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12-02-2008, 06:52 AM
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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.
Last edited by AGDee; 12-02-2008 at 06:56 AM.
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12-02-2008, 08:40 AM
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Quote:
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.
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Has there been any increase of suspicious house fires?
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12-02-2008, 02:31 PM
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Quote:
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.
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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.
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12-02-2008, 02:55 PM
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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?
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12-02-2008, 05:06 PM
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Quote:
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?
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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...
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12-02-2008, 08:14 PM
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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.
Last edited by UGAalum94; 12-02-2008 at 08:22 PM.
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12-02-2008, 09:53 PM
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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.
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12-03-2008, 10:35 AM
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Quote:
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...
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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.
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12-03-2008, 04:37 PM
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Quote:
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.
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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..."
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12-03-2008, 04:41 PM
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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.
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12-03-2008, 12:28 PM
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Quote:
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...
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Oh okay. I knew I had heard that somewhere. Thanks
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12-02-2008, 03:04 PM
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Quote:
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.
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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").
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12-02-2008, 03:43 PM
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Quote:
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").
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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.
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12-02-2008, 04:02 PM
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Quote:
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.
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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.
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