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

[aephi alum]

From the "no sh*t, Sherlock" files:

Dow Plunges 680 Points as Recession Is Declared

The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.

But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.

[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.

[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!

[jojapeach]

Now I know who "THEY" really is: the nonpartisan National Bureau of Economic Research.

Seriously, we (the whole world) have known that America's been in a recession for nearly a year. The whole world economy is jacked up. But it wouldn't be OFFICIALLY jacked up without that declaration. *sigh*

I'm still thankful for this job that I hate...in this recession.

[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.

[Scandia]

That's old news. We all suspected it, if not downright knew it.

[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?

[Army Wife'79]

But if you foreclose and "walk away" don't you lose all that money you have paid down on your principle? I've read an article in our AL paper here that people are doing "round robin silent bidding" on properties now. I guess it's like a silent auction where you keep adding your name and higher bid.
And what's with parents asking Toymakers to stop advertising on TV. Whatever happened to just saying "we can't afford it" to your kids. When I was little we got one big gift and a stocking. Now kids get about 30 big gifts. It's so unnecessary for people who can't afford it to rack up big credit card bills just to please a kid.

[AGDee]

Yes, you do lose what you've paid in so far but if you owe $250,000 on a house that's now worth $175,000 (because it was at $300,000 when you bought it two years ago) and you are out of a job and can't pay the mortgage, you're pretty much out of luck anyway. What options do you have?

[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").