Once people get the idea that defaulting on debts is no big deal we are all screwed.

[dkf]

The entire idea of saving money is you are accumulating extra funds from your labors to use for a later day. When you deposit your funds in a bank, they will use it to loan out.

If your funds are loaned out to someone who spends it and never intends to repay it, and a majority of people live this way then the people who are spending are the lucky people, the people who are saving are the suckers.

Without some sort of integrity in the loan process a system of saving money doesn't make sense.

And if a bank simply took money to store for you, never made anything on it by loaning it out, they really ought to be charging you to store your money safely and to execute all your requests.

Lastly, if too many people default as a convenience to them because overbought in their lives, banks will fail and those who have saved their whole lives, been frugal and built that nest egg will lose everything over the FDIC limit.

Those people will have been ROBBED because the person who borrowed their money didn't want to take a financial loss.

Many people forget that in the end, banks don't really have money. They have other people's deposits.

And many people need to have their credit limits cut drastically. Allowing people to get into huge credit card debt is begging to have them default.

[Bonhomme Richard]

1. A fellow I know just did it and he leans..............

very much to the right. Left his house in CT and moved to Tennessee to rent a house.

[vadawg]

2. yup, unfortunately it seems that people who actually save and look to the future are seen as a bad

thing on DU, Great points.

[here_is_to_hope]

8. +1! eom

[laughingliberal]

28. Not a bad thing, just an impossible thing after being unemployed or underemployed

Savings went pretty fast once our income was gone.

[Hello_Kitty]

71. Yeah, I saved and paid my bills too. And then l I LOST MY FUCKING JOB!

And my savings went adios, along with my house.

You want a gold star for being such a frugal little saver? Fine, here's your gold star.




:eyes:

[superconnected]

98. Actually the person should only get a temporary gold star for as long

as they have a job, and then as long as their unemployment lasts. Because after they lose both of those, their savings will be gone gone gone and if they admit it on internet they'll be attacked for how they handled their money.

[rufus dog]

105. One thing to consider

Those who didn't buy or bought below what they could afford are worried they will be impacted. Now being a person that could survive and make payments for a long time frame I understand the viewpoint. (and my advantageous position is purely based upon luck and timing - I bought in a valley, while making less money, the only thing I can take credit for is not taking out second mortgages. And If I lost my job a year after buying my house I would have been screwed if a huge recession hit 10 years ago)

Anyway I think this is what the OP is feeling:

1. The banks got theirs, what did I get?
2. Joe Blow bought a house he couldn't afford and is now bailing , what did I get? (And all of us in high home price areas know many Joe Blows who either bought way over their head or took out seconds to buy toys)

So the OP and you are both frustrated and rightfully so, but you are not enemies.

My house tripled in value from 1998 to 2007, that is fucking insane! It was purely based upon unregulated money flowing into the system.

To you I would suggest being a bit more understanding of the OPs position.

To the OP I would suggest that although it seems unfair to you specifically, there are a lot of good people who have lost or are upside down and looking for ways to make things work. If the bank won't negotiate the person has little choice other than to walk. While it may seem like a very callous approach the person forced (and most are forced) to walk pays a huge price, both monetary and psychological. Complete lack of regulation is the root cause, focus your scorn on those who truly deserve it.

[nebenaube]

3. If things actually worked this way you would be right.

But banks don't loan your savings out... They create new money out of thin air.

[rfranklin]

5. Yes, it was the banksters who had the obligation to lend prudently...

but they churned as many loans and mortgages as they could to generate the fees. Fees for applications, fees for mortgage insurance, fees for mortgage originations, fees for selling the mortgages, fees for bundling the mortgages, fees for CDOs, fees for derivatives. It was a great system for generating profits but it had no benefit to anyone other than the banksters. Now the general public is left holding the bag.

[dkf]

7. If they are holding your loan, that means they got deposits

and only kept a percentage on their books as reserves.

That loan IS someone's deposit.

But if they have a practice of selling their loans, then the original deposit has probably funded a bunch of loans which are sold to make way for new ones.

Not all banks sell all their loans though.

[galileoreloaded]

55. Actually ther is no loan reserve in American banking, and hasn't been for a year or so.

Kind of brings new meaning to fractional banking, huh.

[TexasObserver]

63. Banks have ten times as much out in loans as they have in bank capital.

Do you really believe all the loans are based upon deposits?

Your bank deposits are insured up to the FDIC limit. That's your assurance that the bank's failure won't hurt you, as a depositor. If you keep over the FDIC limit in any one bank, that's your bad planning, isn't it?

[TexasObserver]

56. Yes, the OP's entire version of what happens is off base.

It is the bank's capital which dictates how much they can have out in loans. Deposits matter, but not as much as simply having performing loans. When the loans don't perform, the Office of the Comptroller of the Currency makes the bank write off their bad loans against the bank's capital, and THAT process is what makes a bank fail.

When a bank fails, it means it made so many bad loans that the cumulation of those bad loans exceeds ALL of the capital the shareholders have invested in the bank. That's bad management and decision making.

[Hannah Bell]

76. they also loan out their deposits.

[Toots]

4. banks don't really have money. They have other people's deposits.

Those hundred million dollar bonuses are with other people's money? Banks have more money than God...."banks really don't have money" :rofl:

[dkf]

6. The investment banking side is making the big bucks, not the regular bank side.

Which is the problem that Obama is facing and that is the need to separate the regular banks from the investment banks, as it should be.

The traditional banking system has been corrupted, but that doesn't go back to the point of the foundation of our banking system which is the deposits of savers.

[Commie Pinko Dirtbag]

9. If my family's livelihood is at stake, I won't play nice. If you don't like that -- tough.

There are precious few rules in the rulebook that actually give the little guy a chance against the big guy. And you are implying the little guy shouldn't use them because it wouldn't be "fair play".

Well, no. It is bad advice and I refuse it.

[dkf]

11. The mistake is thinking that you are only hitting at big banks and that other little guys

who are saving at that bank aren't being hurt.

A max of $250,000 FDIC insurance is not enough to retire on. That isn't big money. Most pensions are worth WAY more than that.

[TexasObserver]

64. You're not supposed to keep over $250,000 in any one bank.

If you're too lazy to make sure you don't have over $250K in any one bank, you deserve to lose money when a bank fails.

You act as if you have to keep your money all in one bank.

Is this entire thread about you worrying about your retirement CDs? Good Lord, split 'em up and be done with it, like everyone else facing the $250K FDIC limit per bank.

[vadawg]

14. well dont be surprised if people use the same rules against you

the problem with living and not playing nice as you put it is that you probuably have more chance of being a victim than a predator.. why should anyone play fair if you dont..

[Commie Pinko Dirtbag]

15. Heh. As if they already don't.

It's banks and megacorps we're talking about here. They think and act like that ALREADY.

[vadawg]

17. well you cant really complain about them, as you are willing to do the same stuff

personally my family comes first so i expect that others will think the same way, no such thing as a fair deal anywhere on the planet, someone will always come out ahead...

[Commie Pinko Dirtbag]

20. When a person walks away from a mortgage, the bank GETS THE HOUSE BACK.

They're not stealing anything.

First, the bank had a house. Now they have the same house plus all the installments the "thief" paid. Some theft.

[KittyWampus]

26. And your neighbors are left with an abandoned house and even lower equity in their own homes.

[laughingliberal]

29. My neighbors have every right to walk away from theirs, too

The banks foreclosing on people's homes have no problem making a 'business' decision to benefit them with no concern on the overall economy.

I talked to our bank last week about what we could do because we are likely to not be able to pay the mortgage any longer. They suggested we try to short sell. Now, people who get out from under by 'short selling' are following the rules but they aren't going to help their neighbors' equity, either. I don't see the difference their in terms of impact on the neighbors.

[blondeatlast]

40. They actually talked to you about it? In the process of a divorce and my ex-hubby

is working out of the country. We have all but begged them to let us short sell; after nearly a year, they are finally allowing us to.

As to the neighbors, I pin that fault ENTIRELY on the banks. We got lots less house than we qualified for because we wanted to be cautious. We just can't liquidate without a short sale now; there's no way to sell the house except way under even its current value.

[laughingliberal]

51. Well, I live in a state that's # 2 in foreclosures and #1 in negative equity

I'm certain they realize a short sale is the only way they'll ever see any of the money out of our place. A short sale will save them the trouble of upkeep while the house sits empty and the nuisance of trying to move it themselves.

I'm still thinking it over. I'm going to lose the house one way or another and my credit is already wrecked so I may just mail the keys in.

[Hello_Kitty]

91. I let mine go to foreclosure and my next step is bankruptcy.

One thing I've got going for me is that I'm so broke I qualify for Chapter 7. Silver linings, baby. ;)

[laughingliberal]

93. That's us, too. Bankruptcy as soon as I can get our records together to do it

and we qualify for Chapter 7. This is known as the law of unintended consequences. The banksters got the bankruptcy laws changed so they could screw people who were in tight situations. Then they tanked our whole fucking economy. Now all those people they thought they were going to screw in the future are too poor to be forced into Chapter 13. I get a laugh out of thinking about that on a regular basis.

[lukasahero]

50. Unfortunately, some of your neighbors already own their house

I have no mortgage to walk away from because my husband and I worked like hell to pay it off.

I'm sorry for your situation and, believe me, I understand we are fortunate to own our house at this time but it still stings to hear people talk as though their actions have no impact on the rest of us.

[laughingliberal]

53. It's amazing to me how more anger gets directed at people who got screwed than the screwers

We worked like hell, too, to have what we did. We would still be working like hell to pay our mortgage if my husband's business hadn't tanked due to the collapse of the housing market and I hadn't lost my job.

So, the impact to you is loss of value in your home? Welcome to America. I'm glad you understand you are fortunate. Those who scraped it up to buy a home in the past 5 years got screwed to the wall and I have no problem with them walking away if they are paying out the wazoo for a behemoth that has negative equity and renting a similar place would lower their monthly expenses to keep going. Maybe if the 'little guys' start to have an impact we'll finally get someone's attention. There was always the option of using the money for the foreclosure crisis to help the homeowners instead of the banks. It would have stopped the bleeding by a lot. Instead, they gave the banks the money, didn't require them to stop the foreclosures and people still lost their homes. Now, property values are still tanking and foreclosures continue.

And we had many people right here on DU who raised holy hell when the FDIC floated a suggestion that they might pay down the principal on some people's homes that they were already on the hook for. Hear that? Mortgages they were already going to have to cover and they thought, maybe, paying down the principal would be a better idea. See how that would work? People would have kept their homes and the damage to surrounding property values would have been minimized. But the wailing and gnashing of teeth that someone, somewhere might get some help after 'they' had done everything right and 'these deadbeats are getting a handout' and on and on and on. Not one acknowledgement that a lot of us did 'everything right' and still lost everything. Not one word about how it might help them maintain some value in their property. There was an answer that would have benefited everyone but there was no outcry from those who still had 'theirs.'

[Lydia Leftcoast]

57. People in the NY Times article (and the following comments) said that they HAD

tried to negotiate with the banks and the banks had refused.

[laughingliberal]

61. Yes, I've seen it over and over with people

And I have no problem that the little guys (us) are fighting back. Those people who are worried about how it might affect them might want to consider a public outcry for helping the homeowners. Instead, we see people act just like the Republicans and cut off their nose to spite their faces. They'd rather suffer the impact to their own property values and the overall economy than think some deadbeat somewhere might have gotten some help that they didn't get.

[lukasahero]

74. Not sure who you think is angry here but I don't think it's me...

My husband was out of work from 2001 - 2003. I was laid off in 2002 but have been steadily employed since 2003. My husband faced another round of being unemployed in 2005 and "retired early" after a heart attack and bypass surgery in 2007. We continued to pour any money we had into our mortgage because it is our most valuable asset and didn't want to risk losing it.

I agree money should be directed to help people who are in danger of losing their homes but I also believe money had to be put into the banks to salvage our economy. I am disgusted by the bonuses being handed out in the financial sector and have lost faith in our government for giving the money without regulation. I believe there is enough criticism to go around.

[Hello_Kitty]

88. So your unemployed neighbors should empty their savings and IRAs

To keep up a mortgage payment they can no longer afford because you and your husband were so virtuous? Really?

That's what I did, lukasahero. After I lost my job I liquidated my savings and IRA to pay my mortgage as long as I could. Know what ended up happening? I lost the house anyway and my credit is trashed. I was thinking like a typical guilt-ridden debt peon instead of a rational actor and it was stupid of me. I should have walked away from that house a year and a half ago and moved in with my boyfriend like he suggested all along. But I didn't listen and now I have nothing. Happy?

[lukasahero]

99. You can do what you want

Yes, I know, I'm the evil bastard for suggesting that the people who think they are ONLY hurting the banks consider that they are also hurting their neighbors as well. I condemned no one (yet have been roundly condemned). I presented my story (http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7630054&mesg_id=7632801) - we've been unemployed and my husband is no longer able to work due to health reasons, but that's ok - you go ahead and pretend I condemned you.

In the meantime, we have lent friends money to help them keep their houses. I have co-signed a loan for an unemployed neighbor's kid so she'd be able to finish college. But if it makes you feel better to consider me evil for correcting someone who suggests that their neighbors are equally able to walk away from their mortgages, have at it.

Because that's all I fucking said. Read the fucking posts and note who said what. All I said was in response to the poster who said their neighbors could walk away from their mortgage as well that there are those of us who don't have that luxury.

---------------------------------

"And your neighbors are left with an abandoned house and even lower equity in their own homes." -- KittyWampus

"My neighbors have every right to walk away from theirs, too." laughingliberal

"Unfortunately, some of your neighbors already own their house." lukasahero

---------------------------------

And fuck this shit about me and my husband being so virtuous. No one fucking said that and I'm so fucking sick and tired of people here reading what they want into other people's words. Fuck that.

[superconnected]

101. Cause, you know, it's all their fault they lost their jobs, right...?

*sarcasm*

[lukasahero]

104. Yeah, that's what I said

We've lost our jobs, too.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7630054&mesg_id=7632801

So fuck off.

[Hello_Kitty]

107. Back in 2001? GMAFB.

Not the same as what's going on now.

[lukasahero]

110. You don't read too well, do you?

"My husband was out of work from 2001 - 2003."
"I was laid off in 2002"
"My husband faced another round of being unemployed in 2005"
""retired early" after a heart attack and bypass surgery in 2007."

So between 2001 and 2010, my husband worked in 2004 and 2006. So give me a fucking break, ok?

[Hello_Kitty]

111. No. You showed up here with your holier-than-thou bullcrap and can't handle being challenged

I have no mortgage to walk away from because my husband and I worked like hell to pay it off.

You think your neighbors should bankrupt themselves (and possibly end up losing the house anyway) to keep up with mortgages that they got into under, pay attention now, totally different circumstances than you and your husband had when you bought your home years ago.

[lukasahero]

117. We bought our home 10 years ago

I love how you're screaming at me for not caring about my neighbors when all I did was suggest that the person walking away from their mortgage do the same.

No worries. I'm comfortable knowing I've been able to help my friends and neighbors who are going through hard times. YMMV.

[Hello_Kitty]

119. Glad you're comfortable

Makes it so easy to cast judgment on others, doesn't it?

[lukasahero]

121. Who's actually passing judgment here?

Enough. I'm done.

[superconnected]

113. Your "fuck off", earns you an ignore.

Bye bye.

[lukasahero]

118. I'm crushed. eom

[Pithlet]

37. Yes. And who's fault was that?

The banks who created this whole mess to begin with. Yes, the value of my house has plummeted. But I know where to place the blame.

[Maru Kitteh]

109. oh! the HORRORS! - That the fortunate should have to suffer alongside the less fortunate!!!!

Yer breakin' my heart.

[Hello_Kitty]

115. And? Why should your neighbors bankrupt themselves to keep your home equity up?

When I think of how I wiped out my savings to try and keep up with mortgage payments all those months when I was unemployed it makes me sick. I could really use that money now, Kitty. And you know what? I ended up getting foreclosed on anyway.

[blondeatlast]

58. Silly, how dare you expect banks to get their SECURITY back from a loan?

Poor, poor little banks--having to deal with hundreds of pieces of real estate that they made happen. :nopity:

[Zoeisright]

62. +1000000

[KittyWampus]

25. actually, the behavior in question is pitting you against your neighbors as well.

[here_is_to_hope]

10. I didn't post in the 'lost my house' thread...

Didn't want the flames thanks but in my mind, saving in the good times is a Progressive Value, the future and all of that.
I am unemployed, the wife is underemployed now but we are getting by on 1200.00 a month just fine because we saved in the good times.
We owe a relative 600.00 and wouldn't think of defaulting on that loan or any others.
Suggesting to others in debt that they just walk away from that debt is wrong.
Personal responsibility and all of that.

[dkf]

21. Savings definitely adds to peace of mind.

Sounds like you prepared well just in case. And having a good credit situation will improve chances of getting a good job. It pays off in so many ways.

[laughingliberal]

32. I practiced personal responsibility all my life

But after my husband's business failed and I lost my job our savings didn't last long. I lost everything in a flood in '98 and that ate up all the savings I had at that time and my husband was starting over after a divorce when I met him in '99. What savings we managed to accrue in these years went pretty fast with no income to speak of. Glad things worked out better for you.

Considering the mortgage crisis tanked a business my husband made his living on since 1982, I don't really have any problem with the average working person who is struggling saving themselves if they can.

America: welfare for Wall Street and personal responsibility for the working class. Maybe if the people get too big to fail they'll get some help.

[Name removed]

41. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[cbdo2007]

69. I agree with you...and people here don't seem to understand the "win some, lose some" concept.

It's just life. No matter how much we plan we're going to win sometimes and get a great deal or make a great investment or whatever and we're going to lose sometimes. Just because something happened now to someone they don't agree with, they think the world's crashing down on them and find everyone else to blame.

This whole housing crisis has given millions of people both ups and downs.

It's easy to look back now and say, "my house has lost X amount of money since I bought it, so I'm mad and think the bank should be responsible."

Yet when their housing values were rising like crazy a few years ago, I'm sure everyone around here wasn't saying, "wow, my house has gained X amount of money since I bought it, so I'm happy and want the bank to share in my success."

I know lots of people who sold during the housing bubble and made a sh*tload of money when their houses gained 100% or more within just a few years, now they're upside down in their current situation cause they used profits from the housing bubble to buy a bigger house.

People shouldn't be eager to share their losses with the bank any more than they would share their gains with them. They won for awhile and the bank didn't say anything. They didn't ask for a share of the profits. Now though because the bank is always the "bad guy" they are supposed to take the fall for everyone who's ever made a bad decision.

[laughingliberal]

94. I would suggest 'win some, lose some' should be the message to the banks and those here who are

whining about those who are choosing to walk away. If the banks hadn't tanked the whole fucking economy they'd be getting mortgage payments like they were. They wrote the contracts.

edited typo

[Hello_Kitty]

108. The bank didn't get a profit when housing values were going up? Are you serious?

:wow:

You can't be serious. What do you think they were doing with those loans that whole time? They weren't letting them sit in the bank. They were reconfiguring them as CDO securities, selling them, and using the profits to sell MORE bullshit loans!

[Hello_Kitty]

90. Why is it wrong?

In my city the developers of a massive retail and condo complex that got a huge tax break from the city have let it go into foreclosure because they haven't sold all the condo units and several of the stores pulled out. So if I have this straight, them walking away from their project is a sound business decision but a homeowner walking away from a home s/he can no longer afford is "irresponsible".

Is that right?

[undeterred]

12. We are all screwed no matter what.

Unless you are a member of the ruling class.

[gratuitous]

13. Indeed

How DARE the peons think they can just walk away from their financial obligations? Who do they think they are - Donald Trump?

[dkf]

16. Its not good when the big guys do it either.

Look at how outraged you are. Isn't that the double standard?

[gratuitous]

27. And yet you post only about the little guys

It's surprising to me (although perhaps it shouldn't be) that there has been media notice taken of ordinary folks acting like rational economic actors. When a large corporation or a well-heeled individual screws someone in a business deal, the popular media shrug and if they notice at all simply mutter, "That's business." But from what I can discern, when little people walk away from a bad deal like an underwater mortgage, the moneyed interests are suddenly quite alarmed.

The aforementioned Donald Trump has gone bankrupt at least once, and threatened it on several other occasions in order to leverage himself out of bad business deals. The moneyed interests have worked very hard and very cooperatively to please Mr. Trump, for any number of reasons. One, of course, is that they make money from dealing with him. There's also the cachet of being involved in a transaction with the man who wrote "The Art of the Deal."*

But small potatoes investors? Folks who were stampeded into buying overpriced homes at or near the height of the market? Financiers haven't been very eager to negotiate with them, and they have enlisted the popular media in firmly affixing all blame on "greedy" "unqualified" buyers who bought more house than they could afford. Somehow these financial moguls couldn't refuse to write loans for first-time buyers. The market-churning hocus pocus that resulted in these properties being so badly overvalued seems to get lost in the mix. Not to mention the marketing hype that persuaded so many people that if they didn't buy and buy now, they'd never be able to afford a home.

But now, after the bubble has burst, and the market is resuming a more natural level, the mortgage holders are unwilling to take their lumps along with the people who got fleeced. Cram-down legislation proposed by Congress was scuttled; mortgage holders refuse to negotiate more affordable terms. And so borrowers are taking what is really the only avenue left to them: Walking away. They've done the analysis and determined that the hit they'll take for defaulting on their loan is less than the financial damage they'll do to themselves by staying with the bad deal.

Yes, it's bad for the financial sector. It could be less bad if the big money concerns were more willing to negotiate with their debtors, but they uniformly refuse to do that. I'll leave it to you to guess why. But the public scorn and the fretting over the damage to be done by financial institutions seems to be reserved solely for the people walking away from their loans, with no accountability apportioned to the institutions who engineered this situation.

There's a lot of blame to go around; I'm just not willing to put it all on the most vulnerable victims.

*I like the way Trump used "art" to describe his rapacious capitalism; sure put sculpture and literature in their place!

[xiamiam]

31. + one million

[laughingliberal]

33. America: welfare for Wall Street and 'personal responsibility' for the working class

Maybe if enough people start acting like Wall Street, we'll be too big to fail.

[blondeatlast]

42. +1. nt

[Pithlet]

48. +1,000,000,000

[dkf]

34. Actually I'd say there are more big boys walking away than little guys.

It takes a more ruthless personality to walk away and it makes more sense for an expensive house where 20% means 200000 while a less expensive place loses 50000

[Hello_Kitty]

86. Commercial real estate developers default on projects all the damn time.

As do homebuilders. Greater Phoenix is littered with half-occupied or even half-finished strip malls and office complexes in foreclosure. Housing developments that are half finished are collecting cobwebs while thousands of people are losing their homes here.

[dkf]

35. Actually I'd say there are more big boys walking away than little guys.

It takes a more ruthless personality to walk away and it makes more sense for an expensive house where 20% means 200000 while a less expensive place loses 20000.

[Pithlet]

46. It could be.

The fact that so many of the little guys stick it out longer than they should to their financial detriment out of some misguided sense of duty, probably in part due to the horribly misguided judgmental finger wagging of some other little guys, is pretty sad in my book.

[Lydia Leftcoast]

59. Right, a lot of the commenters on the NY Times article

mentioned that a group of investors had walked away from a pair of huge apartment complexes in Manhattan.

[msongs]

18. it's an extension of the something for nothing culture like file "sharing" etc. nt

[laughingliberal]

38. Nope, it's a lesson we've learned from those who have been fleecing us for 30 years

Get the emotions out of it and make sound 'business' decisions. We've been hit for 30 years with declining wages for which we have to work harder every year while big business and the uber wealthy were allowed to shirk their responsibilities to society at large.

After working my ass off all my life and getting less for more every year and now losing everything in my 50's, that personal responsibility crap doesn't fly with me anymore.

When we return to a day that business feels some responsibility for their employees and customers, I'll give it some thought.

[Hello_Kitty]

87. Thank you! eom

[slackmaster]

19. Defaulting on debt is always an option - It's a business decision

Purely reptilian, no moral implications one way or another, only consequences.

Businesses do it ALL THE TIME. Individuals have the option of doing so too, and must accept the effects such actions have on creditworthiness.

[dkf]

22. Then walking away with ability to pay should have a more serious downside than

getting into difficulty and then not being able to pay.

Banks actually SHOULD be taking this into account because it shows a pattern of calculation that will act against their favor in many cases because MOST loans (cars, credit cards, student loans) have a good chance of not having adequate collateral

This kind of character trait does not change over time either. It should be on a person's permanent record.

[slackmaster]

24. I don't know how that could be enforced - Ability to pay is partly subjective

It depends on what value a person puts on having "disposable" income. To some people, a Venti Latte from Starbucks every morning is a psychological necessity.

The consequences of defaulting on a loan are always clearly spelled out in the documents.

[laughingliberal]

60. Yep. I know of no mortgages with a clause requiring you to keep paying as long as you can afford it

That was kind of an lol for me.

[laughingliberal]

43. Sorry, my character traits changed when we lost everything

and they can put that on my permanent record all they want. Banks are able to take the financial situation under consideration. Remember the new bankruptcy laws in 2005? If there is any ability to pay, people are forced into Chapter 13. Heh! Since they tanked the whole economy most people are able to now file Chapter 7.

As for mortgages, it's a contract and the banks' recourse is whatever that contract and the state laws say it is. Period. Or would you prefer we return to debtors' prisons?

[Xithras]

66. Contracts contracts contracts.

There is nothing ethical about exercising a contract.

To repeat an example I cited in the other thread. If I sign a contract with you saying that I have to pay you $500 a month, and you get to bonk me on the head if I don't pay, there is NOTHING unethical about me telling you, "I don't want to pay anymore, just bonk me and get it over with." My reason for making that decision is irrelevant. You can complain all you want about losing the $500 a month, but the reality here is simple. You agreed to the bonking escape clause. If you didn't want to face that possibility, you shouldn't have agreed to it. There is nothing unethical about ME deciding to exercise a clause in my contract that WE BOTH agreed to.

Mortgage contracts are actually even more damning for banks, because they write the contracts themselves with little or no input from the other party. They created these contracts, and they define the requirements and escape clauses. They created these situations, and defined the severity of the "bonking".

What you're saying, in effect, is that PEOPLE should be held to ONE side of the contract, but the BANKS should be exempted from having to deal with the negative repercussions of THEIR side of the contract.

[dixiegrrrrl]

80. Well stated.

Logic and business decision vs. emotional and value decisions.
Banks are not known for the latter type.
Too many people are.

[laughingliberal]

95. Yep. The banks wrote the contracts. Watch my heart break for them. hee hee. nt

[hunter]

82. "Permanent Record?" How about we just sell people with low credit scores as slaves?

Sorry dude, your payment's late so we just repossessed your car and your house and sold you to Wal-Mart's janitorial contractor. I hope you get along with Haitians. Have a nice life.

There will be a point when the majority of us have bad credit. At that point the banks will simply redraw the curves and reset the ratings or they'll cut themselves out of their own business.

It's a wild ride to hell and we're all riding the same bus.

[Hello_Kitty]

92. Donald Trump's permanent record on that is as long as your arm.

Yet oddly enough, it hasn't impacted his ability to get money.

[WeDidIt]

23. Businesses default on contracts all the time. Corporations do it as a matter of doing business

Walking away from an underwater mortgage is a business decision, nothing more.

Corporations set the stage for this. If my loan goes too far underwater, you're damned straight I'll default, decalre bankruptcy, and start over.

It's a business decision, nothing more.

[laughingliberal]

97. +1000 nt

[Blackhatjack]

30. Of course when Corporations and Businesses Do This ... "It's just a business decision..."

Banks and lenders write the contracts, set the terms, and decided that they had obtained sufficient security to underwrite the loans at the time the consumers signed on the dotted line. In those same documents, the security pledged to be forfeited in the event of default by the borrower was an explicit agreement between the borrower and lender.

I don't see individual borrowers walking away from mortgages underwater any different from corporate borrowers which have defaulted on commercial and development loans on projects that are no longer profitable.

If you are going to play the moral hazard card, start with the corporations and prevent them from walking away from their obligations.

[closeupready]

39. +1000.

If corporations can do it with impunity, then don't complain if consumers do it, too.

[bvar22]

36. As soon as Wall Street Banks believe they are "too big to fail",

we are all screwed!
.
.
.
.
oops.

[laughingliberal]

45. Perhaps if enough average Americans start walking away from all this, we'll be too big to fail. nt

[Fixed_Based_Operator]

78. I concur with this idea.

What will a credit score mean if everyone had wrecked credit?

[ddeclue]

44. Oh boo hoo.. that's not my problem. Why should people pay back when the banks set them up to fail?

Why should people expect ridiculous returns on their money? People who invest in AIG, BoFUA, Goldman Sachs, Citicreep etc. DESERVE to lose their shirts.

[laughingliberal]

47. +1000 nt

[Tierra_y_Libertad]

49. Too small to fail? Maybe the government should bail them out..like they did the banks.

Or, subsidize them, like they do corporations.

[TexasObserver]

52. Banks aren't failing because people default on loans they can pay.

When there's a bad economy, people default on debt obligations. Most of those defaults are strictly based upon people having less money. They have to choose what they will pay this month.

When the choice is paying the utilities or paying a credit card with American Excess, that's an easy choice to make. When the choice is buying food or paying a credit card with Capitol Credit, that's an easy choice to make.

The idea that banks will fail because some consumers decide "oh, screw it, I'm not paying a bill I could afford to pay" is pure nonsense. There's nothing to substantiate such a claim.

And if anyone is keeping in excess of the insured FDIC limit in one bank, that's their problem for being stupid.

[laughingliberal]

54. "And if anyone is keeping in excess of the insured FDIC limit in one bank..."

That's what I thought. Is there anyone who wouldn't figure out to open another account for anything in excess of the insured amount?

[blindpig]

65. Fuck the banks

Why is it the people's fault? Why is it always the people's fault?

Ruling class argument.

[laughingliberal]

67. Ruling class argument, indeed

Big, old Reagan Republican style ruling class argument.

Really sucks to see it on a Democratic website. Do we just have a lot of people here who were not alive in the days before Reagan who don't know our country was not always rigged so vehemently against us?

[galileoreloaded]

68. This thread is about playing by rules that no longer exist except in the

minds of institutionalized consumers.

What you think you know, you really don't know.

The banks were allowed to recapitalize by paying them previous assessed full value via a multitude of fraudulently concocted FED programs. It was the largest heist in history, and you people that are complaining at your "equity value decreasing" because folks are dropping out of the debt matrix due to design or default, are a bankers wet dream. You will continue to pay and pay, as long as you are able, based on your 1950's principles, while the banks (who know that there are 4-5 million extra residences nationally) shifted the paradigm about 4 years ago and are playing by the 2006 rule book.

Let me show you one more time why none of your actions matter:



There can be no recovery, no growth, in real terms, as every dollar, public and private, is being extracted due to deleveraging, and dollar destruction.

Watch for a major GDP revision.

[leftstreet]

70. +1

[laughingliberal]

72. This needs to be an OP

I just don't think people get it. Working class Americans bashing on others of their class about 'personal responsibility.' It's way time those who are comfortable with the status quo of today wake the hell up. This isn't going to end with just the people struggling now.

[blindpig]

73. Well done. n/t

[ddeclue]

75. REPOST THIS AN OP PLEASE!

:applause:

[closeupready]

83. I concur - OP! OP! OP!

:applause:

[Hannah Bell]

77. Tell that to the folks who want to default on the$2 trillion in Social Security money we loaned them

Tell that to the GM execs who stiffed their pensioners.

The ruling class has no scruples about defaulting on obligations when it suits them.

Oh, but now civilization will collapse if some schmuck defaults on his mortgage?

Ha-ha. The mortgage holders are in that position in the first place because the banksters didn't want to take the losses on the speculative bets they made & shoved their problem on to the citizenry.

Spare us the moral lectures. Dog-eat-dog, every man for himself, that's what the rulers model, don't whine when the plebes follow suit.

[laughingliberal]

96. "Oh, but now civilization will collapse if some schmuck defaults on his mortgage?"

A-freaking-men. Seems people are getting a little nervous about the peasants starting to wake up.

[EFerrari]

79. Wall Street already has. We already are.

:shrug:

I hate being so negative but if I bail on credit card debt it's not going to hurt us all as much as what Wall Street has already done with the full cooperation of our government.

And, btw, the reason people starting using credit was because their WAGES were sliding into the toilet. That happened about the same time I hit the job market in the mid-70s.

[laughingliberal]

100. I'm so with you. Worked my whole adult life in the trickle down economy

Working harder for less every year til we fell off the cliff. It's pretty much a save yourself if you can day in America, now.

[earth mom]

81. Put the blame on the fuckers who really ripped us all off: Wall Street & the Banksters.

They are the ones who gamed the system and figured out how to rob us all blind.

Don't even try to blame your neighbor down the street who lost his job and home because Wall Street has been given TRILLIONS of our taxpayer dollars and are NOT reinvesting that money in this country or in jobs!

I applaud anyone who sticks it to the fucking banksters by walking away from their debts because they are too damn broke to pay off those goddamn bloodsucking vampires!!!


If you have money saved in a bank, I'd suggest you take it out and invest it in something you can bury like gold or jewelry because those bastards will try and figure a way to steal your savings from you one way or another!

The rest of us who live paycheck to paycheck will be investing what little money we have in heirloom seeds and other goods that we can use or sell when this country eventually crashes and burns!

[Naturyl]

84. Banks don't loan depositor's money

The deposited money is just a formality. Money loaned by banks is created from thin air, and this is how the money supply is expanded.

No joke. For those unaware, it may seem incredible, but do some research and you'll find it is the case.

[LaPera]

85. If it means ones only choices are to walk away or feed ones family What the fuck would you choose?

Obviously, "some" don't have to make this choice....it's extremely easy to pontificate and choose to exercise moral righteousness when one doesn't have to make this kind of decision.

Those who are more worried about how it will affect the banks and ultimately them, they then offer some bullshit abstract moral dilemma and feel guilty if they decide against their best interest....

This is the way it's always been, all through history, keeping the workers, the peasants, the pawns down and feeling guilty, and it's usually their own, preaching this bullshit to the helpless in favor of the "haves" interest!

[superconnected]

102. +1

[Hello_Kitty]

120. Yep. The rabble policing the rabble.

Here on DU I call them the $30,000 DLC Millionaires. They have working class incomes but think they'll be invited into the elite class if they repeat their talking points.

[anonymous171]

89. Fuck the banks, I hope everyone defaults and flees to Mexico

[superconnected]

103. What are you, a repuke?

"Those people will have been ROBBED because the person who borrowed their money didn't want to take a financial loss."

The people got robbed by predatory lenders, outsourcing to India and China, and the WTO that doesn't put sufficient tariffs on products we buy that don't use our labor to make.

If you really don't understand what happened to the economy and you believe the common person is at fault, you are on the wrong board. The correct board for you is www.freerepublic.com. I promise they hate the average person there but love corporate crooks, just as much as you do.

[asdjrocky]

106. Walk away People.

You owe nothing to the banksters.

[LanternWaste]

112. I'm not personally aware of anyone...

I'm not personally aware of anyone who defaulted on a loan and thought it was "no big deal." Indeed, the few I know who have defaulted went through many a sleepless night, feelings of guilt and worthlessness, and marital problems.



However, maybe there are numerous, peer-reviewed studies that do illustrate that many people who default on loans are laughing and giggling over their ill-gotten gains... :shrug:

[Hello_Kitty]

114. I wish people would start thinking of it as no big deal.

Business owners don't lose a wink of sleep over walking away from failing contracts so why should Joe and Jane Doakes?

[TheKentuckian]

116. You're under the impression we aren't already all screwed

Failure to recognize systemic failure is a far bigger concern. I strongly suggest you spread your money around if you are so blessed to have ca$h resources above the FDIC cap.