[Jukesgrrl]

I don't personally know any Walmart employees who live in $400,000 houses in Las Vegas. But I know of one U.S. senator's former aide who lives in a $1.6 million house he can't afford, now that his wife is no longer "assisting" the senator. Would that be an example of a contingency that should have been planned for?

[dynimagelv]

Originally Posted by Jukesgrrl

I don't personally know any Walmart employees who live in $400,000 houses in Las Vegas. But I know of one U.S. senator's former aide who lives in a $1.6 million house he can't afford, now that his wife is no longer "assisting" the senator. Would that be an example of a contingency that should have been planned for?

along with a years supply of kneepads.

[tony soprano]

Fannie ups the ante for strategic defaulters-

Originally Posted by The WSJ

"Walking away from a mortgage is bad for borrowers and bad for communities, and our approach is meant to deter the disturbing trend toward strategic defaulting," said Terence Edwards, Fannie's executive vice president for credit portfolio management.

The government-owned mortgage-finance titan also said it planned to step up legal actions to pursue deficiency judgments in states that allow lenders to go after borrowers' other assets. In addition, Fannie said it would instruct its lender partners to monitor delinquent loans owned by Fannie, and recommend cases that warrant attention.

Fannie to Deny New Mortgages to Defaulters - WSJ.com

[lyra33]

Originally Posted by BayAreaNightmare

No one NEEDS a house..they can buy a condo much cheaper and affordable..they can rent an apartment...etc...

I think people get irritated when they hear others whining about losing their house like its a right! alot people cant afford even thinking about buying a house

Exactly, lol. It's sad and I feel for those who are loosing a home- but it's just like my mom told me, life isn't fair.

Just like it's not fair that everyone walking away from their home is lowering the value of my home while I still have to pay top dollar since I bought when the market was high.

We are not victims and we are not entitled to have a home just because someone loaned us money.

[bb702]

Purchased new home in 2005 for $436k - Put down about $50k.
Have a 1st and 2nd (original loans) totalling about $390k.
5yr interest only loan 5.5%. Loan will adjust in September to 3.5%, but payment ironically is going up over $100 p/month. Loan is Libor based and can adjust every year. Luckily enough the Libor rate has been the lowest on record. I can afford the home currently and have no debt, and have never missed/been late on any payments. Our plan is not to live here forever and feel like a prisoner to our location due to our decreased home value. Value of home is about 50% ($180k) of what is owed ($390k). I have a strong belief the value of the home when purchased will never come back, even in 100 years. Have attempted to work with the bank (1st=Chase) but because we can "afford" it, nothing can be done. Even if a refi was an option, our plans are not to live in the same house/city for more than 5-10 more years.

We'd like freedom to be able to up an move in our near future, without the ball and chain of our current home keeping us from the freedom. Have considered just walking away and have the freedom to make these choices. Currently have a good job and stable income.


Do we think the govt. will come up with in the near future a program that assist the people caught up in the mess that can "afford their homes" by way of prinicpal reduction? From a few news clips, it doesn't appear as if the current housing secretary has any plans of doing this. Have investigated all the the current govt. programs and do no appear to qualify for any of them. Only rational thought to stay in our home would be way of principal reduction.

I am not posting to debate morals, right or wrong of walking away, but to investigate all possible current or future options. We are in our mid-30s. I've got an 800+ credit score and understand the ramifications of walking away. We do have dreams of living in other places/states, but our current situation appears to have crushed those dreams for many many years.

Strategic default appears the smartest financial decision at this point.

By the way, we are about the last home left in the neighborhood to have an original $400k loan. Most all homes have already foreclosed and been repurchased for $100-$175k. In other words, are we the silly ones for staying? Just thinking of what the neighbors paid for their houses and knowing what we paid for ours makes me sick.

Thoughts/Advice?
Thanks,
BB

[lyra33]

I'm in exactly the same situation, except I have a 30 year fixed loan at 5 percent. I bought when the market was high and just on the tip before the crash- (Nov 2006).I had an idea going into it that a dip was going to happen. However, never thought my home would only be worth half of what I paid a few years later.

I'm not sure what I would do because you are not paying off your house with an interest only, adjustable loan. That makes your situation different than mine. Maybe you can wait and refinance to a fixed loan? Why is refinancing out?

It's not "silly" that you would stick it out and honor your agreement. Buying a house is an investment, you signed the document and took a risk. The government is not responsible for helping you out, and homeowners should not expect to get help from the government.

Believe me, I understand about feeling sick about what the homes are going for right now. If we had just rented the home we were renting for one more year instead of buying this one we would have not lost all the money we put down on the house.

[bb702]

Thanks for the feedback. As far as why not refinance? Come September, the new rate of 3.5% will be in effect (currently 5.5%). My payment will be just over $2k p/mo. For some reason I thought when the rate went down, our mortgage payment would go down as well. It's going up. Rates right now are about 4.6%, which means the rate will even jump higher than the 3.5% I'll be in for another year unless I'm missing something. Also, no banks are willing to refinance anyone 50% under water. Govt. programs are not able to assist in this situation, because I can "afford" the home.


I understand the obligation I'm in and am not pointing blame on anyone. We enjoy our home and our town, but don't want it to be the deciding factor in where we want to be the rest of our lives.

BB

[vegaslocal55]

An investment decision is not a guarantee. If your home-buying investment had skyrocketed would you have refunded the bank more of the original loan value? I sold a home in 2006 at the top & decided renting was more cost effective. Am I a financial wizard? NO! I lost more than I would have paid for a house on a very poor investment "opportunity". I'm not expecting the government to bail me out on it, either!

[lyra33]

Originally Posted by bb702

Thanks for the feedback. As far as why not refinance? Come September, the new rate of 3.5% will be in effect (currently 5.5%). My payment will be just over $2k p/mo. For some reason I thought when the rate went down, our mortgage payment would go down as well. It's going up. Rates right now are about 4.6%, which means the rate will even jump higher than the 3.5% I'll be in for another year unless I'm missing something. Also, no banks are willing to refinance anyone 50% under water. Govt. programs are not able to assist in this situation, because I can "afford" the home.


I understand the obligation I'm in and am not pointing blame on anyone. We enjoy our home and our town, but don't want it to be the deciding factor in where we want to be the rest of our lives.

BB

That's a tough situation to be in. Personally I would do anything to get your interest rate fixed so at least you are not subject to the variable rate. My only experience is my own home buying experiences so I'm not sure what you should do. Here is a really good article that might be helpful...

"With people walking away from their houses in droves, and with foreclosure rates rising quickly, would you approve that loan? You wouldn't, if you wanted to keep your job."

Can you refi when you&#39re upside down?

[tony soprano]

Originally Posted by bb702

Thanks for the feedback. As far as why not refinance? Come September, the new rate of 3.5% will be in effect (currently 5.5%). My payment will be just over $2k p/mo. For some reason I thought when the rate went down, our mortgage payment would go down as well. It's going up.

BB, your payment is going up (even though your interest rate is going down) because you're completing the interest only period of your loan. Going forward from September you'll be paying interest and principal. Many others are going to be caught in the same dilemma. Best of luck with whatever choice you ultimately make.