Walking away: the right real estate choice?
Letter to the Editor
By Inman News, Monday, January 24, 2011.Re: 'Professor promotes plight of real estate walkaways' (Jan. 24)
Dear Editor:
I have not read the professor's e-book, so I do not know in how much detail he goes in explaining the strategic walkaway. However, it is the right thing to do for many property owners, simply on the basis that what is good for the geese is good for the gander: i.e., if banks and investment companies are allowed to do it, why can't a consumer do it?
And there is another part where consumers are discriminated against. When and investment bank walks away, its "credit rating" is NOT reduced so that it would prevent that bank from doing business for at least several years.
A consumer still pays heavily on his credit rating for several years, which can block that consumer from getting a new loan.
How fair is that? Banks (mortgage brokers and loan officers, etc.) created the problem in the first place by in some cases allowing falsified loan applications and not verifying the income (the down payment was often zero).
The sole reason why some banks allowed this to happen: they made billion of dollars originating loans and selling them to the investment market. They were not interested in verifying if the consumer could actually pay for the loan.
The professor is correct in stating that the bank gets the property when the owner defaults. Where is the problem here? I am concerned about bank actions when the owner does have sizable equity in a property: that the bank may prevent a refinance and then foreclose on the property, knowing that it will profit on a sales transaction. Banks have been getting away with killing the economy and now they want the homeowner to pay for it? What do they think we are, stupid?
Consumers should be protected from these types of actions.
Antoine Pirson
Caldecott Properties
Oakland, Calif.
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Submitted by Jay Seville -- Arlington virginia condos on January 25, 2011 - 6:09am.
There are more parties at fault than the author lists responsibility. The banks did receive pressure/mandates from government to make housing more affordable with its loan qualification parameters, etc. in its quest for social justice. This was the foot in the door that led to many bad decisions by other parties.
Lawmakers were alerted to the serious need for reform of freddie/fannie policies going back to at least 2002 but were blocked from reforms by the party that thrives on this social justice mantra.
best to see it in their own words from hearings in this short video:
http://www.youtube.com/watch?v=_MGT_cSi7Rs
The point is there is another major player involved at the outset whose influence cannot be underestimated much less ignored by the letter.
Submitted by William Metzker on January 25, 2011 - 4:11pm.
1. Let's not forget that the Mortgage Bankers Association "strategically defaulted on their building.
2.If you borrow $100 from a friend, and he says okay, but I want your Rolex watch as security, you feel less bad when you can't pay and he takes the watch. In the case of the mortgage mess, the Rolex turned out to be a knockoff.
Submitted by ArtfulMind.Biz | Vincent Medina on January 26, 2011 - 1:13am.
Technology is changing at the speed of novel thought... we, the people, remain flexible to change and open to the continuum of the proverbial building of a better mouse trap.
Inman remains a great source for Print | Social Media | Creative | Business Process Improvement | Marketing | SEO/SEM | Advertising for Realtors in Santa Monica | Los Angeles | S CA.
Vincent Medina
Managing Director
http://ArtfulMind.Biz
http://artfulmindbiz.carbonmade.com/projects/2935994#1
Submitted by Bill Fooks on January 26, 2011 - 5:29am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI http://www.fooksteam.com
Banks, I love them. They are guaranteed agains loss, by the government, they want us to tell the truth on an application,(so they can turn the loan down)then when there health is in question, we are not supposed to know about it. Hummm, and when there is a problem with a business loan they try to work it out. Consumers, Forget it. You are just a little guy.I wonder if I really do love them.
Submitted by John Burchardt on January 26, 2011 - 5:34am.
There's no need to play the blame game, because everybody in this game is a winner. The bottom of the professor's writing is to view your family as a business, and to do what's right for your business. If walking away is the best thing you can do for your family's welfare, (business) so be it.
If the lenders wanted too, they could easily avoid foreclosure costs, by deferring the loan and collecting only servicing costs, typically no more than $150/mo. But they're greedy, they want whatever they can get now, is that really smart business?
Now if we look at the family business, this is a no brainer, stop paying, stash the cash, and prepare for the move when the court proceedings finally end. Now you have capital for the move and to restablish a new foundation for the business. Now that is smart business!
Basically we all need to remember that, "The rules are written by those who have money, for those who have money." I find it absolutely ironic that the authors of the rules are upset because average citizens decided to read the rules and then play game!
John Burchardt
LocalHomesForSale.com