of NOT paying it back)

You took out a loan and promised to pay it back, so pay it back.

How do you come up with the feeling that they stole it from you first?? You went to them to borrow it, they didn't come to you. You read the paperwork, agreed to it and signed it, you had the opportunity to back out in 30 days or less. This attitude that the banks are to blame is BS. Nobody forces anyone to sign loan papers. Anyone who has ever taken out a loan could have waited to earn the money and pay cash, not borrow it. Would you borrow someone you didn't know money? Would you do it without charging interest? Would you do it without having the ability to repo whatever they bought to get your money back? I think not.

Would you think it's right for someone you borrowed $100 to not pay you back? What about $100,000?

There is no guarantee that you will get ahead by filing bankruptcy and bailing on the house.

You are correct that it's attitudes like this that ruin our economy, but yet you still ask if you should do it? Dude. Seriously?

Our home has lost 100,000 in value over the last 5 years, it used to be worth 250,000. We built in 97 for around 175,000. Will it get back it's value? Who the hell can say?

Be a man and keep your word, suck it up like a lot of the rest of us and pay your bills. There are many of us in your situation that are doing what it takes to honor our debts. Working extra hours or a second job (I just got back from a stint in North Dakota), doing without some of the little extra perks we used to enjoy when things were good.

[zzmegad]

yeah scooter I agree with what you say, I get it.

I just feel I have been screwed over by the banks or whoever you wanna call it, and we all have.. One year my place is worth 130k and the next it's worth 50. To me that is fraud. They stole my equity. It would be hard for you to change my mind about this.

It sounds like you have a pretty nice place, I guess if I had a nicer place with a garage I wouldn't be complaining as much. It just burns me a little when I see the people I grew up with moving into great places for nothing while I'm stuck in this starter house for the long haul. These people did nothing through there 20's and are rewarded for it. I thought I was doing good investing in a house. I thought I would get ahead. I was wrong. It was bad luck and bad timing. I should have rented. Either way thanks everyone for pointing me in the right direction, I will do the right thing.

[Billy Golightly]

As a real estate professional that deals with these situations on a daily basis (multiple times per day, with people from all walks of life) the bank isn't screwing you.

If you want to be upset with someone, be upset with the regulators and laws that made the housing bubble to begin with, that the banks were mandated (just like they are now on the opposite end of the spectrum with Dodd-Frank) by enacted law to adhere to.

What your contemplating is basically mortgage fraud.


If free government money is your sort thing, check out programs like HAMP, HAFA, and PRA: http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx

[kb0nly]

Dude if you want out of the house... Sell it, take the loss and move on. It will hurt your wallet but not your credit. I know some guys that are talented and have degrees in their fields but can't get jobs due to bad credit and bankruptcy, employers look at that big time as a mark of a persons credability and reliability. So you owe 90k on it, and your saying its worth 40-50k, i know a lot of people that went through this, i think we all do now days. Get a realistic evaluation of your property value, it will cost some money to get it done, some real estate agencies around here will do it if you ask about putting your house on the market. See how close the evaluation gets to what you owe. If you can get enough that you can roll the remainder over to a new loan and get a different house then go for it, but your still going to be behind by the remainder of your original loan, thats life, you have to pay it. Look around and ask about government help that has been set up to help people like this. Also, you say you have good credit, pay your bills, etc.. Have you considered a refinance to get the interest and monthly payment lower? I know some that had 6% or higher and refinanced down to like 3-4% and got their payments as much as 40% less than what they were paying.

Ask these questions to your self....

Do i like this house?

Is it just the payment amount bothering me?

Is the debt so bad i want to commit fraud and ruin my credit and potentially everything else depending on it? (you can forget decent insurance premiums for one and good interest rates on any credit cards you have, they will double or triple overnight i have seen it happen)

How much of my "stuff" do i want to give up? Yes they can garnish wages depending on your state, they can also file for assets to be seized, boats, atv's, more than one vehicle, tv's, computers, you name it. I know one family that had to go to court to keep their vehicles and electronics, the collection agency processing the debt got everything else, their boat and offroad toys, even their garage full of atv's. It all depends on what the creditor or collection agency wants to do. And generally the bigger the debt the more agressive they get because its a bigger profit margin for them after buying the debt. Again this depends on your state, etc. I can't quote you every states laws.

Stay put, and know that your not alone. Does it suck? Yes... Is it worth making more trouble over? No... Stay and pay, or sell and move.

[Howdy]

Back in early 1988 I was working a Job and made Very good money. I lived about 3 - 3 1/2 hours from here. Money was great, and I had established great credit. I abused that credit and ended up with $20,000+ in credit card debt. Never missed or was late on a pmt. Then later that year I decided to move back home to help my family ( or try ). I gave up my Good job for a job that paid $5 a hour. I couldn't make payments on time and even had one take me to court. The judge reccomended I file Bankrupcy. I told the judge, I borrowed this money on good faith and I some how will get it all paid back. It took me years of hard work a few job changes and a lot of penny pinching, but I paid it all off with interest. That 20k cost me 40-50k but my credit now reflects my hard work. In 1996 I bought a house and had to pay higher interest do to my lower credit score. I got a 15 year loan and worked hard to pay it off early. The house is now worth about $10,000 more than I paid after putting $20,000 in improvements. Is it the perfect house? Nope. Does it need work? Yep!! Am I happy here, Yes it's mine and probably will be my boys some day. Your home is what you make of it!!

So what does my past have to do with your current situation:
You can not predict the future, so when you buy something pay for it. If you have a change of mind ( buyers remose ) then sell it and take the hit and learn from your decision.
Based on your info, I would keep the house and pay a little extra each month that you can. This will get it paid off sooner, build your credit up even higher, and give you personal satisfaction that you bought, lived in and paid for your Home. Do it for your own Pride!!!
Howdy

[zzmegad]

Do it for your own Pride!!!

Hell yeah...

Guys, the other night when I posted I had a few beers and overheard these other 2 guys talking about this, and I've heard it before in the past. Honestly, I love my house and my community even better. I didn't mean to come off crying or whining, I was just thinking about it and thanks to the "few" beers I decided to post it.

[kb0nly]

No harm no foul.. I understand why this is going through some peoples heads. The housing crash was pretty hard on a lot of people/families. I saw so many houses go into repo and up for sale here, and in a small town of only around 1200 people to see a hundred houses go into repo really is quite a shock, thats a large chunk of the population, not to mention you would see 2-3 houses on a single street that were going down.

There was a huge jump in sales this past spring, seems a lot of those houses got price slashed pretty heavy by the banks to get rid of them. I know of one house, a really nice brick house with oak floors and traditional trim that my best friend bought, sold for about half of the original debt owed the bank. The house ended up going for $42k and the bank was into it for about $80k, but it sat empty for almost two years so they had to slash and burn. After our tornado last July all the empty houses in repo got damaged too, and so prices were pretty low, a lot of them got bought up by landlords as rentals, some of them got bought by people who lost their home to damage. The housing crash was and still is a big damn mess. Still a couple dozen houses here for sale.

[Thorpe]

Look into refinancing your home... I am currently in the similar situation. Pretty sure the housing market tanked 20 minutes after I signed the dotted line. But my wife and I have made every payment on time, spent many thousands remodeling, new furnace and a/c... Will I ever get out of it what I have in? Time will tell. Want to feel sick, go look at your truth in lending statement...

My wife and I discovered that we can refinance right niw, shaving quite a few points off our apr... Our out of pocket cost being $1800. Skip one month of mortgage payment, (approx 1400) go from a 30 year mortgage, down to a 20 year, and still save $105 more a month. Now what's my point in all this? If we keep making the same payment we have always been making, A) more money each month is going to my principal B) I shaved years off my mortgage C) in a few more years when I do sell it, I have put more money into my equity.

This economic period sucks, but hang in there... Can't really get much worse, can it?

[kb0nly]

Can't really get much worse, can it?

Now you gone and done it.... LOL

[Thorpe]

Now you gone and done it.... LOL

I thought my buying the house caused it!!

[tri again]

Hell yeah...

Guys, the other night when I posted I had a few beers and overheard these other 2 guys talking about this, and I've heard it before in the past. Honestly, I love my house and my community even better. I didn't mean to come off crying or whining, I was just thinking about it and thanks to the "few" beers I decided to post it.

Ya know? Great things can come from brainstorming.
When everyone was heat tempering guitar strings, dean markley said let's freeze some.
His cryogenic liquid nitrogen strings brought him 27 million the year they came out.

Your story has some real basis in fact.
It was real common for people to run up credit cards and then file bankruptcy.
All completely legal.
Run up 50 grand for a house or education and file bk.
That was back in the 80's when interest rates were around 20%.

Now a days, they can and do get nasty.
Bad credit can double your car insurance withOUT any accidents or claims.
and on and on..screw 7 years. It's more like 10 years to life to get stuff cleaned back up.

I could've bulldozed and clearcut my place and it still had a fair market value of 650k
at the peak.
Recent appraisal came in around 157?
BUT it was enough to drop my % from 6.75 to 3.99% and pmts from 1400 to 900.

Do I like it here?
We can do anything you'd imagine on country property.
Do my neighbors suck?
nope..they're all great and no problem with any of them having keys to my place.

That right there is worth it's weight in gold.
Natural disaster?
Bring it on, we'll all be bbq ing together.

an easy thing to do is call your mortgage company and hint that you want to refi
but you 'like' them and would like to see what they can do for you.

It works with credit card companies too.

Streamlined refi may save you quite a bit and they
usually go thru in weeks.

I don't enjoy working constantly but I also don't enjoy not working so I'm screwed
internally.

Yupp, it hard to comprehend what were' doing and why.
Get an education, get a job, get up early, work hard and what>? get screwed by
everything we're been told or believed in?

Not sure what you meant by your friends being 'ahead' of you in the real estate game
and you being stuck in the starter home.

Bottom line for me is: I can't rent a place for what I have here.
Heck, I may even start a church and stop paying taxes...Legally.

idk man, it's depressing for sure, but it can always be worse.

Build up a house and stock it with disaster supplies and have it be 3 blocks away like in Joplin MO last year.

I believe anyone with a pulse and a conscience should be thrown off kilter
by what's going on.
How's that go?
"if yer not outraged, you're not paying attention"

The market could even get worse, but it's been bouncing off the bottom for a while
and someone will always have $ to buy places that we'll need to live in.

Might be time to invent somethng and just get filthy rich.
We're ALL capable from some of the posts I've read on here.

Keep the faith.

[Scootertrash]

You have to remember: A LARGE portion of the people who lost their houses where already in over their heads. Everybody (well, not everybody, but you know what I mean) wants to have really nice stuff and live in really nice neighborhoods. Problem is most can't afford it.

About 10 or so years ago I stopped at a house my real estate buddy was showing. We got to talking about housing in general, I'm in construction and he also was and still is, but he's out of real estate. He said "Scooter, take a look around and tell me what you see". I said "Lots of nice houses with lots of nice toys" He said "Yup. Brand new 300,000+ home, nice new SUV and car in the driveway, nice new John Deere lawn tractor, boats, wheelers, watercraft. But they have sheets for curtains. They are maxed out on credit and can't afford to buy drapes because all their money goes to paying CC bills. It ain't gonna take much to push alot of people over the edge into bankruptcy"

Now whether he was a visionary or just took a lucky stab in the dark I'll never know, but he hit the nail on the head.

If you want a deeper look into the housing crisis, google somethings like "Community Reinvestment Act","Franklin Raines Fannie Mae"


zzmegad never described his predicament in his OP. He never said he was behind on payments, close to bankruptcy, or was having any money problems. The only predicament he described was wondering if he should try to get money from a bank under false pretenses and bail on his current home for the sole purpose of trying to get something for free. All because he thinks the bank "ripped him off".

Like Billy said, the banks are screwing no one.

[atc300r]

Can you refinace . I bought my house as a fixer upper.Still fixing it up after 18 years there. I payed 30 grand and its valued at 64 now.

[tri again]

Funny thought.
If a house is in forclosure and the bank is gonna sell it for 1/2 what it's worth,
why can't the existing owner just buy it for the lesser price?

as an off the wall mutant refi.

[rdlsz24]

Why does it matter what it's worth if you aren't selling? If you like it and can still afford the mortgage stick it out.

Rob

[Howdy]

Funny thought.
If a house is in forclosure and the bank is gonna sell it for 1/2 what it's worth,
why can't the existing owner just buy it for the lesser price?

as an off the wall mutant refi.

If they allowed this then Everybody would do this to save money on what they owe. If they catch wind of someone trying to play te system they will take the Debitor to court for the money they are out. I know a guy going through this right now. yes, he was playing the system, and he got caught.
Howdy

[Dirtcrasher]

Funny thought.
If a house is in forclosure and the bank is gonna sell it for 1/2 what it's worth,
why can't the existing owner just buy it for the lesser price?

as an off the wall mutant refi.

Because if you couldn't afford it for a year or longer, you are at risk for foreclosure again.

Remember a few years ago. Things were well, people didn't sell things just to survive.

Now we have so many homes in foreclosure that the banks are draining the water from the supply and boiler and sticking cars in the yard to warn copper thieves; Keep them thinking!

I have never seen it this bad, inflation is at our doorstep and thats why I say "GET READY FOR ROUND 2".

[Billy Golightly]

You'd be surprised how many people that get mortgage modifications end up defaulting again. The amount is totally staggering. When you go from not paying anything at all for months on end, even coming up with 50% of your old mortgage payment is tough for some people.

[tri again]

You'd be surprised how many people that get mortgage modifications end up defaulting again. The amount is totally staggering. When you go from not paying anything at all for months on end, even coming up with 50% of your old mortgage payment is tough for some people.

Human nature is amazing to me at times.
I know people that got their mortgage paid for a year.
There were 180 'spaces' avail in this county and only 50 some even applied.
Not sure what the program was but some sort of saving grace bailout IF your income dropped for whatever reason.

Seems like it was administrated by St Vincent de Paul.
so there are lots of programs that are not real obvious.

I just got a HARP 2.0 at 3.99% but it was out of the blue when my mortgage servicer
was bought by quicken loans after a year of searching for an answer to my 6.875 loan.

[atc300r]

When I first got my mortgage a small amount of my monthley payment was going toward the principle.The rest went to interest. Each year more of my payment was going toward the principle less to interest. You dont realy see the mortgage amount go down till you past your half way point. Like if you have a 30 year morgage it doesnt go down alot till you get past the 15 year mark.This is what I was told by my lender.Good luck . Hope you get it figured out leagaly.

[fabiodriven]

I am upside down on my mortgage, but I don't care. It's not my fault, that's just how things are in this current economy. I'm just proud that I can pay my bills and have a place to hang my hat and call my own.

When I went to look at my house the first time, I had been house hunting for about 30 minutes. I saw my current house on the computer and knew exactly where it was. I had looked at the house before as I was driving by and thought how I really liked it. When they showed me the house I told them I'd take it for what they were asking. I didn't even try to talk them down. I knew I could afford it and I wanted it. I paid $229 and now it's worth about $160, but I don't care. It's mine and that's all that matters.

I was at the bank one day and they asked me if I wanted to talk to them about my mortgage. They said they could save me some money. I sat down with the guy and we started talking. He was typing away on his computer and asked me what I paid for the place. When I told him what I paid his face dropped. He told me "I'm so sorry, but you're upside down on your mortgage. There's nothing we can do for you today." The look on his face, you'd think one of my eyeballs had just popped out or something. He looked horrified. I told him "That's fine man. You asked me, I didn't ask you." I wasn't bothered at all.

In this economy you're lucky if you own anything at all. I'm just happy that I can pay my mortgage and still have a few bucks to toss around. I didn't mess up the housing market, but I'm dealing with the consequences of other people messing it up. It sucks for a lot of people, but I've got a house so fawk it.