__________________ "In brightest day, in blackest night / No evil shall escape my sight / Let those who worship evil's might / Beware my power, Green Lantern's light!"
It really is sad how much stuff they're just throwing away. In a way, its kind of eerie how sudden the houses are abandoned. Its like a freaky horror movie where a family just disappears.
Man that's sad to watch. I'm just wondering though, if you knew ahead of time that your house is about to be foreclosed, why not try to sell what you can before you have to leave?
Because nobody's buying right now. Potential buyers are waiting for the market to drop even more. Trust me, my house is for sale, and I know I waited too long to decide to move, but I'm lucky enough to have the equity to drop my price as the conditions change, but even that isn't enticing buyers. I need to get lucky with someone relocating who wants a move in ready, fully update house. There aren't a lot of those out there.
I hope this doesn't offend anyone who is going through this first hand, but I don't understand how somebody can simply walk away from all of their personal possessions, furniture, clothes, tv, etc. Can someone enlighten me here? I figure it's one of two things:
1) People are so devestated by "losing it all" that they don't care about their personal possessions anymore. If this is the case I am truly saddened because I couldn't fathom having to experience something like that.
2) People are so far in mortgage debt and consumer debt that they are declaring backruptcy and simply walking away from their house and everything in it. Cynically, I wonder if those people simply bought a bunch of crap on credit that they couldn't afford (big house, big screen tv, electronics, new clothes, etc.), and then just left it all because it was never stuff they "needed", just stuff they "wanted". If this is the case, then I am a little disgusted that all of this stuff (that people normally work to save up for, but others have simply put on their credit card) is worthless to them and they won't even try to take it with them to start over. To leave your kid's toys? Clothing? Family photos?
I can understand people walking away from their homes/mortgages because it doesn't make any financial sense to keep them, but this is beyond anything that I had ever contemplated...
Sometimes when people are foreclosed on they're in denial about what's happening to them. They're given a deadline to vacate the premises since the bank is officially taking ownership of the property. If they're not out, the local authorities will come and force them to leave. If it gets to that point, there isn't time to get your possessions. Typcially, you can make arrangements with the bank to go get your things back, but they may charge you storage fees, so you have to come up with that money before you'll have access to collect your things.
People are in debt because they either bought a house they coudlnt' afford, or refinanced and took all the equity they could at the peak of the market. Then, their rate adjusts and there's no way to make the payment. People used equity to fund vacations, cars they couldn't afford with tradition auto financing, furniture... you name it.
When I bought my house I promised myself that the only reason I'd ever take out equity was if it was being put back into the house, a new roof, reinforcing the foundation to prevent earthquake damage, stuff like that. I remember when I told my dad that I wanted to buy a house he gave me the best advice. He said "make sure you own the house, don't let the house own you." Maybe more people needed to hear that advice before getting in over their heads.
But...if you wre really able to afford the 3000.00 per month its not a big deal. You just keep making your payments and eventually the prices go back up. If you could really afford the house you're in, you would've put enough down so you're not upside down and be able to keep making the payments regardless of what your house is worth on paper. You're only out money if you sell your house. If you like your house, keep making the payments and nothing has to change. In fact, your property tax bill could go down.
The problem is all the horrible loans that allowed people to buy houses with zero money down and take out an equity loan at the same time so they started of owing more than the purchase price of the house. Also the loans where you pay 1.25% on your payment but your loan is charged 8.25% so your principle balance goes up every month, then your teaser rate ends and it was raised 1% every year and suddenly 4 years later you have a mortgage you never really could afford at a standard rate, except now your rate is 12.25%. Its absurd. I really don't know how the lenders didn't see this coming, they created their own mess and now they're basically demanding the government bail them out.
Location: Close enough to make a beer run during a TV timeout
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Originally Posted by tvp2003
I hope this doesn't offend anyone who is going through this first hand, but I don't understand how somebody can simply walk away from all of their personal possessions, furniture, clothes, tv, etc. Can someone enlighten me here?
Also, keep in mind what kind of big screen TV we are talking about here. It's a circa 2000 Sony 53" rear projection. 4x3 screen. 480i- so no HD. Likely even no component inputs. If I were to try and sell it here on CP would anybody give me $300 for it?
Compund that with the fact that 1/2 of your neighbours are also foreclosing; so who could even buy it? Then the cost of moving it, and of course losing your house likely means you are at the end of your rope financially and emotionally.
What got to me was the guy talking about throwing away kids toys and dolls. My favourite stuffed animal from when I was 3- I still have it to this day. He sits on a shelf in a closet, but he's there. I just can't imagine telling your kids that their favourite toy is gone forever.
Hrm. You know what? Someone could make a mint scavaging the landfill that stuff was going to. Some nice furniture going out the door there.... true, the technology was old (old TV, old computers) but the furniture I would absolutely love to have here.
True, Ken, that most can't afford new furniture right now with the U.S. economy in the crapper... but I'd take the best stuff and throw it in a storage locker.
I decided in April I needed more room than I had where I was renting. We looked at rentals around the city and the price range/quality of homes that were available made it ~20% more expensive to purchase a year old starter home. I can afford this mortgage with my wife working part time and me being a student and working only during the summer.
If something happened and my house dropped 100k in 'value' in the course of a year, what would it change?
I would be paying a little more (~40% in the 100k loss situation) in housing expenses than I could be if I was renting, but I would still be able to afford my house. If it dropped in half or by 75%, I would still be able to afford my mortgage payments.
At what point does it become a situation where you cannot afford to pay your mortgage? Are there really that many people stupid enough that they buy a house they cannot possibly afford the mortgage on their home? Enough people that it kills an entire nations economy? I can understand if people get laid off they can't afford a mortgage, but I am assuming that this is not the case since people keep screaming about subprime mortgage crisis and not the unemployment crisis.
I must be so naive that I just can't see what the problem is, can someone enlighten me?
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"Wake up, Luigi! The only time plumbers sleep on the job is when we're working by the hour."
During the housing boom, mortgage lenders were offering risky loans with teaser rates that made initial monthly payments very, very affordable for huge houses. Imagine getting a 600,000 loan for only 1100 per month. Also, imagine that you didn't need to prove your income. Lenders would take an application, and you tell them you make 85,000 per year, then when your loan docs are printed, your income says 125,000. The loan agent did that just so your loan would get through underwriting so they'd get their commission and you'd look like you can afford the loan. They just manipulated numbers any way they had to in order for ratios to be acceptable for underwriters to approve the loans. Since people were snapping up houses they couldn't afford, and snapping them up fast, it created a false demand for expensive housing. So the prices went up even higher and in order to loan on them the loans got riskier and riskier. Millions and millions of Americans were loaned money on homes they couldn't afford. More millions were taking out home equity loans up to 125% of their home's value. This was standard procedure with lenders. But, after rate increases and loans readjusting, these same people can now not afford the high payment on the houses they bought. People's payments have gone from around 1500 per month up to 4000 per month now. That is a crazy jump in payment. For higher end houses, those in the 800,000 and up range, the payments are even worse. Between very agressive lending tactics and Americans wanting to keep up with the Jones' and have a picture of wealth, we've ended up here.
If you purchased within your means, you will be largly unaffected by this. My home has been and always will be one I can afford. The only reason I'm selling is because I'd rather have a single story on a larger lot. I don't see my house selling anytime soon though. But I could stay here and make my payment forever regardless of what the housing market does.
Hrm. You know what? Someone could make a mint scavaging the landfill that stuff was going to. Some nice furniture going out the door there.... true, the technology was old (old TV, old computers) but the furniture I would absolutely love to have here.
True, Ken, that most can't afford new furniture right now with the U.S. economy in the crapper... but I'd take the best stuff and throw it in a storage locker.
I move buildings for a living during the summer. There is a TON of stuff that we can salvage. Cupboards, lumber, electronics, landscaping materials, copper piping and wiring. We could take sinks, vanities, mirrors, old dressers, shelving, workbenches, septic tanks, hot water tanks, boilers and well pressure systems. We salvage entire garages, garage doors, newer windows and doors. You name it and we find it.
Now as much as you might think this seems like a real good deal, what the heck we gonna do with it all? My father in law has a pretty new set of maple cabinets we pulled from a kitchen. I put new cupboards in the place I was renting in exchange for a months rent, same with a hot water tank.
Sure all this stuff is cool to do for free, but are you really going to find anyone who wants to buy used stuff enough that it will justify you storing it for an extended time? Not unless you have a huge lot, and neighbours who don't care if your place has a lot of garbage around.
I imagine that counting copper piping and wiring and other easy to salvage materials we leave in houses could keep 1 person gainfully self employed for 6-8 months a year just reclaiming it. They wouldn't be rich or anything, but it would keep them in work. However, for us to do it, it isn't worth it since we bill out at rates that would make troutman cringe, but it is something that I have considered.
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"Wake up, Luigi! The only time plumbers sleep on the job is when we're working by the hour."
But, after rate increases and loans readjusting, these same people can now not afford the high payment on the houses they bought. People's payments have gone from around 1500 per month up to 4000 per month now. That is a crazy jump in payment.
So this is due to variable interest rates rising then?
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"Wake up, Luigi! The only time plumbers sleep on the job is when we're working by the hour."
Yes, a combination of rising rates and negative amortization. All the years of paying an extremely low rate wasn't covering the interest charged to your loan, so while you're making payments, your principal balance is going up. When the loans were revisted the new payment was at a high rate and amortized to a new, inflated principal balance causing an enormous increase in payment amount. The rates on these risky loans have gone up much more rapidly and in larger increments than standard indexes or the prime lending rate. There are people, who in four years time, saw a rate increase from 1.75 to over 12%, but it was "disclosed" in the loan documents so its technically legal.
Not really variable interest rates as we know them. It's not like a floating prime rate. As I understand it, it was more like when you get a call from the banks with their introductory rate credit card. Starts at 3%, but then in a year jumps to 19%. Same deal here.
I just don't understand what people thought was going to happen in a couple years? It's not hard to do the math.
The problem was loan agents weren't present when you signed loan docs. They sent mobile notaries out who weren't trained on details of loans. All they really knew is where you were supposed to sign. If you had any questions, you might get an answer, but there was no real guarantee it was the right answer. Many people were convinced these loans weren't dangerous. Unfortunately, you only have three days to decide that you made a mistake and cancel the loan. Most people found out the hard way much later than that.
It should not be legal for notaries to have you sign such important documents without a loan agent present. The only requirement to being a notary is passing a test, and they are trained in identification, not mortgage loans, title, regulations, etc.
BTW, there's a pretty cool set of videos here from a speech that Peter Schiff gave in 2006. Looking at it in hindsight kinda makes you wonder why everyone didn't have it figured out like he did.
