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

[texas*princess]

That has all been talked about for almost the last YEAR. I'm surprised it's just now being declared. I find it comical that they didn't dare say the "R" word until now

[SWTXBelle]

I'm sure it had NOTHING to do with the election.

[AGDee]

The latest phenomenon around here. Chrysler white collar workers took their buy out plans which included (on average) $75K and a $25K voucher toward a Chrysler car (because most had company cars). Their plan?

1) Take the buyout
2) Buy a house that's under foreclosure for $40 or $50K
3) Get a car that costs less than $25K thereby eliminating car payment or need for a car loan for a while
4) Move into the house you paid cash for and let your original house go into foreclosure.
5) Become Mr. Mom or a SAHM since you have no mortgage and no car payment for one car, you can now afford to do so.

[KSig RC]

Originally Posted by AGDee

The latest phenomenon around here. Chrysler white collar workers took their buy out plans which included (on average) $75K and a $25K voucher toward a Chrysler car (because most had company cars). Their plan?

1) Take the buyout
2) Buy a house that's under foreclosure for $40 or $50K
3) Get a car that costs less than $25K thereby eliminating car payment or need for a car loan for a while
4) Move into the house you paid cash for and let your original house go into foreclosure.
5) Become Mr. Mom or a SAHM since you have no mortgage and no car payment for one car, you can now afford to do so.

Isn't the "foreclosure" portion of this plan a total disaster if you have other assets?

[AGDee]

Not really. It does destroy your credit score for about 7 years but I've known people to get credit after they foreclose. The only thing the mortgage company gets is the house that is mortgaged. It's not like a bankruptcy where they can seize/sell off your assets to pay your creditors. Part of the weirdness of things up here is that people are openly saying "We're walking away from our house". There's no longer a stigma to it. Once upon a time, going through a foreclosure was an embarrassment, but not these days. People just move and sign over the deed to the mortgage company.

There was a 2000 sq. ft. brick Cape Cod with 4 bedrooms/2.5 baths, built in pool and jacuzzi that sold on the next street over for $43K. So you take your $75K buy out and pay cash for something like that. Sure it needs a little work because it was abandoned so you have to re-finish the basement and make sure there's no mold, but you have time since you have no job, right?

ETA: This has a devastating effect locally. People with valid home sales can't sell a house when those other kinds of deals are out there. Property values are dropping so property taxes are dropping. Localities have less money. There have already been reports on the news that most cities and the counties are cutting back on how much salt they are buying for winter and have announced that some streets will not be salted this winter. That's going to mean more car accidents which is going to increase insurance rates.. a real domino effect. Additionally, it's not good for a neighborhood to have numerous abandoned houses sitting there.

[Munchkin03]

Originally Posted by AGDee

This has a devastating effect locally. People with valid home sales can't sell a house when those other kinds of deals are out there. Property values are dropping so property taxes are dropping. Localities have less money. There have already been reports on the news that most cities and the counties are cutting back on how much salt they are buying for winter and have announced that some streets will not be salted this winter. That's going to mean more car accidents which is going to increase insurance rates.. a real domino effect. Additionally, it's not good for a neighborhood to have numerous abandoned houses sitting there.

Has there been any increase of suspicious house fires?

[KSig RC]

Originally Posted by AGDee

Not really. It does destroy your credit score for about 7 years but I've known people to get credit after they foreclose. The only thing the mortgage company gets is the house that is mortgaged. It's not like a bankruptcy where they can seize/sell off your assets to pay your creditors.

This is only true, as far as I know, if there is mortgage insurance to cover any differences between the resale price and the amount owed . . . if not, I'm nearly certain the mortgage holder can file for a lien on existing assets for the (newly-solvent) individual/couple . . . I'm no expert, though, clearly.

[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?

[KSigkid]

Originally Posted by KSig RC

This is only true, as far as I know, if there is mortgage insurance to cover any differences between the resale price and the amount owed . . . if not, I'm nearly certain the mortgage holder can file for a lien on existing assets for the (newly-solvent) individual/couple . . . I'm no expert, though, clearly.

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").

[honeychile]

Originally Posted by SWTXBelle

I'm sure it had NOTHING to do with the election.

Why, SWTXBelle, you act as if you're surprised that the media doesn't put its spin on everything!