Quote:
Originally Posted by afc wimbledon
My mortgage in essense says if I don't make the payments then the bank gets my house, ultimately I, as a home owner have only 2 obligations, pay the mortgage or vacate the house.
The Bank assumes my house's value will cover the mortgage, but I have no obligation to ensure that.
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Your obligation is actually to either continue to pay terms of your note or do a pay off of the loan amount. Obviously, the banks want their loan amount back plus interest and not the house. The house is simply collateral.
If you don't fulfill the agreement and the house forecloses for less than the loan amount, you are on the hook for the remainder of the loan. There are "walk away" (non-recourse) states for purchase money loans and WA state is one but that is based on a lot of IFs.
If you refinance or if you take out a second mortgage or if have other assets to make it worthwhile for the bank to come after you with a defiency judgement, they will even if you are in a "walk away" state.
Short of it: once you've signed the contract, there are real consequences. It may be less problematic for those who had nothing to begin with but for most buyers, it just isn't that simple.
Also, there are examples of people who were put in jail for mortgage fraud for "lying" on their loan application despite the Sandy Weils and Angelo Mozilos being the most culpable for enabling the fraud to exist and profit off the state we are in. Did those people commit fraud? Yes and with probably millions of other knowingly or unknowingly who aren't in prison.
Should they be absolved because everyone else is doing it and not in prison? Of course not. Is it fair that those at the top who are getting away with the real crime are enjoying a comfortable retirement? Of course not.
Ultimately, buyers, no matter how qualified or unqualified, partnered with the bank in this bubble. And nothing is free.
So from From Trew's link to NPR's Subprime victim, Clarence Nathan, do you really believe the only consequences were he lost his house and has no credit? What landlord will offer him shelter based on his credit?
"Clarence Nathan: Nobody came and told me a lie: just close your eyes and the problem will go away. That's wasn’t the situation. I needed the money.
I'm not trying to absolve myself of anything. I thought I could do this and get out of it within 6 to 9 months. The 6 to 9 month plan didn’t work so I’m stuck.
If somebody had told me I couldn’t borrow the money I probably would’ve
had to do something else more drastic and dramatic and not be in this
situation now.
The bank made an imprudent loan. I made an imprudent loan. We're partners in this.