Linda Caoli helps lots of families on the verge of losing their homes, including a single mom working two jobs to pay her mortgage.
"She says Linda the house across the street, same model, with more upgrades sold in foreclosure for $315,000!" explains Linda.
Her client isn't the only one thinking about ditching her house to buy the better deal across the street. A number of realtors CBS13 talked to say it's already happening.
"Can you imagine if you had a same or similar home and your mortgage was half the price?" asks Linda.
This is how it works. Bob paid $420,000 for his home. Then he notices the house across the street, with more upgrades, and is selling for $315,000.
So Bob, who has pretty good credit, decides to buy the cheaper house. He can't afford both, so then he walks away from his original home, letting it fall into foreclosure. That will hurt his credit, but he's willing to take the hit for a more affordable home.
"Is it wrong to steal when you're hungry? That's an issue that a lot of people are trying to figure out right now," says Linda.
Caoli is sympathetic, but she doesn't endorse the practice of it. Other real estate agents we talked to were far more critical, calling them cheaters. They say the banks take a huge hit when their homes foreclose, and in the end, we all end up paying the price.
From Countrywide e-mail:
2008 is forecasted to be a challenging year for the mortgage industry, characterized by a declining Housing Price Index in a wide variety of metropolitan markets. In the context of the prominent threat to our industry of collateral values falling below outstanding loan balances, mortgage professionals must strive to ensure that borrowers do not take on loans that they do not have the ability or economic interest to repay.
Wachovia:
“... people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they've lost equity ...”
In short, the stigma of walking away from a home.. foreclosure, sending the bank the keys, however you do it.. Appears to be fading. Disregarding the ethical considerations for a moment to discuss it economically, this is an apocalypse to those holding the debt. But when you inflate prices this much...
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Well, I bet the banks certainly didn't see that coming.
"If you don't pay, we'll begin the foreclosure process!"
"So? I'm already moved out and into a better, cheaper home that I can afford. Take it. And hurry up; I don't want to pay property taxes any longer than I have to."
"Uhhh..."
Though I think in certain cases, homeowners can still be on the hook for certain loans related to their house, even in the event of foreclosure.
"There is a principle which is a bar against all information, which is proof against all arguments and which cannot fail to keep a man in everlasting ignorance--that principle is contempt prior to investigation." -Herbert Spencer
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-BWAHAHAHAHAHA!!!! The finacial industry deserves every bit of this! Too bad there is no real platform for Mr. Average to negotiate with all the rich people and corporations raping the U.S. It might save a lot of otherwise scorched earth.
Alferd Packer wrote:Well, I bet the banks certainly didn't see that coming.
"If you don't pay, we'll begin the foreclosure process!"
"So? I'm already moved out and into a better, cheaper home that I can afford. Take it. And hurry up; I don't want to pay property taxes any longer than I have to."
"Uhhh..."
Though I think in certain cases, homeowners can still be on the hook for certain loans related to their house, even in the event of foreclosure.
IIRC it varies from state to state, but in a lot of them the rule is if they're refinanced it, they're on the hook for any equity the bank doesn't recover in the foreclosure, but if it's the original mortgage they can just mail in the and owe nothing.
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This isn't really new - there have always been a certain number of walk-aways. What's new is the sheer number of them that will happen over the next couple years. While I have strong feelings about paying back what one borrows, at a certain point it makes sense for the individual to cut his or her losses and let a foreclosure happen even with the subsequent consequences - and at that point, smart people will do just that. The mortgage industry brought this on themselves with "predatory" or just plain fucking stupid lending practices, so I have little sympathy.
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Now I did a job. I got nothing but trouble since I did it, not to mention more than a few unkind words as regard to my character so let me make this abundantly clear. I do the job. And then I get paid.- Malcolm Reynolds, Captain of Serenity, which sums up my feelings regarding the lawsuit discussed here.
If a free society cannot help the many who are poor, it cannot save the few who are rich. - John F. Kennedy
There have actually been a growing number of lawsuits now being brought against Realtors and their agents by homeowners that essentially accuse them of fraud, making them buy a home that lost a significant amount of value in a short time.
While I can sympathize with homeowners caught in that trap I have to say that people who thought that the housing prices I saw could ever last deserved what they got. It was like a big illusion everyone brought into that this house could only continue to skyrocket in value.
One of the main issues with this whole housing market is that at some point buying a home went from actually buying a place to live and raise a family into a pure investment scheme that also served as a dwelling on the side. If you're into your house for the longterm then these fluctuations in the market shouldn't bother you to the point of suing your Realtor but if you were looking to make money in a few years then yeah, you should be pissed.
Wherever you go, there you are.
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Nova Andromeda wrote:-BWAHAHAHAHAHA!!!! The finacial industry deserves every bit of this! Too bad there is no real platform for Mr. Average to negotiate with all the rich people and corporations raping the U.S. It might save a lot of otherwise scorched earth.
Guess who's going to get it up the ass when the financial industry goes tits-up and takes the rest of the economy with it? Mr Average and the people who are poorer than him. The financial industry may deserve this, but on the whole, when the economy goes bad, it hurts the poor people first and most.
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