In addition to what Guest #8 noted, foreclosures also affect neighboring property values. The lenders actually factor in foreclosure stigma when evaluating mortgage modifications. What do you think would happen to the value of your home if it was surrounded by boarded-up, foreclosed homes?
I know someone who bought a very modest home 2 years ago. He is on permanent disability. He was single at the time of the loan, but was engaged and would be married about 2 months later. He had to sign documents at closing stating that he was aware that his mortgage payment would be more than 30% of his income. So he signed it knowing their incomes would be combined. No problem. The payments were actually more than 50% of his income. Well, he and his wife got separated last November, she moved out. They divorced in Feb. He can no longer afford the house. He put the house up for sale once she moved out. It was listed at $85,000 to begin with. No one interested. He finally contacted his mortgage co. after his savings was depleted to make payments, and they told him to not make payments for 3 months and then they could help. They want him to do a short sale. So, the price on the house is now $65,000 - a $20,000 drop in a few short months. There has been some interest, so maybe he can sell it. But it won't pay off his loan. Hopefully he won't get a deficiency judgement against him. What is someone is position supposed to do? He is living in the house and saving the mortgage payments so he can rent a place once the house sells. It could take a long time.
It hurts because the banks have to increase mortgage rates (e.g. credit becomes more expensive) for those of us who would choose to use it responsibly. The responsible folks have actually be hurt twice by this. Those of us who knew we couldn't afford a home for the last few years before the crash saw people who couldn't afford those homes drive the prices to astronomical levels. When credit was cheap and these exotic loans existed, it didn't matter if you over bid a $100 or $200 thousand because you were just going to refi using the equity later.
Now, instead of letting the houses return to a reasonable level so those of us who are responsible and have been saving for a down payment for 6 years can buy at "real" prices, the gov't and the banks are trying to prop home prices up and keep people in houses they "own", even though they actually own no equity in those houses.
some more investigation will let you know(was having same probs w/telephone tree to India r Pakistan)...resold motgage was probly bought by WELLS FARGO...it's ALL a crying shame
Sorry for the ignorance but can someone please explain to me how this hurts everyone? This is a sincere question. I don't see how John Doe defaulting on his mortgage affects me adversely.
Came across start up company gigmax.com ..pretty similar to dropbox incorporating sugar sync ideas..it looks like they have potential..any views on this?
No argument that it is already being paid for by the government and not the people who use/abuse the system. The trouble is, they still won't be paying for it. The government is just raising taxes and fees on everyone else to expand what the people are using / abusing now. What happened to it won't raise the deficit, or no new taxes for people making under 250k?
Do I think you are being naive, simply yes.
Anything the government touches either turns to crap or ends up being wonderful expensive crap that other people pay for.
Are we "bending the curve" - no, just adding more welfare.
Do I think we need real heatlh care reform, absolutely, but this is exactly the wrong reforms.
We shall see how all this plays out, since the odds of replacing,repealing are nil, but hopefully the courts will rule the individual mandate null and void, but I doubt that will change the law except to create an even higher cost.
I agree Greg, I too have a mortgage with Citi. i recently underwent a "loan modification" which after 7months(I was told the process would only take 3)they only remodified it to payments of $100 less than what I was paying before. I can never speak to the loan officer(even thought they tell me every time we've sent an email and you should recieve a call in 5-7 business days). Whenever i call for any correspondence i have to lie about a situation to speak with a manager, it's like they don't want you talking to anyone but the person who answers the phone, and their just reading from a script and can't help you at all. So with all of that said I called to tell them it would be a struggle to make the payment, she replied with well how long do you think the situation would last, i said probablly long term, in which she went into her speech well the payment will be late after the 16th but be aware there are payment options you can make but they may(will)result in late charges and penalty's. So i said there really are no options, she replied well if you can't make your payments and fall behind, we would then assign your loan to someone who can help. I'm about ready to leave it all alone, seriously considering the deed in leui of forclosure and start over.
Maybe I'm naive, but I'm really not that worried that health care reform will cost that much money.
Granted, the built-in cost savings are small. There'll be some gain from people getting care early rather than later, when they'd be more expensive to treat, but that's a modest sum.
The real savings come from the fact that poor and uninsured people are already getting care, they're just not paying for it.
The current model is:
Poor or uninsured person gets sick, but can't afford treatment, so he carries on and hopes it gets better.
If the poor or uninsured person instead gets more sick, he eventually goes to the emergency room.
The hospital treats the guy for the acute problem, then sends him a bill.
Since the guy is poor, he can't pay it. (And since he's uninsured, by the way, the bill is way higher than it would be if he got care at the negotiated rates that insured people get.)
After hounding the guy for a while, and maybe seizing his bank account or garnisheeing his paycheck, the hospital eventually writes off most of the charge. (Possibly only after driving the guy into bankruptcy.)
Since the guy was only treated for the acute problem, and not the underlying condition, he's quite prone to get sick again: Repeat from step 1.
The hospital ends up eating a big chunk of the bill. Governments at all levels subsidize this in various ways, to keep the hospital in business.
My point is simply that the care is already being paid for. It's just being paid for in the most expensive way possible, with plenty of money going to the support the hospital's back office work to drag payments out of broke patients, together with some little slivers of extra money being siphoned off by bill collectors, bankruptcy lawyers, and the like.
I have read what some of you have said and I have a an example for you of the above information being true.....my family.
We have been have removed all processed foods from our diet. (we only have noodles and sour cream since I haven't figured out how to make them yet) We have all done this for over two months now....we even drink raw milk.
When we eat out or go to someone's house for dinner (even if they make everything from scratch they still use processed ingredients) all 6 of us get sick....burping, gassy, diarrhea about 1 hour after we eat. That right there is all the proof I need to tell me that there is something really wrong with the processed foods we buy everyday. We need the enzymes that are heated out of food and we need a strong gut.
Just thought I would add our testimony....we aren't a study but a real family.
Yes, Xin, I see your point in noting that the foreclosure process is a long and slow machine. This is not just because of the banks, but also because foreclosure itself is a court procedure. The delays are built into the system on purpose to benefit the homeowner.
However, this is the second article that makes a point but abandons any responsibility to give actual facts. Yes, it takes a long time to foreclose, and if you are in this situation, the last thing you should do is panic and move out before the eviction notice arrives. You failed to note the effect on the credit of people who are in default. You also failed to note that most states are NOT non-recourse, meaning the mortgage debt is not going away.
At the risk of sounding like a broken record, I am attorney assisting homeowners in crisis. If you are in default, do not assume a foreclosure action has been filed if you haven't received a complaint. When you get the complaint, ANSWER IT. If you don't know how, just write a letter, denying everything.
Can WB please try writing an article on this subject with some facts that might actually help people, as opposed to reactionary conjecture?
To commenter #1, if you read to the end of the article, you'll see that banks have also walked away from properties because they deemed them too costly. Since there are no debtor's prison anymore these people are just doing what they can get away with. When you say just sell it and take the loss, it is easier said than done when you owe a lot more than it is worth. Besides, when these people stop paying their mortgages and still live in it they are at least still taking care of the home. it is better than leaving the home empty and letting it be vandalized. When the banks ultimately take it over they sell it and take a loss anyway. Personally I think people shouldn't throw good money after bad, but I don't think people should break contracts either. However, if these folks really cannot pay for their mortgages anymore, then should they just leave their home immediately? What is the point in leaving the home open to vandals when they can just live in it for a little longer? I think my whole point in this article is that banks are very slow to foreclose now even if people stop paying, and those who really cannot pay shouldn't panic since they'll have time to prepare to vacate.
I definitely hope this isn't wisebread putting a stamp of approval on walking away... If you cant afford it don't buy it! It's BS that people like me live wayyyyy below our means, yet some people decide they want luxury, get free money from the government, and somehow get bailed out AND just recently, BoA was chopping principal off the top to help freeloaders out. But someone like me still gets stuck with the same APR and same monthly rates because im responsible...
Dont get me wrong, im all for helping people out who legitimately need help (lost job, health issues etc) but how do you not feel a sense of shame and disgust?
oh, and do you notice all the examples the Author gave were of people living above their means?? 5800 sqft, $800K homes... $5600/mo mortgages... c'mon people...
I got a hiptop a year ago, had reception fine, then i moved now i dont get reception. Im on a 24 month plan and i still have over a year to wait, and now i dont get reception im paying around $70 a month and i dont even use it!!!
Perhaps it is just me, but I don't look at the new law as any kind of help for anyone other than the 32 million people that the Democrats wanted to add to the government medical welfare rolls.
Yes, removing recission could be a good thing, but as Massachusetts is finding out (in the news today) that people will game the system, and cause sky-rocketing costs to be passed along to the rest of us.
If the ultimate goal was health care reform, this was not it. The primary goal of Obama & the liberal establishment was create a government single payer network so they can control your lives.
Could this law work? Maybe but once all the lawsuits and other changes over the next few years happen, it will raise premiums and ultimately either bankrupt the US or simply force the goverment to raise taxes and extinguish any chance of new jobs that are not government sponsored or federally paid.
I can never hit 10% - my govt job takes 15% out for the retirement fund.
It was 8% but apparently they invested it in the stock market and lost a bunch of it in 2008.... I wish there was a way to get out of the retirement because, I otherwise totally love my job, it the best job on earth for my family (single parent).
It has to be illegal to mandatorally take money like that, retirement should be voluntary, it is my responsibility to make sure I have enough when I retire - I don't make much to begin with & it really hurts. I've met with multiple financial planners who have told me that's the main ding in my money. I have some debt due to a long layoff before I got this job & the debt would have been paid off in months, not years if not for the retirement fund.
At least a 401k you can borrow against in a pinch and a Roth you can withdraw your contributions..... I can't touch that money with a 100ft pole & it's still counted as part of my salary (thus disqualifying us for some financial help at times).
BTW - because of the volume of people pulling from the retirement fund and the volume anticipated to retire I will never see any of my money unless I leave before I have 10 yrs tenure. If I leave before 10 yrs then I can petition to get my money back with no interest which it better then nothing. And at least then I can invest it how I see fit and actually have it if/when I retire.
C. Holland - your full of smoke on health care.
The real problem is Americans don't take care of themselves and over time their body starts to react to the chemical & fat laden food & lack of overall care.
You want to the see the "health crisis" go away? Then ban fried food (or at least hydrogenated fats), high fructose corn syrup (look up what it does to your internal organs)and any chemical made in a lab that's currently put into food and peoples healthcare expenses will plummet as their bodies get better.
I have health insurance however, due to all the people getting diabetic, having heart and other weight related health issues my insurance covers hardly anything. If my family took drugs then it'd be great because of the deals the insurance has with the drug companies but for getting the kids stitches & bones set it's worthless. My kid was in an accident in January and the insurance covered 10% leaving me with medical bills totaling over half my salary even though I pay the mandatory health insurance premiums. And the health care bill does nothing to address that. It is actually a sick care bill - they look to treat the symptoms not the actual cause of the symptoms.
sorry - I meant to say "If you devote time and space, you might be able to produce all the tomatoes you NEED. But you wouldn't be able to do the same with corn."
One way to eat better on a budget is plan out your garden based on foods you like where you can also grow a LOT of produce in a small space.
For example, we use a lot of tomatoes and we also like to eat lots of corn. Tomatoes are prolific and we can grow a lot of them in a little space. Corn, however, is not so cost/space effective in a backyard. If you devote time and space, you might be able to produce all the tomatoes you want. But you wouldn't be able to do the same with corn.
So what we are trying to do is devote our limited backyard resources to produce we could grow to meet all our needs for the year like tomatoes. The money we save (versus buying) will enable us to go to the local farms for our corn and other needs.
We also buy in season and buy enough to store for the year. We are still eating some of last year's corn in our freezer...and will run out just in time for the new season!
I never put off taxes but I've also never had to pay (Federal at least...state we've paid once).
Sure I procrastinate but never involving money. Only household things like ironing, putting away laundry and mopping!
Paying bills - especially medical bills
GC
In addition to what Guest #8 noted, foreclosures also affect neighboring property values. The lenders actually factor in foreclosure stigma when evaluating mortgage modifications. What do you think would happen to the value of your home if it was surrounded by boarded-up, foreclosed homes?
I know someone who bought a very modest home 2 years ago. He is on permanent disability. He was single at the time of the loan, but was engaged and would be married about 2 months later. He had to sign documents at closing stating that he was aware that his mortgage payment would be more than 30% of his income. So he signed it knowing their incomes would be combined. No problem. The payments were actually more than 50% of his income. Well, he and his wife got separated last November, she moved out. They divorced in Feb. He can no longer afford the house. He put the house up for sale once she moved out. It was listed at $85,000 to begin with. No one interested. He finally contacted his mortgage co. after his savings was depleted to make payments, and they told him to not make payments for 3 months and then they could help. They want him to do a short sale. So, the price on the house is now $65,000 - a $20,000 drop in a few short months. There has been some interest, so maybe he can sell it. But it won't pay off his loan. Hopefully he won't get a deficiency judgement against him. What is someone is position supposed to do? He is living in the house and saving the mortgage payments so he can rent a place once the house sells. It could take a long time.
but this is in reply to the would you relocate for the perfect job post.
n/t
It hurts because the banks have to increase mortgage rates (e.g. credit becomes more expensive) for those of us who would choose to use it responsibly. The responsible folks have actually be hurt twice by this. Those of us who knew we couldn't afford a home for the last few years before the crash saw people who couldn't afford those homes drive the prices to astronomical levels. When credit was cheap and these exotic loans existed, it didn't matter if you over bid a $100 or $200 thousand because you were just going to refi using the equity later.
Now, instead of letting the houses return to a reasonable level so those of us who are responsible and have been saving for a down payment for 6 years can buy at "real" prices, the gov't and the banks are trying to prop home prices up and keep people in houses they "own", even though they actually own no equity in those houses.
WELLS FARGO, but they just game me & my family the BIG SHAFT...oops or was that...oooOOooh, just get bad feelings in this economy
some more investigation will let you know(was having same probs w/telephone tree to India r Pakistan)...resold motgage was probly bought by WELLS FARGO...it's ALL a crying shame
Sorry for the ignorance but can someone please explain to me how this hurts everyone? This is a sincere question. I don't see how John Doe defaulting on his mortgage affects me adversely.
Thanks!
AMEN!
Came across start up company gigmax.com ..pretty similar to dropbox incorporating sugar sync ideas..it looks like they have potential..any views on this?
i've been using them for a lil while now
No argument that it is already being paid for by the government and not the people who use/abuse the system. The trouble is, they still won't be paying for it. The government is just raising taxes and fees on everyone else to expand what the people are using / abusing now. What happened to it won't raise the deficit, or no new taxes for people making under 250k?
Do I think you are being naive, simply yes.
Anything the government touches either turns to crap or ends up being wonderful expensive crap that other people pay for.
Are we "bending the curve" - no, just adding more welfare.
Do I think we need real heatlh care reform, absolutely, but this is exactly the wrong reforms.
We shall see how all this plays out, since the odds of replacing,repealing are nil, but hopefully the courts will rule the individual mandate null and void, but I doubt that will change the law except to create an even higher cost.
For what it's worth, I have written about the impact on people's credit scores when a foreclosure, short sale, or deed in lieu happens: http://www.wisebread.com/how-foreclosure-deed-in-lieu-and-short-sale-aff...
This article is purely a collection of individual stories, and not any general advice.
I agree Greg, I too have a mortgage with Citi. i recently underwent a "loan modification" which after 7months(I was told the process would only take 3)they only remodified it to payments of $100 less than what I was paying before. I can never speak to the loan officer(even thought they tell me every time we've sent an email and you should recieve a call in 5-7 business days). Whenever i call for any correspondence i have to lie about a situation to speak with a manager, it's like they don't want you talking to anyone but the person who answers the phone, and their just reading from a script and can't help you at all. So with all of that said I called to tell them it would be a struggle to make the payment, she replied with well how long do you think the situation would last, i said probablly long term, in which she went into her speech well the payment will be late after the 16th but be aware there are payment options you can make but they may(will)result in late charges and penalty's. So i said there really are no options, she replied well if you can't make your payments and fall behind, we would then assign your loan to someone who can help. I'm about ready to leave it all alone, seriously considering the deed in leui of forclosure and start over.
Maybe I'm naive, but I'm really not that worried that health care reform will cost that much money.
Granted, the built-in cost savings are small. There'll be some gain from people getting care early rather than later, when they'd be more expensive to treat, but that's a modest sum.
The real savings come from the fact that poor and uninsured people are already getting care, they're just not paying for it.
The current model is:
The hospital ends up eating a big chunk of the bill. Governments at all levels subsidize this in various ways, to keep the hospital in business.
My point is simply that the care is already being paid for. It's just being paid for in the most expensive way possible, with plenty of money going to the support the hospital's back office work to drag payments out of broke patients, together with some little slivers of extra money being siphoned off by bill collectors, bankruptcy lawyers, and the like.
I have read what some of you have said and I have a an example for you of the above information being true.....my family.
We have been have removed all processed foods from our diet. (we only have noodles and sour cream since I haven't figured out how to make them yet) We have all done this for over two months now....we even drink raw milk.
When we eat out or go to someone's house for dinner (even if they make everything from scratch they still use processed ingredients) all 6 of us get sick....burping, gassy, diarrhea about 1 hour after we eat. That right there is all the proof I need to tell me that there is something really wrong with the processed foods we buy everyday. We need the enzymes that are heated out of food and we need a strong gut.
Just thought I would add our testimony....we aren't a study but a real family.
Yes, Xin, I see your point in noting that the foreclosure process is a long and slow machine. This is not just because of the banks, but also because foreclosure itself is a court procedure. The delays are built into the system on purpose to benefit the homeowner.
However, this is the second article that makes a point but abandons any responsibility to give actual facts. Yes, it takes a long time to foreclose, and if you are in this situation, the last thing you should do is panic and move out before the eviction notice arrives. You failed to note the effect on the credit of people who are in default. You also failed to note that most states are NOT non-recourse, meaning the mortgage debt is not going away.
At the risk of sounding like a broken record, I am attorney assisting homeowners in crisis. If you are in default, do not assume a foreclosure action has been filed if you haven't received a complaint. When you get the complaint, ANSWER IT. If you don't know how, just write a letter, denying everything.
Can WB please try writing an article on this subject with some facts that might actually help people, as opposed to reactionary conjecture?
To commenter #1, if you read to the end of the article, you'll see that banks have also walked away from properties because they deemed them too costly. Since there are no debtor's prison anymore these people are just doing what they can get away with. When you say just sell it and take the loss, it is easier said than done when you owe a lot more than it is worth. Besides, when these people stop paying their mortgages and still live in it they are at least still taking care of the home. it is better than leaving the home empty and letting it be vandalized. When the banks ultimately take it over they sell it and take a loss anyway. Personally I think people shouldn't throw good money after bad, but I don't think people should break contracts either. However, if these folks really cannot pay for their mortgages anymore, then should they just leave their home immediately? What is the point in leaving the home open to vandals when they can just live in it for a little longer? I think my whole point in this article is that banks are very slow to foreclose now even if people stop paying, and those who really cannot pay shouldn't panic since they'll have time to prepare to vacate.
I definitely hope this isn't wisebread putting a stamp of approval on walking away... If you cant afford it don't buy it! It's BS that people like me live wayyyyy below our means, yet some people decide they want luxury, get free money from the government, and somehow get bailed out AND just recently, BoA was chopping principal off the top to help freeloaders out. But someone like me still gets stuck with the same APR and same monthly rates because im responsible...
Dont get me wrong, im all for helping people out who legitimately need help (lost job, health issues etc) but how do you not feel a sense of shame and disgust?
oh, and do you notice all the examples the Author gave were of people living above their means?? 5800 sqft, $800K homes... $5600/mo mortgages... c'mon people...
I got a hiptop a year ago, had reception fine, then i moved now i dont get reception. Im on a 24 month plan and i still have over a year to wait, and now i dont get reception im paying around $70 a month and i dont even use it!!!
Perhaps it is just me, but I don't look at the new law as any kind of help for anyone other than the 32 million people that the Democrats wanted to add to the government medical welfare rolls.
Yes, removing recission could be a good thing, but as Massachusetts is finding out (in the news today) that people will game the system, and cause sky-rocketing costs to be passed along to the rest of us.
If the ultimate goal was health care reform, this was not it. The primary goal of Obama & the liberal establishment was create a government single payer network so they can control your lives.
Could this law work? Maybe but once all the lawsuits and other changes over the next few years happen, it will raise premiums and ultimately either bankrupt the US or simply force the goverment to raise taxes and extinguish any chance of new jobs that are not government sponsored or federally paid.
I can never hit 10% - my govt job takes 15% out for the retirement fund.
It was 8% but apparently they invested it in the stock market and lost a bunch of it in 2008.... I wish there was a way to get out of the retirement because, I otherwise totally love my job, it the best job on earth for my family (single parent).
It has to be illegal to mandatorally take money like that, retirement should be voluntary, it is my responsibility to make sure I have enough when I retire - I don't make much to begin with & it really hurts. I've met with multiple financial planners who have told me that's the main ding in my money. I have some debt due to a long layoff before I got this job & the debt would have been paid off in months, not years if not for the retirement fund.
At least a 401k you can borrow against in a pinch and a Roth you can withdraw your contributions..... I can't touch that money with a 100ft pole & it's still counted as part of my salary (thus disqualifying us for some financial help at times).
BTW - because of the volume of people pulling from the retirement fund and the volume anticipated to retire I will never see any of my money unless I leave before I have 10 yrs tenure. If I leave before 10 yrs then I can petition to get my money back with no interest which it better then nothing. And at least then I can invest it how I see fit and actually have it if/when I retire.
C. Holland - your full of smoke on health care.
The real problem is Americans don't take care of themselves and over time their body starts to react to the chemical & fat laden food & lack of overall care.
You want to the see the "health crisis" go away? Then ban fried food (or at least hydrogenated fats), high fructose corn syrup (look up what it does to your internal organs)and any chemical made in a lab that's currently put into food and peoples healthcare expenses will plummet as their bodies get better.
I have health insurance however, due to all the people getting diabetic, having heart and other weight related health issues my insurance covers hardly anything. If my family took drugs then it'd be great because of the deals the insurance has with the drug companies but for getting the kids stitches & bones set it's worthless. My kid was in an accident in January and the insurance covered 10% leaving me with medical bills totaling over half my salary even though I pay the mandatory health insurance premiums. And the health care bill does nothing to address that. It is actually a sick care bill - they look to treat the symptoms not the actual cause of the symptoms.
sorry - I meant to say "If you devote time and space, you might be able to produce all the tomatoes you NEED. But you wouldn't be able to do the same with corn."
One way to eat better on a budget is plan out your garden based on foods you like where you can also grow a LOT of produce in a small space.
For example, we use a lot of tomatoes and we also like to eat lots of corn. Tomatoes are prolific and we can grow a lot of them in a little space. Corn, however, is not so cost/space effective in a backyard. If you devote time and space, you might be able to produce all the tomatoes you want. But you wouldn't be able to do the same with corn.
So what we are trying to do is devote our limited backyard resources to produce we could grow to meet all our needs for the year like tomatoes. The money we save (versus buying) will enable us to go to the local farms for our corn and other needs.
We also buy in season and buy enough to store for the year. We are still eating some of last year's corn in our freezer...and will run out just in time for the new season!