It's official: We're in a recession.

[KSig RC]

Originally Posted by KSigkid

That was my understanding as well. I don't have much experience with foreclosures (thank goodness), and I think it depends on state law, but I thought that other assets could be attached to satisfy the remaining mortgage amount (which I believe is called a "deficiency judgment").

I'd be very worried about simply "giving up" on the mortgage and relying on the insurance to kick in, as well - not only is this a run on the bank of sorts, but I wouldn't expect the insurer to take it lying down, and given their litigation strength as a collective, they may just find a method of recovery.

[KSigkid]

Originally Posted by KSig RC

I'd be very worried about simply "giving up" on the mortgage and relying on the insurance to kick in, as well - not only is this a run on the bank of sorts, but I wouldn't expect the insurer to take it lying down, and given their litigation strength as a collective, they may just find a method of recovery.

Exactly - if nothing else you're going to be dealing with a subrogation battle, where you're going to end up paying court fees and find yourself involved in some litigation. If you're in that much trouble, the court fees alone could be enough to sink you.

[KappaKittyCat]

Originally Posted by RU OX Alum

Isn't there some kind of standard definition for what qualifies as a recession? Like, if the GNP falls by a certain percentage for two consecutive fiscal quarters?

Yes. According to Wikipedia's entry on the subject, in macroeconomic terms, "a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year."

So while the economic contraction has been felt by individuals all over for a long time now, I think we're just now entering our second quarter of actual GDP decline.

You know how those economists are such sticklers for rules...

[UGAalum94]

AGDee, is that really happening in significant numbers or do you think it's a case where there's a big story of one person actually doing it and now it's widely speculated that others will follow?

I can imagine that people will come to a point where they do what they have to do to provide their family with shelter, but I have a hard time really imagining that most people can ethically live with themselves if they just walk away, especially so relatively soon after the settlement. A year from now, maybe I'd expect them to be more desperate, but I'd think it would actually be far more common for folks to use the 75K to gradually pay the mortgage for a while while they looked for other work.

On the other hand, if you felt like you'd be left holding the bag with debt on a house that now wasn't worth much you'd feel victimized and entitled to see what you could get away with.

I'm surprised to learn what the KSig lawyers are discussing. I though the house alone secured mortgage debt. But if you about it, it probably doesn't make much sense for the mortgage company to pursue these other assets if the main asset is in the form of yet another, probably unsellable, house. Maybe these folks are counting on it. ETA: or the insurers either, which I guess is what you guys were actually saying. I guess they could get a judgment, but would they really want the assets they could get? Maybe yes, just to show other people that this scam, for a lack of a better word, wouldn't work.

EATA: In all this, I'm assuming the order of AGDee original list which assumed that you bought your new house before you let the other lapse into foreclosure. Sure, if you're sitting around with 75K in the bank, I'd expect either the mortgage company or the insurer to try to get that money, but I doubt they really want to own other house in this market.

[AGDee]

Well, there are 7 foreclosed homes on my street right now and I personally know at least 4 others who have let their houses go and nobody has gone after any of their other assets. I do know that the person who had their house foreclosed on next door to me, before I bought my house, did have that happen and she filed bankruptcy and got out of it. I imagine that's what they would do. My next door neighbor went to bankruptcy court today. Bottom line is, you can't get blood from a turnip. These folks aren't going to have many assets in 6 months or so. Would it end up costing the insurance companies more in court costs than they could recover themselves?

As for finding another job, there aren't any. Unemployment is approaching 10% and it's going to get worse before it gets better. The plans being submitted to Congress include more cuts as well as significant pay cuts for those who are working.

I can't predict how many people will do what I outlined, but the gal I work with whose husband is at Chrysler headquarters said that several of the guys who took the buy out from her husband's department were planning to do that. But, even if they don't do that, there is a good chance they'll lose their house anyway. They may just lose it after they've spent their whole buyout.

My biggest concern at this point is that my ex-husband will lose his job and I'll be paying him child support.

[MysticCat]

Originally Posted by KappaKittyCat

So while the economic contraction has been felt by individuals all over for a long time now, I think we're just now entering our second quarter of actual GDP decline.

You know how those economists are such sticklers for rules...

There sticklers enough that they don't announce things until well after the fact. I believe that after the last recession, when the NBER accounced that the recession was "officially" over, the actual announcement was that the recesssion officially ended two years before the announcement was made.

These are people who will not be hasty.

[RU OX Alum]

Originally Posted by KappaKittyCat

Yes. According to Wikipedia's entry on the subject, in macroeconomic terms, "a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year."

So while the economic contraction has been felt by individuals all over for a long time now, I think we're just now entering our second quarter of actual GDP decline.

You know how those economists are such sticklers for rules...

Oh okay. I knew I had heard that somewhere. Thanks

[KappaKittyCat]

Originally Posted by MysticCat

There sticklers enough that they don't announce things until well after the fact. I believe that after the last recession, when the NBER accounced that the recession was "officially" over, the actual announcement was that the recesssion officially ended two years before the announcement was made.

These are people who will not be hasty.

Yes. FDR asked for a one-armed economist because he was sick of his economic advisors telling him "On the one hand... but on the other hand..."

[Munchkin03]

I thought you were able to keep your homestead if you filed for bankruptcy. Maybe that's just Florida, and probably some other states too.

[KSig RC]

Originally Posted by Munchkin03

I thought you were able to keep your homestead if you filed for bankruptcy. Maybe that's just Florida, and probably some other states too.

Florida's laws on this and similar issues are notoriously lenient/favorable/awkward, depending on which side of the coin you're on.

[AGDee]

I've done some reading up on it since my last post and it sounds like very few banks are actually filing for deficiency judgments but I would definitely be too afraid to try something like that.

In Michigan, you can keep your homestead in a bankruptcy if you own it or can continue to make payments on it. And, deficiency judgments can be included in a bankruptcy. So I guess if you're willing to foreclose and file bankruptcy, you could probably get away with it. I think a bankruptcy is a bit more devastating to your credit record than a foreclosure is but I guess if you're convinced that it will be inevitable down the road, you may go for it. I do hope it doesn't become commonplace because we're in enough mess as it is.

When they made the recession announcement, they also made it retroactive we've been in a recession since Dec. '07. I'm wondering what the definition of a depression is.

[ASUADPi]

You can file for chapter 7 bankruptcy instead of chapter 13. I only know this because I am one of those people who is in a serious money bind, not only with my other bills, but my mortgage. My mortgage is 186 thousand and my home is probably only worth 100K. Thankfully, my bank would much rather help me than have me foreclose (which just means they would get stuck trying to sell a house worth 86k less than the loan is worth). It just bites the situation I am in along with everyone else. Especially living in Arizona, we have one of the highest rates of foreclosures right now. My subdevelopment isn't even completed and there are already homes in it that have foreclosed.

[VandalSquirrel]

Originally Posted by Munchkin03

I thought you were able to keep your homestead if you filed for bankruptcy. Maybe that's just Florida, and probably some other states too.

Some states have some really interesting items listed that you can keep when you file for bankruptcy. I think one of my favorites was the amount of coal and/or firewood you can keep in Maine.

Most of the states have something listed for family Bibles, could you imagine a Bible being taken and sold?

[SWTXBelle]

My ex made a point of stealing my confirmation Bible. So, yeah, I can imagine some cold-hearted person selling a bankrupt person's Bible.

[WarEagle07]

WAIT......We're in a recession???? Oh wow! Thank goodness we can rely on the government to make us aware of this situation. Good 'ole government....right on top of things as usual. I should probably start preparing....first I need to find a job since I lost mine last month, I'll sell some stock so I have money for the house payment..oh damn, the stock isn't worth anything. Shoot, how does the government expect me to prepare for a recession with no money and no job? I need a bailout...I'm calling my senator tomorrow asap!