Would it be in my best interest to stop paying mortgage loan?

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First

Lifer
Jun 3, 2002
10,518
271
136
Your credit score goes down the toilet and you can't borrow for 7-10 years. Also humiliation.
 
J

jinduy

Diamond Member
Jan 24, 2002
4,781
1
81
First said:
Your credit score goes down the toilet and you can't borrow for 7-10 years. Also humiliation.
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right but i always pay off my credit cards anyway and the only balance i would carry, in theory, would be just on the house

as for humiliation... it wouldn't affect me that much if at all
 
R

Rebel44

Senior member
Jun 19, 2006
742
1
76
jinduy said:
right but i always pay off my credit cards anyway and the only balance i would carry, in theory, would be just on the house

as for humiliation... it wouldn't affect me that much if at all
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Do it.

Unless you default on that mortage your credit wont be hit that hard anyway.
 
StageLeft

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
It depends on your lender, in part. Either now or soon fannie mae (at the least) will be going after people who are strategically defaulting and not taking their sh*t.

Anyway, everytime somebody asks this on AT i feel they're not being genuine about their inquiry but rather making a point.
 
J

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,686
136
Just because somebody quits paying on their mortgage doesn't mean they'll qualify for any sort of relief program, at all. Qualification depends on complete financial disclosure. People who make enough that they really should be able to pay don't qualify, nor do people hopelessly over their heads, either.

For many recent buyers, one of the biggest problems in today's market is the inability to trade down. Young couples buying a house they really can't afford is nothing new. In a rising market, they can hold out for a few years, sell, downsize, and come out OK. In the current market, where prices fell precipitously in many areas, they're locked in, underwater, so the constant over-expense grinds down their resources. Any financial shock at all puts them over the edge, into default...
 
her209

her209

No Lifer
Oct 11, 2000
56,336
11
0
The banks were too eager to hand out money when the housing market was booming because they thought that even if you couldn't afford the payments, they would be able to turn around and give money to the next sucker.
 
Bignate603

Bignate603

Lifer
Sep 5, 2000
13,897
1
0
Skoorb said:
It depends on your lender, in part. Either now or soon fannie mae (at the least) will be going after people who are strategically defaulting and not taking their sh*t.

Anyway, everytime somebody asks this on AT i feel they're not being genuine about their inquiry but rather making a point.
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Good. There are too many people that are financially fine but are using the mortgage crisis as a way to try and shake money out of their lender.

Also, if you think your credit rating taking a dump won't affect you you don't know everything that they use your credit rating for. Insurance companies have found that people with bad credit are worse insurance risks and they'll charge you more. Companies that are considering hiring you often check your credit. If you have indications that you are irresponsible or immoral with your own money it's likely they won't want to trust you with their money.
 
C

ChunkiMunki

Senior member
Dec 21, 2001
449
0
0
Corporations and companies do things in their best interests, to make maximum profit, why not individuals? Taking advantage of opportunities presented is the American way.
 
D

dammitgibs

Senior member
Jan 31, 2009
477
0
0
ChunkiMunki said:
Corporations and companies do things in their best interests, to make maximum profit, why not individuals? Taking advantage of opportunities presented is the American way.
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So you want to have the same morals and ethics as a corporation?
 
J

JS80

Lifer
Oct 24, 2005
26,271
7
81
My friend, who makes $150k/year, is underwater in his mortgage. About 18 months ago he decided to start not paying his $2600/month mortgage. He was rewarded 3 months ago when the bank finally agreed to let him do a short sale and he has been living there rent free with the money piling up in his bank account. The bank has been dragging ass on the short sale but he's making out like a bandit.
 
Modelworks

Modelworks

Lifer
Feb 22, 2007
16,240
7
76
If you signed the papers knowing the terms then you are no better than the lenders if you decide to stop paying.

It is sad that people think it is okay to break an agreement, they willingly signed, because they now don't like the terms . I wonder how those people would feel if their employer told them "I know we agreed on $20 /hour, but that was just to get you working here, so now that you are working here I decided to pay you $5 /hour " ?
 
W

WHAMPOM

Diamond Member
Feb 28, 2006
7,628
183
106
AW guys, i don't think it will work the way you make it sound. Got alot of urban myth in this topic.
 
R

Rebel44

Senior member
Jun 19, 2006
742
1
76
JS80 said:
My friend, who makes $150k/year, is underwater in his mortgage. About 18 months ago he decided to start not paying his $2600/month mortgage. He was rewarded 3 months ago when the bank finally agreed to let him do a short sale and he has been living there rent free with the money piling up in his bank account. The bank has been dragging ass on the short sale but he's making out like a bandit.
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I am not surprised. So many people are very late or dont pay at all that if banks foreclosed them right now it would cause prices of homes to go down again.
 
Vic

Vic

Elite Member
Jun 12, 2001
50,422
14,337
136
Only if you're stupid.

If you have the financial ability and strategically default on your mortgage, you will not be approved for any type of modification, your credit will be trashed, you will not be able to get another mortgage for at least 7 years, and if you live in a recourse state you will be liable for the deficiency balance.
 
her209

her209

No Lifer
Oct 11, 2000
56,336
11
0
Modelworks said:
If you signed the papers knowing the terms then you are no better than the lenders if you decide to stop paying.

It is sad that people think it is okay to break an agreement, they willingly signed, because they now don't like the terms . I wonder how those people would feel if their employer told them "I know we agreed on $20 /hour, but that was just to get you working here, so now that you are working here I decided to pay you $5 /hour " ?
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I'm betting the mortgage agreement signed has a what happens in the event of default clause.
 
JEDIYoda

JEDIYoda

Lifer
Jul 13, 2005
33,986
3,321
126
Jhhnn said:
Just because somebody quits paying on their mortgage doesn't mean they'll qualify for any sort of relief program, at all. Qualification depends on complete financial disclosure. People who make enough that they really should be able to pay don't qualify, nor do people hopelessly over their heads, either.

For many recent buyers, one of the biggest problems in today's market is the inability to trade down. Young couples buying a house they really can't afford is nothing new. In a rising market, they can hold out for a few years, sell, downsize, and come out OK. In the current market, where prices fell precipitously in many areas, they're locked in, underwater, so the constant over-expense grinds down their resources. Any financial shock at all puts them over the edge, into default...
Click to expand...

We don`t agree on much...but this we do agree on -- people buying more than they can possibly afford -- just because they can...
 
Vic

Vic

Elite Member
Jun 12, 2001
50,422
14,337
136
her209 said:
I'm betting the mortgage agreement signed has a what happens in the event of default clause.
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Yes, it's called foreclosure.

I have found that the confusion most people have regarding mortgages is the fact that the note and mortgage are separate. The note is the credit instrument, the promise to pay. The mortgage (or deed of trust, depending on the state) is the security instrument, which allows the holder of the note to exercise certain rights against the collateral in the event the borrower defaults on the note (namely the right to foreclosure upon the borrowers equitable right of redemption).
But they are 2 separate legal documents. The borrower bought the property. It is their house. Recorded title to the property is vested in the borrowers' name. By means of the note, they borrowed the necessary funds from the lender, and then by means of the mortgage they pledged the property as collateral against their performance on the note.
This distinction is critical, and it is what literally defines homeownership when the property is financed. Otherwise, you'd just be renters, and the bank your landlord.

Strategic defaulters are immoral slime IMO. You borrowed the money, you have the ability to pay according to the terms, but you think you deserve a handout because the value of the collateral went down. But when it went up, you were pocketing all the equity you could. You were driven by greed during the boom and by fear in the bust. And even if the banks did write down these mortgages, you'd just start pocketing the equity again when (not if) the property began appreciating in value again. This is an assault on the very notion of homeownership and on the fabric of capitalism.
Well, go ahead and default on purpose, we're going to make sure you never get to buy a house again, except with cash.
 
Slew Foot

Slew Foot

Lifer
Sep 22, 2005
12,379
96
86
JS80 said:
My friend, who makes $150k/year, is underwater in his mortgage. About 18 months ago he decided to start not paying his $2600/month mortgage. He was rewarded 3 months ago when the bank finally agreed to let him do a short sale and he has been living there rent free with the money piling up in his bank account. The bank has been dragging ass on the short sale but he's making out like a bandit.
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Yeah, welcome to California. The "strategic default" is a way of life out here.
 
Lemon law

Lemon law

Lifer
Nov 6, 2005
20,984
3
0
No, I think few of you understand. The problem really is, many stuck with these mortgages are in what is commonly put as underwater or up side down in the banking world. They bought at the housing market high, took out mortgages at that high market level, and suddenly, as the housing market drops like a stone, are paying for a house that can only command a resale value of between half and 2/3 of what they bought in at.

They have to be almost crazy to hold onto such a home and keep making payments on it, when they can simply walk away from the mortgage, rent for awhile, rebuild their credit, and then later buy the same equivalent house at 50% of what they bought their old house for.

And then as they keep making payments and the housing market finally recovers, they will build equity in their home, because its resale value will greatly exceed what they still owe on the mortgage. Having positive equity in your home is a good, having a negative $100,000 equity in your home is crazy. And if the bank will not work with such an individual, they may well deserve getting to eat 100% of that negative $100,000 equity if the borrower falls on hard economic times.

But silly me, I paid off my mortgage long before this collapse happened. And now my house is worth less if I want to resell.
 
pcgeek11

pcgeek11

Lifer
Jun 12, 2005
22,409
5,012
136
JS80 said:
My friend, who makes $150k/year, is underwater in his mortgage. About 18 months ago he decided to start not paying his $2600/month mortgage. He was rewarded 3 months ago when the bank finally agreed to let him do a short sale and he has been living there rent free with the money piling up in his bank account. The bank has been dragging ass on the short sale but he's making out like a bandit.
Click to expand...

Well, your friend is a piece of shit. 150K and won't pay what HE Agreed to.
 
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