December 24, 2007

FLASH: Bank of America CEO predicts Americans might wise up and stop making payments on their depreciating homes. Uh-oh. Someone let the truth out!!


Bottom line: The banks and the mortgage CDO bagholders are screwed.

Really, really, really screwed.

Sorry, it's just the way it is.

Whose stupid idea was it to allow no-down loans in the first place?

Idiots. Frigging idiots. And they deserve to fail. They need to be taught a lesson about fiscal and lending responsibility that will last for generations.

Turn in the keys Underwater Homedebtors of America!!! Run from that debt-trap as fast as you can!!!

Oh, dear, is this gonna get ugly. And you can thank our idiot Congress and Bush for pouring fuel on the fire last week by allowing homedebtors to short sell or foreclose with no tax hit now too! Monkeys I tell ya. Monkeys.

Bank of America CEO Ken Lewis told editors of the Wall Street Journal that he's worried about borrowers with strong credit scores not making loan payments if the housing crisis worsens.

Such concerns by the head of California's largest bank could trigger a tightening of credit availability beyond the subprime customer base.

"There's been a change in social attitudes toward default," Lewis told the Wall Street Journal. "We're seeing people who are current on their credit cards but are defaulting on their mortgages. I'm astonished that people would walk away from their homes."

Apparently even borrowers with strong credit scores are finding it easier to walk away from their mortgages, especially if they put little or no money down on houses and condos purchased for investment purposes.

72 comments:

Anonymous said...

I've done it once already, and about to do it again, it gets easier, and you can breath again - just do it! It's really not that bad.... just walk away....

MarkIFC said...

DUHHHHHH, why do you think for hundreds of years they have required a DOWN PAYMENT.

Anonymous said...

Oh My GOD--I am just getting so sick to even call myself an American lately.
WHY rob banks when you can just gut your house of hundreds of thousands in equity, spend it all,and let the Tax payers of America foot the bill??

Finally someone is speaking about what this crisis is--A MORTGAGE and CREDIT bubble, NOT a Subprime crisis.

Among all of the HUUUUGE repercussions that this disaster will have, is NORMAL, LAW ABIDING, PRUDENT, FINANCIALLY RESPONSIBLE citizens-(up till now)- Walking away from their homes too. THIS will bring our country to its knees and worse.
Why continue to make your 30-year fixed mortgage payments when your deadbeat neighbors are getting either bailed out, or they are mailing in their keys without penalty??

THINK about this people, because this is going to be the most devistating thing our country has ever seen--A financial 9/11 that hits every city and every town in America.

Houses will be worthless--

Anonymous said...


"There's been a change in social attitudes toward default," Lewis told the Wall Street Journal. "We're seeing people who are current on their credit cards but are defaulting on their mortgages. I'm astonished that people would walk away from their homes."


Are these financial wizards really that stupid? Is it possible that monkeys in suits are running our economy? It wasn't a change in attitude that is causing this mess. It was the change in lending standards. I remember my parents had perfect credit when we bought our first house and they still had to put 20% down. Someone needs to slap this Lewi guy in the face so he'll wake up to reality.

guy n. cognito said...

yep, you nailed it. w/o the tax hit, the only thing left is their credit score and that was baloney to begin with! now it's just going to reflect what it should have portrayed prior to the bank's loan write-off. i guess sometimes it's not best to learn the hard way.

ugh said...

I'm astonished highly paid expert analysts on WS, Mr. Magoo and President Chimp couldn't see this coming.

Anonymous said...

Idiot lending caused this problem. Idiot lending deserves to be compensated in the form of non-payments.
In they words of the immortal Henny Youngman "Take my house....please"

ugh said...

I must wonder. Is trying to get underwater people to stay put testing the waters for future debt serfdom?

happy homeowner in the stix said...

Considering how a substantial portion of them probably refi'd their way into "great scores", why the shock?

Anonymous said...

I read in the WSJ about some guy with a $100k house from the 80's pulling equity out of his property as it rose in value into the $500's and then walking away after retiring. Not a bad deal. At most he put in $50-80k between downpayment and Princ paydown and walked away with over $400k. If you don't need credit, you can certainly screw the finance industry. With all the disdain the bankers and wealthy have for the little guy, this is a sweet way to get back at them and their investments.

Anonymous said...

Honestly, it's a shameful, but predictable response to free money (liar loans). The same people who felt okay with lying about their qualifications to buy a home (and don't give me BS about "victims"; to avoid being a victim, all it would have taken was for someone to say, "This isn't right.") who worked with lenders who thought it was okay to look the other way (even though they knew damn well what they were doing) and appraisers who also knew damn well what they were doing are now going to start walking away.

The only reason it seems so outlandish is because too many people still believe in personal responsibility, acting ethically, and honesty. Maybe we're the ones who are screwed up, but I think these boneheads will get theirs sooner than later.

dougr100 said...

So here's the flip side of the heinous bankruptcy bill. People are so afraid of the consequences from the credit card companies, and with no money actually invested in "their" house, and with impossible mortgage payments, why not keep your credit cards current and walk?
You can't get a motel room with a mortgage.

Stuck in So Pa said...

They were never "THEIR" homes to begin with, IDIOT!

I just love the fact that 25million in political contributions to get the bankruptcy "reform" act pushed through is going to cost big banking 400-500 million in foreclosures.

Suck it, and suck it good!

I wonder how long it will be before one of the paid for stooges introduces a bill to "reform" the bankruptcy reform act.

Anonymous said...

If I anticipated being significantly underwater within a few years then I'd walk away now, too. It's the logical thing to do. You always look out for yourself first. Home owners need to place their finances ahead of the banks'....after all, the banks always put their interests first.

eric in vegas said...

A Duhhhhhh. Why the hell would anyone want to keep making payments on a home that's already worth 20-25% less than they bought it for? It's only going to go down even more in the next few years and won't get back to the level they bought it at for at least 20 years? If you put nothing down who cares if you lose the house? It's not like they have money to pay loans back anyways so fuck their credit score.

Brian said...

Speaking of walking away from other debt:


Unpaid Credit Cards Bedevil Americans
http://tinyurl.com/2b6nsn

Have some bedeviled eggs on me this Xmas!!!


aaaanddd...

Longer Car Loan Can Handcuff Buyer
http://tinyurl.com/2ruz6a

Handcuffs will the the jewelry du jour come 2008.

Brian

Debbie said...

Duh!*head hits table*

By the way, thanks Keith for this blog. Best wishes to you and the other HPr's for the end of this year and for the next. -Deb

adprod said...

Americans are not walking away from their homes, they are walking away from THE BANKS HOME.

Anonymous said...

"I'm astonished that people would walk away from their homes."

HAHAHAHAHAHAHAHAHAHAHAHAHAHa

Jump douchebag. You are through.

bickerer said...

Dow should rally 400 points on such comments.

ForeclosureBoy said...

ok so banks lend money from 'thin air' (fraction reserve lending) so why would they care if they take billion in losses? the 'losses' are monopoly money that is 'virtualy printed' from thier computer.

If I could lend money I did not have with no limit then I too would give EVERYONE a loan to rake in huge fees, and WHO CARES if they loan is payed back? the fees are the thing!

Welcome to the new new world order: economy is based on selling homes to each other and borrowing money to buy crap to put in them.

eric in vegas said...

"Speaking of walking away from other debt:


Unpaid Credit Cards Bedevil Americans
http://tinyurl.com/2b6nsn"

Haha, these people know exactly what they're doing. Spending every last ounce of debt they have before they're cut off. And they are NEVER going to pay it back.

Anonymous said...

So where's Cramer's video telling people to just walk away? Huh? Where is it? I can't believe you don't have it posted along side of this article...;)

Anonymous said...

Dont be DAFT people!! Americans have acted like a bunch of spoiled, materialistic children with ZERO self control over the last 2 years--You want to play? Well now--it's time to PAY, and PAY and PAY.

All these stupid "Yeeeah, I'm going to walk away and stick it to the bank" idiots are not only going to screw their credit and financial reputations for 7 years or more--

THEY are going to be part of that group known as "Tax paying citizens" that will have to bail the whole shyyt storm out, AND will be responsible for the Banks huuuge pullback in lending to EVERYONE. (Hello HUGE downpayments and rate increases)!!

Good luck ever getting a house again..you should have to rent for the rest of your sad lives, AND even that will be impossible, once landlords get a glimpse at your dismal credit history.

I am sick that so many responsible citizens are going to be penalized for the wreckless behavior of so many. There should be a massive REVOLT.

Anonymous said...

I work for BofA & what I don't understand is -

If K-Lew finally gets the fact that people "walk away", at what point does BofA stop making loans with 100% combined loan to value?

They are still closing on loans that should never have been approved. I guess Ken will still be "astonished" when those loans default too.

AmazingRuss said...

All these stupid "Yeeeah, I'm going to walk away and stick it to the bank" idiots are not only going to screw their credit and financial reputations for 7 years or more--

Lets see...7 years of no credit, or 7 years of paying everything I earn on debt that will last a lifetime.

I think it's past a moral decision for a lot of folks....it's a question of what is possible.

The banks chewed through the borrowers that wouldn't pay them and into the one that just flat COULDN'T pay them in less than a year. Screw them. Stupid should hurt.

Anonymous said...

Dear Bankers,

Merry FuckU Christmas!

Anonymous said...

"you should have to rent for the rest of your sad lives, AND even that will be impossible, once landlords get a glimpse at your dismal credit history"

Nope. Renters are so desperate where I am, they'll take any credit score. Some don't even check it anymore.

Anonymous said...

And yet dow is up 100. Go figure.

Face it HPtards, this so-called crisis is a non-story except for a small group of people who will lose their homes. 70% of people own a home. Of those 60% have a mortgage. Of those 5% are foreclosing. So this whole supposed crisis is affecting about 2% of the population.

Now be good little communists and go vote for Ron Paul.

LauraVella said...

Bank of America CEO Ken Lewis told editors of the Wall Street Journal that he's worried about borrowers with strong credit scores not making loan payments if the housing crisis worsens.



So, the CEO is worried now? the borrowers salary was never enough to qualify for the house in the first place. Mortgage adjustment magnify the problems.

How could anyone in their right mind think equity only goes up?

Obviously, no one in financials understood how the real estate and business cyle works.

Anonymous said...

Lets see...7 years of no credit, or 7 years of paying everything I earn on debt that will last a lifetime.
---------------------------------

Moron: these people were ***SUBPRIME*** to begin with. That means their credit was shit. If they walk away their credit will be shit still. They have absolutely nothing to lose and everything to gain by walking away.

borkafatty said...

Jingle Mail, Jingle Mail Jingle all the way...

I have a neighbor..great guy..great family man and a hard working son of a bitch...His wife got sick a while back, and with no health insurance he signed on the dotted line thinking he was getting out of medical debt...well he did (artificially) through a refi..into a toxic mortgage, that just keeps going up and up.

He has owned the house for 15 years and well he told me just the other day, that he is looking for an apartment, and mailing in the keys..as he cant swing the cost...He is an out of work construction worker...and this is basically his only skill...he can do wonders with wood..but the work is just not there.

I try not to get to involved in other peoples business..but when you see the pain and utter loss on someones face...it really puts your own personal situation into perspective...

And no he has no Hummer he has no Harley..just a regular joe..trying the best way he can to make ends meet...who signed on the dotted line..with the quote...

"You can just refinance it in 2 years everything will be fine"

You mortgage broker KUNT!!

LauraVella said...
This comment has been removed by the author.
Double kick to the nads said...

anyone stopped to notice the hundreds of thousands of people who have lost their jobs due to the housing bubble bursting?

From mortgage companies, to financial institutions, to homebuilders, and all the others that have been effected by it.

All those jobs have simply disappeared. So its not just the housing gamblers that will stop making payments, but all those that have lost their jobs due to the ponzi scheme collapsing. Like a double kick to the nads.

borkafatty said...

All these stupid "Yeeeah, I'm going to walk away and stick it to the bank" idiots are not only going to screw their credit and financial reputations for 7 years or more--

-----------

Umm Genious..if my eyes serve me correct...Credit scores have been tossed out the window for the last 3.5 years...so what now it matters....please you sound like a fool...go have some Egg Nog and add a little Geritol to it...it might help.

-----


There should be a massive REVOLT.

------

You are correct...a REVOLT against the rich.

Anonymous said...

Too bad. Easy come and easy go, di*khead. I hope your asshat mortgages eat your lunch and the lunch of your shareholders - fu*king moron.

Smug Bastard

F**ked borrower.. from KY and now in Orlando.. said...

it's not like I am going to mail in the keys.. I find it unethical to just walk away from obligations.

Let's talk about what is so unfair. What makes it hard is my mortgage company is chapter 11, i am learning my house is worth about 15k less then what I purchased it for. I didn't put a downpayment on it, but I sunk 20k into the house to upgrade the heating system, windows etc nothing extra crazy stuff just the basics.

I didn't think I was buying at a bubble price and thought worst case with my improvements I'd break even .. well.. I owe about 15k less then what I originally borrowed and don't see a way out of this unless I take a 30k loss and come to closing with cold hard cash or short sell and make arrangements.

My beef on my scenario is I'll never get help but you know my mortgage company is taking everything as losses for the scumbags that do walk.. What really (when you do the math) outside of my morals should keep me from mailing the keys to the bank??

Seriously.. with the extra $2500 a month, my debt snowball would get me completely out of debt in 12 months.

Since my stupid worthless 800+ credit score which should not even matter (b/c having credit cards are a joke and the reason why I am in the mess I am).. I bought into the lie...

money is not cheap, there is never a fancy way to work your money.

We have a bunch of spoiled, un-disciplined people not realizing even with a 20% downpayment... if your prone to moving or wanting to upsize, we all would of been better off just renting until we had saved 50% of the cost of the house we wanted..

Rant-o-meter off now..

see the problem??? I will pay my mortgage, my house sits on the market.. I might have to rent it out.. all the while I am a renter in another state.

If 2009 or 2010 set my house back to 1980 or 1990's prices.. I am better off financially short selling and letting bank give me the 1009 form, paying the IRS and taking a hit on my credit score (if that even happens) and just getting free to get completely out of debt.

Then maybe, when I can afford it I'll buy a house outright or using a 15 year mortgage with 20% downpayment.. and I won't be mobile any longer.

BTW, I made 150k last year, I bought my house for 283k, May 2005 I tried to sell it for 300k this summer (after putting 20k into it) and now it's down to 277k with no serious bites.. willing to drop to 259k to dump it in 60 days. I can afford both the mortgage and rent on new place now. But you know I hate throwing the money away and knowing I am, like the rest of us, in over my head.

That is why the CEO is freaking.. b/c good people like me can't take a job transfer or promotion.. without the hit cutting hard.

It's time to use cash people. Stop paying with credit, period.

God bless and good luck..

Anonymous said...

You are correct...a REVOLT against the rich.

There already was a revolt against the neocon GOP fascists. They were thrown out on the streets like a bunch of cheap hookers in 2006. Madam Billary or BaCrock Obama will be the next Prez. The Socialists will turn on their Wall Street and hedge fund masters who have been funding them.

ugh said...

Dude, no 1009 or whatever it is. No IRS tax hit. Pres. Chimp signed off on a bill.

Just walk, now. Why lose more?

Anonymous said...

Wow, this is something I never thought would happen in my lifetime. Lenders getting screwed big time by borrowers. Reminds me of the good old saying: Never do a deal with a naked man, because he has no shirt to lose. Merry Christmas hombres.

Anonymous said...


It's time to use cash people. Stop paying with credit, period.


Credit is good for both sides when used responsibly and wisely. The people who should have regulated, were asleep at the wheel or taking the money to look the other way.

Bankshyster said...

Lewis told the Wall Street Journal. ... I'm astonished that people would walk away from their homes."

Really? Well I'm astonished that B of A would walk away from it's obligations by halting redemptions on a money market fund. What's good for the goose is good for the gander.

Anonymous said...

I would LOVE to see 50% downpayments required; we'd be back to homeprices = 2x income...
And I'm talkin ONE breadwinner!

Anonymous said...

President Bush sure was proud of the rising percentage of home ownership... So how's that goin' George?

bubbleglum said...

I've never owned a credit card. I never could understand why people had to borrow money just to buy crap.

Anonymous said...

I'm astonished that people would walk away from their homes."
---

Ofcourse he does! He a multimillionaire. I sure he actually owns his 10,000 sq ft mansion by now.

Anonymous said...

"Credit is good for both sides when used responsibly and wisely"

Are you implying that today's Americans are capable of wisdom and responsibility? How does that jibe with the instant gratification we all learned from watching TV 5 to 10 hours a day our whole lives? Is there anyone under 60 who ever really "grew up"?

Turns out, you have to decide to grow up; turns out growin' old ain't the same as growin' up.

Anonymous said...

"I am astonished that people will walk away from their homes."

Come on now Mr Lewis, don't be such a schmuck. These people are not walking away from their homes, they are walking away from your homes whose values are dropping like stones. You thought they were ignorant fools but look who's singing the blues now. You have been had, and the teaser freezer plan is now going the way of the super SIV. Got REO?

Andrew Hac said...

Quote:
#####
Oh My GOD--I am just getting so sick to even call myself an American lately...
#####

The Americano is as toasted as a skewered snapper turtle on a stick from ass to mouth sizzling and roasting nicely over a bed of white hot charcoal.

It is a shame to be an Americano as never before...

zoiks said...

I wonder: is it "illegal" to stop making house payments, even if you can afford to keep making the payments?

If not, it's a pretty practical thing to walk away from a house once you've financed it to the hilt. Convenient way of selling the house, too. No bothering with realtors, and all that. Just HELOC!

Anonymous said...

I've never owned a credit card. I never could understand why people had to borrow money just to buy crap.
-------------------
NOT everyone is using credit cards to buy crap.
Because wages across the US suck, people have used credit cards to pay for basic necessities, like food, gas, medical bills, you name it. Yes it was wrong, but credit cards at least were and are a temporary solution to the systemic problem of low wage jobs that millions and millions of Americans are expected to live with.

Edgar said...

It's CYA time. Lewis doesn't give a crap about the bank, he is just proclaiming his ignorance from the roof tops so that no-one will prosecute him. He will eat caviar while people riot in the streets.

Anonymous said...

Each Home Debtor has the keys to his own prison. Mail them in if you have no equity. Credit scores are a contrvance of three corporations and if enough debt slaves revolt by mailing in the keys, the credit score whores will be faced with a similar sea change as their FICO scores will no longer be a valid marketable metric for debt ranking the future in hock slaves going forwrd. Go off the FICO grid! Walk away from the banks collateral you mistakenly called your house, pay cash. Reapply for credit if you actaully have to have it by walkintging into a BofA branch and explaining you are an illegal alien from Mexico. They will fall all over themselves to give you a card with either little of contrived application documentation.

bob said...

Sh1t! F*ck!

All this time I've been ranting against the "just walk away" message here, and the putz's in congress and the Commander in Chimp just told everybody to go ahead! In fact, they just told everybody who even thinks they may be upside down in the next 2 years to just go ahead and walk away with no penalties.

I'm a complete f*cking sucker! I had a FICO of 743, bought a house I can afford with fixed interest rate loans in 2005, and I'm an idiot for staying!

Sh1t!

Anonymous said...

Hey Andrew Hac, why do you hate "Americano's" so much. The correct term is American by the way. We Americans are the wealthiest nation on the fact of this earth and for about thirty years people have said "oh, America is finished, the end is near for them, etc...". So keep thinking that we are finished. We are the only game in town. We make up 25 percent of the entire world's economy. No one even comes close. So we can live without the rest of the world, but the rest of the world can not live without us. If we sneeze, the rest of the world will catch a flu you fool! I am so sick and tired of your anti-American rants.

Anonymous said...

Plastic keys...

You mean they HELOCed the kid's playhouse, TOO??

Jennifer said...

Monkeys. *L*

LauraVella said...

Another reason to walk away...

If someone can actually make the payments on an overpriced home for 30 years and rationalizes that sure, they overpaid, but they can afford it...

Think about paying 30 years of interest on an house costing more than 8x salary. At the end of 30 years, including interest, the 8x salary house almost doubles.

LauraVella said...

Anon said:"I would LOVE to see 50% downpayments required; we'd be back to homeprices = 2x income...
And I'm talkin ONE breadwinner!"


I agree! mortgage was based on one household breadwinner back in the 1960's. Loan standards were that way for a reason...we need to return to what works.

Houses are just places to live.

borkafatty said...

Serious Andrew...some of what you say it truth But i am sick and tired of your anti American bullshit..and your Americano crap...

What if i were to say I think Wet Back Mexicans are toilet paper on my ass and you are the first wipe...

Dont like it huh...cut the shit..Oh and give me back the Welfare check you have been living on ...after all its dirty American right.....

Anonymous said...

Amazing how these criminals made billions in bonuses the past few years by raping their companies and the country and now they all claim ignorance. These people are not that stupid. They did this on purpose for the fees and huge bonuses, not caring about the carnage they left behind. If the system collapses, they should dragged out of their mansions and lynched.

Anonymous said...

Keith,

Lets just say there was a person who sold their house and was sitting on the cash. He also had 0 debt and a near 800 credit score. With available lines of credit close to $300,000, would you suggest this person buy gold and silver or sit on cash with credit lines as safety net.

What to do?

Short the Market or go long?

Buy dry goods, guns and ammo, silver and gold?

Do nothing and wait?

Lets hear it HPers, what would you do?

serindippity said...

"There's been a change in social attitudes toward default," Lewis told the Wall Street Journal. "We're seeing people who are current on their credit cards but are defaulting on their mortgages. I'm astonished that people would walk away from their homes."

Hey, Mister brilliant banker, Master of the Universe, didn't you ever realize that when you give out 100%+ LTV on property in a massive price/rent bubble, it isn't their home?

It's yours!

You tried to scam the dumb sheeple of America, but you scammed yourself.

HousingPANIC glossary:

2005: FB's == F@cked borrowers
2008: FB's == F@cked bankers

We all carped back in 2005 that these FB's were just "renting from the bank".

Guess what?

We were right about that too.

In every way.

It's just like those """off balance sheet""" SIV's. A.k.a, "sort of, but not quite sold".

HINT:

20% down in cash == "we're in it together". Low probability of default, except involuntarily in major recession.

0% down == "slam, bam, thank you, Suzanne."

Please, for your own good, memory wipe your malfunctioning C3GOP policydroids and beg for strict government regulation.

You have to stop the stupid bankers before the next stupid bubble. If you're all regulated equally then you don't have to keep up with the Tangelos. You can call Federal Agents on them instead.

Anonymous said...

I wonder: is it "illegal" to stop making house payments, even if you can afford to keep making the payments?

It's a civil contract issue, not a criminal one.

It's not "illegal" in that sense.

The bank can sue you, but traditionally it's less expensive and legally much easier to seize the collateral, which is the reason why mortgages loans were backed by collateral. Now the collateral isn't worth crap.

If you're really rich with liquid assets to seize, they might sue.

99% of people aren't, and the banks probably can't tell anyway.

If you're going to pull this stunt, make sure you have no assets deposited with your mortgage company or affiliates thereof. That they will seize or freeze right away and they'll probably get to keep it.

Anonymous said...

Sh1t! F*ck!

All this time I've been ranting against the "just walk away" message here, and the putz's in congress and the Commander in Chimp just told everybody to go ahead! In fact, they just told everybody who even thinks they may be upside down in the next 2 years to just go ahead and walk away with no penalties.

I'm a complete f*cking sucker! I had a FICO of 743, bought a house I can afford with fixed interest rate loans in 2005, and I'm an idiot for staying!

Sh1t!



Hey... you.. I feel the same way.. which I ranted earlier about being completely torn between just dealing with the 30k I'll owe the bank when I do sell this spring b/c of my depreciating asset or just saying.. let them the bank deal with the BS involved with losing that money, cut the crap and mail in the keys.

I feel like such a sucker. really stupid. My mess isn't great, and not the worst either.

Cash is King!

Anonymous said...

With the change in short sale tax laws, the strategy has changed. Now you call your lender and say if you foreclose on me, I'll vacant the house leaving it to the vandals that will drop what you can get for it by another 15-20%. But if you short sale (no big ding on the credit) I'll stay in it till its sold.

Benjamin Franklin said...

[i]WHY rob banks when you can just gut your house of hundreds of thousands in equity, spend it all,and let the Tax payers of America foot the bill??[/i]

A reporter asked a 1930's era bank robber why he robbed banks, and he replied, "because that's where the money is".

As your post says, many consumers realized that it was easier to rob the banks via HELOC, and hell of a lot safer! Why stick-up a bank when they'll just mail a check to YOU? White-collar crime became mainstream, and even featured on late-night infomercials.

Yep, this 1099 debt forgiveness is truly the PERFECT icing on the Credit Bubble cake, coming from Bush and current members of Congress. It's now official: debt CAN be walked away from, no questions asked.

In this act, we've just witnessed the complete separation of moral hazard from 'borrowing'. Free market, my ASS, when losers on both sides (the lender AND borrower) are artificially propped up by a corrupt and bankrupt government!

Since there's little-to-no loss experienced by the so-called 'buyer' (most buyers NEVER put any funds into a house via down-payment, and many got cash-back on closing, or extracted fake equity from the home the BANK owned), there's no reason for 'buyers' NOT to complete the process if they get upside down!

FBers took a gamble on rising home prices, but hey, it's not going to work out as they were promised, so now they'd like to cancel that purchase after a year or two. No harm, no foul, right?

It's like losing on a spin of roulette in Vegas, but then saying "I want a do-over". Can you imagine the casinos in Vegas allowing THAT? What nonsense.

Bush et al could've not encouraged irresponsible borrowing more than they just did, other than by sending large envelopes with postage pre-paid and pre-addressed to the respective lender, telling people it's OK to mail in the keys!

Those 1099s represent funds defrauded from the GOVERNMENT, and the rest of us taxpayers! The government has an obligation to pursue that debt; Bush has already spent rounds of drinks for the bar like a drunken sailor on leave; hasn't his administration already saddled us with mounds of debt due to spreading his war campaigns world-wide? I swear, we couldn't have undermined our country faster had we just handed the reins of government to the likes of Fidel Castro!

Notice how I've put the term 'borrow' and 'buyer' in parentheses: that's because these people who got upside down no more 'borrowed' the funds for the mortgage, since there was NO expectation that the person would repay! It's like when a young person takes a 'loan' (wink, wink) from their parents, knowing full well they won't expect it back....

What we're witnessing is a collapse of the social contract of borrowing and lending, which is fundamental to the credit market: if there's no expectation of repayment, people will stop lending. Isn't that obvious? DUH!

Veronica Lodge said...

RE: Bank of America CEO Ken Lewis told editors of the Wall Street Journal that he's worried about borrowers with strong credit scores not making loan payments IF the housing crisis worsens.

IF !?!

IF !?!

IF the housing crisis worsens?

I don't think there is any IF about it.

V.L.

Anonymous said...

Umm Genious..if my eyes serve me correct...Credit scores have been tossed out the window for the last 3.5 years...so what now it matters....please you sound like a fool...go have some Egg Nog and add a little Geritol to it...it might help.

LOL...Umm Einstein, Don't you mean "genius"?

Bob said...

To be honest, whats the point in staying in a house your upside-down on (especially by the amount in question, 5-20%)? Especially if you're having the difficulty in making the payments due to a horrible mortgage deal and you don't have to pay taxes on the forgiven debt. Just playing the numbers, it doesn't make sense to stick.

As to honor, well thats nice and all but when I see the financial companies playing by it, then I'll bite. Otherwise its the age-old rule, do unto others before they do unto you.

Anonymous said...

Yes it finally has happened, I handed in the plastic keys to my Fischer-Price plastic house and just walked away.
Let me tell you of my sad story. The value had definitely declined due to sun bleaching.
I also believe I paid too much for it. It was a "do it yourself" type. The sample homes were on display at Toys R Us and a very shady salesman told me now was the time to buy. He convinced me it was a good "investment". I bought in at what I thought was a "bottom" price. Well, I paid too much when I checked the local sales flyers from other companies in the business.
I missed a few credit payments and after several failed attempts at trying to sell it and using various tactics such as "Lawn Sale", "Open House", "Price Reduced", I finally had to face reality and realize that I would soon be homeless.
The home is now cardboarded up and sits on an uncut lawn. It is one among many in an area devastated by overpurchasing.
No doubt, I will return to my steam vent and cardboard carton home, but at least it is a lot cheaper than being a home owner.

Ruprecht said...

Would it be correct to assume that every new house sold in 2005 or 2006 will now be vacated?