My asshole neighbors! They just literally walked away from their house...

[jillan]

and are going to let it go into foreclosure.

If these people were financially in trouble, I would understand. I wouldn't blame them one bit.
But they are not.

They just bought a bigger house, big enough to store their full size RV.
They travel to Europe every year and spend a month there.
He has an amazing job, a manager of a department for a large company that is expanding.

They just didn't want to be bothered with selling this house in this market (we're in Az and it's bad).
So - they just walked away. I liked them - I thought they were a nice, friendly couple, even tho they are repubs.
There goes the value of my house just because they are in a position where they don't need to worry about their credit.

Is this it - everyone is going to live their lives with a "ME ME ME attitude, screw everyone else?" attitude? I feel like they just told me & everyone in this neighborhood "Fuck You".

Good luck to their new neighbors. Assholes.

Edit to add - I know they have every right to do this. I was thinking about selling in about a year. Money is tight & the bills keep getting higher to live here. It just sucks because the actions of one can affect your plans, affect your wallet.

[ET Awful]

1. But . . but . . . but . . . I thought all of Arizonas problems were caused by immigrants

At least that's what Jan Brewer told me.

[jillan]

2. Well there is probably some connection here - I'm sure these people voted for Brewer.

[Logical]

3. This is legal? What about their assets?

[davepc]

8. Why would it be illegal? A mortgage is a contract with the lender

It spells out pretty clearly what happens if you don't meet your financial end of it; the bank takes possession of the asset.

[Logical]

15. They can sue them I assume. Go after savings.

[davepc]

19. Sue them for what?

They stop paying, the lender takes the collateral.

A mortgage is not a prison term where you have to pay it no matter what. If you don't want to pay any more, you don't have too. Their are consequences (other lenders might think twice about lending you money) but its not illegal, and a borrower is under no obligation to continue paying if they don't have a problem surrendering the collateral.

[quaker bill]

89. Foreclosure

it is a form of lawsuit.

[obxhead]

22. Different states have different laws.

Here in VA they can go after you if you could pay. If you own a second home, even in another state, they can take that.

However, in FL, you can walk away, even if you can afford the home and the banks only recourse is to take the home on the note.

Not sure what AZ laws are, but I believe they are much like FL.

[girl gone mad]

29. Arizona is non recourse.

Pretty sure the bank knew that when they signed the loan. They get the house back. That's it.

[slackmaster]

35. The remedy for a mortgagor not making payments is foreclosure

It's written into the note.

[jillan]

9. I don't know! Without devulging their personal info - both of them have jobs that should have

educating them in why this is a stupid idea.

This makes NO sense to me.

[Mariana]

75. It may not be a stupid idea in their situation.

It's possible that they sat down and did all the calculations, and came to the conclusion that this was the move that would be most financially advantageous TO THEM. They may have figured that they were going to lose money in any case, and this way they'll lose the least amount.

It still is likely to suck for the neighbors, of course.

[ejpoeta]

4. wow! i have heard of people who couldn't afford the payments and couldn't sell it

walking away, but this is insane!! and i thought republicans were about 'responsibility'! isn't there anything anyone can do about that!!??? there are so many things wrong with that. firstly the property will disintegrate and vandals could come in and steal things.... and rodents.... uggh. i am sorry that is happening to your neighborhood. wonder if posting flyers in their new neighborhood would do anything about the deadbeats.

[coalition_unwilling]

81. It's called 'strategic default' and has been discussed as an option ever since

this housing crisis began. It's not an option the banks want people to know about.

Here's the rationale: Let's say you were unlucky enough to buy a condo in my building in 2006 at the height of the boom for$500,000. Being the sharp operator you are, you took out a no money down, liar's loan for the full $500,000 with monthly P&I of about $2500 on a fixed rate 30-year note.

It is now 2011 and similar units in the same building now sell for $225,000 (a decline of some 55-60%). Do you keep making payments on a $500,000 loan for a property that is worth at most $225,000, knowing that you will never receive the full value of all those P&I payments? Or do you knowingly and with full awareness of the negative consequences for your credit rating, simply 'walk away' from the property?

It's just business. Corporations do the same shit to ordinary people every day, restructuring and laying them off without nary a thought for the damage they will cause. But when ordinary people turn around and do it to the corporations, they suddenly become the objects of a puritancial, moralistic scorn.

I understand the OP's angst but think his anger is misdirected at his neighbors when it should be directed at Greenspan, et. al.

[conspirator]

90. +1. Corporations screw us because they can. We should do the same when we can nt

[Warpy]

5. Foreclosure is going to cost them

and they are not going to be off the hook for that loan. Since he's got such a fat job with a great salary, the bank will go after them.

My guess is that they're mortgaged up to the hilt, borrowing on the theory that his salary is a permanent condition. It's not.

This is why new money loses it all. They don't read the fine print and they can't spend it all fast enough.

[coalition_unwilling]

83. Um, small but significant caveat: Arizona is a 'non-recourse' state,

meaning bank can only foreclose on the property (the collateral for the loan), but cannot pursue the debtor for satisfaction beyond that.

I do think this family sounds like a case study in hubris, but they'll probably skate away from this with only the damage to their credit rating to show for it.

[bobbolink]

6. "ME ME ME attitude, screw everyone else?" Yes, that is pretty much it.

And, it infects Dems, too.

If you would, listen to "progressive" media, with the ear of a poor person.

What do you consistently hear?

"Middleclass, middleclass, middleclass."

Yes, the prevailing attitude now is "ME, ME, ME."

Solidarity? hah....

[lumberjack_jeff]

7. Yup. Republicans; all about personal responsibility. For you. n/t

[blondeatlast]

10. It's scuzzy of them to be sure, but I kinda don't blame them much, either.

The banks dumped the mess on us, why shouldn't we profit?

[jillan]

14. You're right - it just sucks when the actions of someone affects you.

[Pithlet]

25. Blame the banks who made this mess in the first place.

If they'd been able to sell the house this wouldn't have happened.

[LooseWilly]

66. Uhh, isn't your concern of how it affects you... a "me me me" attitude, also?

Isn't it a form of you trying to tell others how they ought to behave in order to not hamper the interests of "you you you"?

(Not that I blame you your anger... but I think your line of anger is hypocritical. Maybe you should revile them for something else? For having an RV? For being fiscal cowards?...)

[jillan]

80. It isn't just ME that they did this to & voicing a frustration on a website is not

telling anyone what to do.

Geesh! My last words to them where 'let me know when the housewarming is' while I quietly stewed under my breath.


Please don't put words in my mouth.

[Jester Messiah]

23. Tend to agree

They have a contract which says "Make payments or the bank gets the house." The homeowner says "My house is worth a lot less than I owe for it, I think I'll just let the bank have it." Under the terms of the contract, that's legal. Fuck the banks, it's their shitty system and I'm not sorry for them if they get burned by it. They've been screwing us over for decades, it's about time they got the dirty end of the stick.

[laundry_queen]

41. My parents did this back in the 80's

They had bought at a high point, with a high interest rate. Then prices and interest rates crashed. The bank wouldn't refinance without giant penalties, so my parents walked away, bought a nicer house (although it wasn't crazy, they went from a duplex to a small bungalow) and to top it off, their payments were lower. They never regretted it. The bank tried to screw them so my parents had no qualms with what they did.

[Ikonoklast]

11. Sorry, but they owe you nothing.

They are gaming a system they didn't invent, the house would end up empty in any event.

[davepc]

12. We need a law that before you make any decisions about your own life you consult your neighbors

just to make sure it doesn't inconvenience them.

[jillan]

16. Lol - Sounds good to me.

[Ikonoklast]

28. Please take down those hideous green bathroom curtains, then.

I have to see therm every time I look out my kitchen window.

Thanks in advance.

[blondeatlast]

17. LOL! nt

[proud2BlibKansan]

36. Doing something that lowers the value of your property

is more than an inconvenience.

[apocalypsehow]

73. Great! I've decided I want to turn my front and back yards into an auto salvage yard - right after

I move in next door to you.

I'm sure you won't object to this "decision" about my "own life," now will you? Will you? :shrug:

[davepc]

78. As long as you are in compliance with all local zoning laws and the like

Then I don't give a damn what you do. I might not have to like it, but doesn't mean you can't do what you want within the law.

[apocalypsehow]

85. Now you start to add qualifications. Zoning laws? I'm not interested in any damn zoning laws. As you

stated above:

"We need a law that before you make any decisions about your own life you consult your neighbors

just to make sure it doesn't inconvenience them."

This was stated sarcastically, of course, meaning the exact opposite: we don't need any such law, because those decisions are about our "own" lives.

Well, I agree: I want to make such a "decision" regarding my life, and that decision is to open an auto salvage yard on my property. Right next door to you.

I don't care about what the zoning laws and "the like" are all about: that's interfering with my "life," as you so eloquently said above - I want to do what I want to do, the effect on my neighbor's property values be damned. Just like you said above regarding the discomfiture of the OP over what their neighbor had done.

What's the problem? :shrug:

[blondeatlast]

13. We're going to be in the minority--but I agree. nt

[Name removed]

18. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Warren Stupidity]

20. The house was upside down and they did the financially prudent thing.

Businesses faced with similar balance sheet problems would make exactly the same decision, and if they were public, doing otherwise would risk a shareholder lawsuit. When individuals do this we react in knee-jerk horror at the irresponsibility of bailing on a bad investment, at minimizing one's losses, as if it were some moral outrage. WTF?

[JVS]

21. May their credit suck until the day they die.

[here_is_to_hope]

24. Go find a homeless family and

Move them in. They should have at least two free months there before any one with authority shows up.
Seriously.
Get the power changed over, water too.
Its easier than you think.

If you want to push it even further, make up a fake rental agreement, forge it and have the new tenants show it to any one who questions the legality of tenancy.
That should be good for another month.
Every one wins!

[Exultant Democracy]

30. lol, I wonder how the squarter laws work out there.

[here_is_to_hope]

32. You would be surprised how easy

it can be to squat and not suffer any penalties.
We have done what I described above more than once and
got away with it. Any system can be bent to fill a need.

[blondeatlast]

34. I think it's a far better idea to have someone residing in them than to let them fall to criminal

behavior and the elements. I live in Phoenix, and the meth biz is rampant in neighborhoods of EVERY stripe.

[apocalypsehow]

70. Forging a legal document is a criminal felony in all 50 states: surely you are not using DU to

advocate criminal behavior, are you? :shrug:

[2Design]

26. the value of your house was gone before they walked

[blondeatlast]

31. I'm a fellow Zonie and I can absolutely attest to that. nt

[Mariana]

77. Exactly. They wouldn't have walked otherwise. nt.

[freshwest]

82. Yep.

[sufrommich]

27. As someone who lives on a street with many foreclosures I

can tell you that a lot of people will say that they're going to a better place when they're really not. There's a chance your neighbors haven't really bought a newer,bigger house and just don't want to discuss their unfortunate circumstance with you.

[blondeatlast]

33. Excellent point. due to divorce I am now living in an apartment in

the same area my house was in--I was astonished to find that I knew several of the neighboring families here. they, like me, wanted to keep the kids in the same schools.

[slackmaster]

37. I doubt that there will be any lingering affect on the value of your home a year from now

I understand your frustration, but it's one of those things you can't do anything about.

[jillan]

42. I hope you're right... thanks for making me feel a little better.

[Lex]

38. They just SCREWED their credit up

for several years to come and they can forget getting a new mortgage loan, car loan, or anything else for awhile, even if employed.

Hope they can pay cash for all they want for awhile.

[Nye Bevan]

39. Much as the banks would love to guilt-trip people into not foreclosing for purely economic reasons

a deal is a deal. This couple has every right to exercise their option to walk away, and the bank just has to suck up the loss. If the shoe was on the other foot and there was some clause in the mortgage that the bank could take advantage of, you can be sure that they would.

And I don't really understand why you are so upset. People move all the time. The house will be auctioned and sold for whatever its fair market value is, and new neighbors will move in.

[sufrommich]

40. "a deal is a deal". Well, the deal is that you borrow money

over a fixed amount of time and pay it back monthly until it's paid for.I'm not sure I'd call it a "right" to walk away from that.

[Nye Bevan]

44. That's exactly how the banks want people to think.

But the legal definition of a non-recourse loan (which I am assuming is the case here) is that the borrower has the right to hand over the collateral in exchange for canceling the loan.

[blondeatlast]

46. AZ is indeed non-recourse (I'm a paralegal here). nt

[Nye Bevan]

51. Thanks..... I was too lazy to check (nt)

[Warren Stupidity]

55. exactly, and businesses do this ALL THE TIME

somehow it is a moral outrage for regular people to do the same thing.

[Redford]

43. It is pretty stupid to willingly go into foreclosure

They will have a hard time with their credit for years to come.

[Nye Bevan]

45. Not necessarily. If you had the opportunity to get $200,000 today

in exchange for having bad credit for the next 7 years, would you take that deal? That's the kind of calculation that you would do in deciding whether to walk away from a loan. That trade-off would make sense for many people.

[blondeatlast]

47. Many people are discovering having "good" credit isn't all it is cracked up to be.

One needs a car and a house. Once those are obtianed, what's the point in having credit? A mortgage (even now) is the only sensible debt to have.

[BobbyBoring]

59. Really

Few people have good credit anymore. Banks are back to the point that the only way you can get a loan is prove you don't need it.

[jillan]

48. Agreed - former loan officer here & this will be on their credit for at least 7 years.

[Redford]

50. I worked in lending for 25 years as well

One thing about the bank having to sell this house now is that the owners will still be liable for the difference between what they owe and what the bank sells it for. They can get a judgement against the new house and they will not be able to sell the new house without paying off the old.

[msanthrope]

86. You are completely incorrect. AZ is a non-recourse state, and someone in lending for 25 years

should know what that means.

[eridani]

87. That's true, but maybe they decided that they will not have any need to borrow money for 7 years

I don't have a frigging clue what my credit rating is. It doesn't make the slightest bit of difference to someone with a paid-off house and zero debt.

[Liberal_in_LA]

52. folks doing it always say "I'm throwing money away" by paying on underwater house

But it's not being thrown away, it's paying down the mortgage.

[SoCalDem]

74. Yep.. they are mad about paying $200 for a coat that went on sale for 50% off a month later

The problem is the escalating costs of everything in our lives and job-loss or fear of job-loss.

People also see houses sold by the banks for a LOT less than the original mortgage was, but these same banks were totally unwilling to negotiate with the people living there who had been paying all along..

Houses bought as a place to live, by people who planned to stay in them forever, are probably not walked away from, but for people who move around in the job market, that's another story. Many people got too used to houses always appreciating, and thinking that they would always make money on a home sale.. We have sold 2 houses, and bought 3.. All three were bought in a sellers' market and the two were sold in a buyers' market..we have never "made" a penny on a house sale:(

[Le Taz Hot]

49. The exact same thing happened to us.

Neighbors last year bought a bigger, better house in the foo foo part of town and just let the "old" one go into foreclosure. It was empty for about 8 months and new neighbors finally bought it at foreclosure prices. That brings down the prices of ALL HOMES IN THE NEIGHBORHOOD. Prices plummeted and they continue to do so, even though this is working class neighborhood. I hope they enjoy their new home because they sure as hell fucked over the rest of us.

[Nye Bevan]

53. The price of your home had already fallen.

The "foreclosure price" was the fair market value of the house.

[Le Taz Hot]

69. Actually . . .

the home prices had begun to rebound. The house sold for 20% below market value which brought down the value of homes in the entire neighborhood. That information comes from a local broker who's been doing business in this area for about 30 years. But thanks for playing. :eyes:

[Nye Bevan]

72. Nope. The house sold for market value.

Which happened to be 20% less than what you and your neighbors *hoped* the market value was. The definition of "market value" is "what someone is prepared to pay".

[Papagoose]

54. I am wrestling with the idea of walking from my house

I do NOT want to do this, but I'm at a point that I don't know what else to do. I live on a street with 7 houses. Four have been foreclosed on in the past year and 2 are in foreclosure right now...yes, my house is the only house being paid for right now.

My house is worth far less than what I paid for it and worth less than what i owe on it. I have a pressing need to sell as I am driving 100 miles round trip to commute to work which is killing me. The time spent in my car is time that I need to spend with my family and it is taking a toll on my marriage and my relationship with my kids, not to mention the gas bills.

I have reached a point where I don't feel much remorse about this and am fully prepared to leave tomorrow. My wife on the other had will have to be dragged kicking and screaming - so it's probably not going to happen.

[Nye Bevan]

61. Whatever you do, GET EXPERT FINANCIAL AND LEGAL ADVICE!

It might make sense for you to walk away, but you need to get expert advice first. There are many considerations, like the potential tax liability and whether the bank can come after your other assets. Paying a lawyer to check all this is probably the best couple of hundred bucks or so you will ever spend. Good luck.

[louslobbs]

56. Your neighbors are not nice and have no integrity, but read further and see all the corps that do

same shit and never get called on it. Where's the Integrity, being one's word, being authentic? I can understand if you can't pay, but to use walking away as a tool to save yourself money, it's pathetic.

Corporate developers abandon "underwater" property -- why not individuals?

Cory Doctorow at 9:45 PM Monday, Jan 25, 2010

Tishman Speyer Properties and its co-investors just walked away from the largest real-estate deal in US history, simply defaulting on the properties and the loans that bought them and leaving their creditors in the lurch. The properties, Manhattan's 56-building, 11,232-unit Peter Cooper Village and Stuyvesant Town, were "under water" (worth less than the debt hanging over them), so the corporate developers elected to simply jettison them.

They're not alone -- Morgan Stanley recently dumped five San Francisco office buildings, stiffing their creditors when the buildings went underwater.

As a business-strategy it makes sense: why repay loans secured by assets that are worth less than the loans? Just turn the assets over and cut your losses.

But individuals are shamed, bullied, and counseled not to do this when it's their private homes that fall underwater. Everyone from former US Treasury Secretary Hank Paulson to credit counselors to the Mortgage Bankers Association tell you that defaulting on underwater property is low and dishonest (unless you're a Wall Street player -- then it's just "protecting shareholder value").

Former Treasury Secretary Hank Paulson once said: "And let me emphasize, any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator - and one who is not honoring his obligations."
The head of the Mortgage Bankers Association, John Courson, played up the moral argument against walking away, telling the Wall Street Journal last month: "What about the message they will send to their family and their kids and their friends?

But corporations and businesses don't play by those rules. Like CalPERS's McKinley said, "You come to a point where you write it off or stay in the game. If you want to stay in you got to put in more capital. We reached our limit on that. It was not a prudent thing to put more money into it.

"You get to a point where you can't keep throwing good money after bad," he said. "These are illiquid investments. You gotta fish or cut bait."

As for homeowners walking away en masse -- perhaps lenders' biggest housing-related fear -- McKinley added: "We're hopeful that won't happen."

[ecstatic]

57. Sometimes I wonder if I'm a sucker for sticking this through

The value of my home has plummetted by about 25 to $50,000 (maybe more). The rich are walking away from bad investments without looking back. Maybe I should buy everything I need to finance now, walk away, and then wait out the next 7 to 10 years before using my credit again.

[louslobbs]

60. We might seem like it, but we're not. I currently have two underwater homes, one in Los Angeles and

One in Palm Springs. Obviously, if I have two homes, I'm probably doing well enough to pay my mortgages and I am. I could walk away from both and buy nicer homes, at lower prices, but I have "Integrity". Why would any honest person, who can still afford to pay, "cut their losses" and walk away? Because they usually have no integrity, they don't care about their communities and are selfish to the core. Corporations especially, the do as I say, don't do as I do dirt bags, have no shame. Everything to them is about the bottom line even as it destroys our very nation. As long as I can pay, I will honor my contracts with the banks, even though most would not honor their contracts with others and that simply sucks.
Lou

[louslobbs]

64. And you would be following the corporate lead on this and I would say "it is what it is" do what you

think is best for you, but you are not a sucker if you don't. I won't tell you that I haven't thought about it, but my conscience would not allow me to sleep at night knowing that I screwed my neighbors. The banks? That's another story.
Lou

[ddeclue]

58. Bad for you but it makes a lot of sense financially

ultimately houses are vastly overvalued in this country. Houses are supposed to cost no more than 2-1/2 years salary. The average house then should be around $120k based on a median family income around $48k. Even now houses are overvalued.

[upi402]

62. Republicans abuse the commons

whether financial, medical, safety net, or environment.
It's THEIR world. We're here to clean up after them and whine about the unfairness.

Our party is useless -we can't do a thing and they know it - from the asshole neighbors to the pinnacle of power.

[aikoaiko]

63. Its the new normal.

I can't really fault people for making legal and economically sound decisions for themselves. I can't really comment on whether the negative consequences are greater than or less than positive consequences for your former neighbors.

[ms.smiler]

65. I’ve been researching mortgage/foreclosure fraud for over two years

now and my views have changed dramatically. Modern day securitized mortgages are a totally different breed of loan and once understood, people should consider various options.

Chances are there is fraud in your neighbors’ mortgage that violates Federal law. Chances are the company that would bring a foreclosure action against them, doesn’t own the Note and can’t legally prove ownership.

If your neighbors were interested in moving and not fighting a foreclosure which can take years, they could have found a renter and signed a 5 year rental agreement with the option to renew twice. That would tie up the property with a renter for a possible 15 years. That keeps the home occupied and provides income for the homeowners during the foreclosure process which they could use to pay an attorney to fight the foreclosure. They could position themselves to own two homes rather than one. It can be affordable to fight a foreclosure but I like to see well heeled homeowners and their legal talent join the foreclosure fight.

I am a business person and I often do deals on a hand shake involving thousands of dollars. A valid agreement is one thing, but securitized mortgages are no such thing. I now see my own mortgage for what it is – a scam. That’s why I hired an experienced attorney.

If the foreclosure goes uncontested, the foreclosing party will likely prevail in court. The property will likely have a clouded Title which will be a problem for any subsequent buyer. If your neighbors are so inclined in the future, they could file a Wrongful Foreclosure suit against the bank/mortgage servicer to regain the property and damages.

I believe your neighbors are acting in what they believe is their best interest. I think they are better off fighting the foreclosure. It’s not my decision to make though.

I have nothing to indicate your neighbors have done anything wrong but I do realize that banks/mortgage servicers have and will commit fraud and that your neighbors have most likely been defrauded. If you have a mortgage, chances are you have been defrauded. My own nice 30 year fixed rate mortgage has at least $54,000 in fraud. My attorney says she hasn’t yet seen a mortgage that lacks fraud. Homeowners often don’t realize that anything is amiss until they go to a professional.

The people who are underwater on their mortgages – well that’s likely due to appraisal fraud.

There are people with the view I had that “a deal is a deal.” I agree, as long as the deal is valid and legitimate. I don’t think anyone is obligated though to pay a scam.

[Modern_Matthew]

67. Everyone should allow themselves to go into foreclosure and elect sheriffs/judges that won't evict!

EOM

[COLGATE4]

68. Lots of states provide for deficiency judgments against

people who default on their mortgage. If that's true in your state the couple may well be on the hook for the difference betweenwhat the bank sells the property for at auction (probably not a whole lot) and what the value of the mortgage is. I wouldn't assume that they're as free and clear as they think they are.

[YellowRubberDuckie]

71. A couple of thoughts...

FYI: The value of your house was in the shitter BEFORE these people left. If you own a house in that market, you aren't going to want to sell for like a decade because you are going to lose SO MUCH MONEY selling your house at this point, selling would be ludicrous.
And yes, everyone has a ME ME ME, screw everyone else attitude. I hope you're not just now figuring this out.
Duckie

[jillan]

76. Actually we bought just before the bubble. Even in this market we do have equity in our home...not

what it was 5 years ago, but we would have made a small profit.

[and-justice-for-all]

79. That is just pathetic, what fucking wankers...nt

[deaniac21]

84. How could you possibly know their finances. Sounds like they

spend more tahn they make to me.

[sendero]

88. Guess what.

.... they just did exactly what a bank would do. You might say "well that's a might low standard" and I would agree. But if this country is not going to hold the banks accountable for DESTROYING HOME VALUES in this country to begin with, why should citizens concern themselves with the welfare of the banks.

The people probably looked at their options, their legal obligations and consequences, the financial consequences of paying for an underwater house, underwater because of the BANKERS GREED, and made the rational choice.

Good for them.