Look that's all nice you want to worry about other homeowners but the truth is: EVERY HOMEOWNER NEEDS TO MAKE THIS DECISION BY THEMSELVES.

There is no right or wrong here if you owe to much on your home you are a renter plain and simple. You will be debtor zombie if you are under water on your home to far.

Let the market do what it is supposed to do, give your home back the bank will price it right so it will sell and the next owner will have the ability to own a home at the correct price.

There is a need for a stable housing market and this will be done by market forces not homeowners keeping property thousands of dollars upside down for a credit rating.

GIVE IT BACK!! GIVE IT BACK!! GIVE THE OVERPRICED HOME BACK TO THE BANK!

Obviously, you are't in Florida or one of the top 10 states for foreclosures or you must be working for the banks.  Your advice is historically correct, but we are in an unprecedented meltdown that will be going on for at least another eight years. 

Please define the word "afford". 

Myself as a broker have made the decision to walk away from my rental property. after attempting to negotiate a loan modofication for over 1 year, with no end in sight, i made a conscious decision for a rental that has a balance of approx. 650k and now worth $175k...., and hard nosed banks who state that the loan mod offered would still not cover but 60% of the rental value.. This is not rocket science to me in my decision at all, historically speaking i have had a 780 credit score all of my adult life; however this mortgage meltdown didnt start with me abd wont end there either.. Despite my ability to maintain 3 major credit cards, I have made major shifts in dealing with debt on a CASH ONLY LIVING Basis.  I believe if more of us employ that philosophy, we will help ourselves and the next generation to not have to start over again economically for buying what we cant by cash afford....(food for though, I feel totally liberated and in control of my own life now).

Having experienced first hand the absolute arrogance of the banks and lenders who will not lift a finger to renegotiate or even attempt to provide temporary assistance to the homeowner, I think that in many instances owners are RIGHT to stop paying the mortgage, perhaps not morally but certainly strategically. MONEY is the ONLY thing the banks understand - withhold it and suddenly they want to talk, want to be your new best frend, want to explore solutions.  The thinking goes a little like this - if the banks can get a bail out, then I want some of it.  Difficult to fault in this 'its all about me' society in which we live.

I have a friend in California who owns a house that he purchased for about 1.2M. Took a 2nd mortage during the boom and now owes about 1.4M total.

Now since this whole housing "crisis" comps for his home at are about 700k and the REO homes in his area are going as low as $500k. he told me he pays $8,500/month for PITI and HOA dues. He also said there are now rentals in his development (same house pretty much) for 3k per month.

He tried to get a loan mod with his bank, but because he makes his payments and because of the value of the home they wont due it. So what motivation does he have to keep paying his mortage for a house that he is 700k upside down in? Its value is 50% of what he owes. It could take forever for home prices to rise enough to ever get him back to just even.

Why pay the $8500/month when he can rent the same home for 3k per month? Making that payment on a house that much upside down makkes no sense.

It's not all the homeowner. The banks are not listening and not helping when someone WANTS to stay in their home. In the real estate industry, my income went from $140,000/year to $40,000! think I could make payments? heck no, I could barely eat. I was 4 months behind, talking with my lender almost weekly, and asking, PLEADING for help. Once things picked up again and I could afford the payment all I asked for was them to put my arrears at the end of the loan. (by then 6 months behind) Would they help, NO. Instead they foreclosed and sold the house for HALF what I owed. Smart business?? They are idiots. I was willing to keep the house, did not ask for a loan reduction, (many have and got it) only a shift of payments due, to being "paying as arranged". Its not all the consumers fault, the big guys don't give a darn about us. Now my credit is ruined, renting instead of owning, really bites!!! And I was just a victim of the real estate collapse, I did not cause it! I was willing to be a player. Bitter, YES, I am, my retirement home is now someone elses and for so much less!!! 

We have a lot of forclosures around here in Madisonville, Tn. Not only forclosures but 'Short sale' properties also. And the same problems for both. I have several 'short sale' properties listed and the neighbors are calling me every day ( a different neighbor every day), complaining about the condition of the property ( the broken windows, yard needs mowing, guttering falling off etc....). They expect me to do something about the problems. Most of the 'Short sale' properties are empty. But the neighbors  should not take responsibilty and do the work because  they may havean accident on the property, people will sue. One side or the other.

I totally agree. Neighbors need to help each other. As we all learned when we were little, that's what a good neighbor does. good blog. Sue

I'm sorry I completely disagree with some of the statements. I'm in Florida and responsibilty or not the Banks are not making financially wise decisions when it comes to modifications and they deserve what they get. I tried to refinance and even offered to pay down my Mortgage 60-70K and they said no. All I wanted for them to do was lock in my adjustable rate before my payment sky rockets and I really cant afford it.  I asked for no principal reduction besides what I pay down myself and I didnt ask for a lower interest rate and they wouldnt do it. My house is upside down 150K already and getting worse. When I called Citimortgage the guy basically told me we wont do any thing till your 3-4 payments behind. So even though I can afford payment right now I have to force the issue and default till they talk to me and believe me they will eventually. I have over 30-40 clients I have told to stop paying and put the money aside so you can bring it up todate later before you lose home and 75% of them have been able to refinance or modify. Some times you have to force the issue.

I have a client who was upside-down on a rental property.  He spoke with his lender, who advised him to do a short sale.  He had never been late with the mortgage but the lender said he had to miss payments for at least 3 months to qualify for the short sale.  He stopped paying the mortgage and the short sale closed last week, 10 months after I listed it.  Now he finds that the same lender--in this case, Bank of America--listed all of those missed payments as "lates" on his credit score.  These will haunt him much longer than the short sale.  What a crazy system!

Keep in mind with credit repair you can get a FHA loan in 2-3 years after a foreclosure and can clean up credit to be right back out there in a short period. Yes it stays there for 7 years but with credit scoring now days most people dont go back more then 3 years.

In reading the original post, along with all the responses, it is obvious that there is no one solution.  The ramifications of walking away from a home mortgage are long lived in todays society. 

However, when a bank refuses to work with the existing homeowner, I believe they share a huge brunt of the repsonsibility.  Over and over again, the banks have shown that they have little to no regard for the homeowner when it comes to keeping the owner in the home.  Until that scenario changes, I believe you will see more and more homeowners walking away from an upside down mortgage, even when they are current on the payments.  Some mortgage companies are telling homeowners that they have to be late before they can even help them.  Once the homeowner is late, there is no going back and many times when the homeowner does what the mortgage company tells them, a modification is NOT completed and the homeowner loses all the way around.

Banks need to annie up and walk the talk.

While this sounds good on paper, it is not always unavoidable. My daughter bought a home with a friend. Then she lost her part time job working on tags for new car dealerships since that industry was hard hit. The other person that bought the home with her lost their job since they were in the construction world, which was also hard hit.

She then asked the bank to work with her, they said no because now their income was substantially less. Then they put the house for sale. Two CASH offers were refused because the bank decided that the BPO was accurate when in fact it was $50,000 over what it should have been. The cash buyers walked away since they could get a single family home for what the bank felt was the value of her townhome.

I am not an agent, I work for the agents, and I have a top agent who deals with this help her and even he could not get the bank to understand that they were asking way too much for the short sale. They were in an area where there were no nearby comps.

After 2 good offers walked away the bank has now decided to get another opinion. So where does this end? My daughters mortgage is way above what she can afford and unemployment is at an all time high!

If she pays the mortgage, then none of her other bills get paid, so credit will still be ruined. Why wouldn't the bank work with her when now they will get $170,000 for a home she paid $320,000 for. She would have been willing to do whatever it took to stay in the home, but they refused to help her. I am sure when this is said and done the bank will have lost a lot more than if they had worked with her.

You have to be in these peoples shoes to judge whether they are right or wrong!

Mark, I am sure that you have never tried to work anything out with banks.

Real estate would be just fine if banks got out of the real estate lending business. Owners will do seller-financing, people will live within their means and only enough properties will get built.

Irresponsible lending practices by the lenders is the root cause of the market crash.  I have no pity for the banks. Why should an owner who has done nothing wrong be saddled with a home now worth half of the purchase price while the banks take the bail out money and do nothing to help?  There is no honor among thieves.

Well said, Mark! You make a great point about employers pulling credit- more and more do! People need to think long term. If a person could very easily walk away from a house, they could probably easily walk away from a job or leave fellow employees in a lurch.

I think everyone should just stay for free and fight their mortgage companies....question the validity of the debt, sue them in court, save thousands for a few years and then reasess.

This article is blah blah...offers no interesting insight whatsoever...other than finger pointing at the working class in tough times.

Lets see him write an article when/if he's faced with the inability to pay a mortgage.

Yes, let's all take personal responsibility for the mortgages we sign for. Bad credit can ruin you in so many ways, and for so long. This is a big lesson that will force us to live within our income and not take risky courses that could jepordize our financial well-being. I know we will all come out stronger in the end!

Mark:

I can't speak for anyone else but in my case I did get a modification and it was only after I missed some payments.  In fact I talked to a neighbor who also received a modification from Chase and after she sent her payment in the bank actually reversed her payment. 

In both our cases, our home values on the custom homes we had built tumbled to almost half of what we paid for them several years ago due in part to all the builder foreclosures in our new subdivision.  Couple that with the other foreclosures caused by folks that could not afford to stay in these homes for one reason or another. 

I am all about doing the right thing but had the modification not gone into effect I would be forced into making the judgment and business decision for my family as to stay or walk away for our dream home because the market of the home would never in my lifetime reflect what we invested in it originally.    

The truth is there is no magical fix for our financial crisis, and as professionals we should not give blanket advice. Laws are different state-to-state and individual situations vary greatly. I recommend each one of my clients who are struggling to speak to an attorney and an accountant. Then we create a plan according to what is best for them and their individual situation.

Keller Williams Realty of Greater Nassau

I find it hard to disagree with either side of this discussion, damned if you do and damned if you don't. I would do everything to ride the storm out as things will turn around, they always do just a matter of how long.

On a brighter note what a great time to be a qualified buyer (especially in south Florida, what deals)

One other thing to consider about walking away from a mortgage is this: I live in TN and the lenders can file for deficiency judgment on the borrowers that have been foreclosed and/or "short sold" their home. And a judgment sticks to your credit report like glue...and can be renewed every 10 yrs by the lender, if they so choose.

I completed a short sale a couple of months ago for a client that had more than enough assets to pay for their cabin and the bank made them sign a promissory note---for considerably less than the shorted amount, but they still had to pay or the bank would file a deficiency judgment for the full amount.  If they default on the promissory note...they will have a judgment placed against them for the full amount.

So for those that are considering this option add this one to the consideration list. 

I tell all of my clients that are considering a short sale or about to be foreclosed, that this can also be another downside to choosing either.

There are many Homeowners who put themselves in this position. In the hey day escalation clauses were used to "beat out all other offers". For those who actually bought smart, and now have endured financial distress do to layoffs or financial hardship do to medical reasons I feel bad for. Real estate like stocks have risk. If you loose money based on the advise of your financial advisor should his company make up the shortage? The decision to purchase was made and now they should live with the consquences.

Remember,  FICO scores only mean something when we borrow.  We need to keep borrowing to a minnimum and pay with cash for everything else. 

"Myself as a broker have made the decision to walk away from my rental property." Jacquelyn C wrote this in an earlier post, and I applaud her for her courage in writing this.

This is a tough issue for everyone. But just to add some balance to the noise made by the finger pointers, we need to understand that the now banks are starting to earn real money again. They are able to do this, at least partly, because their losses on mortgages are reduced by the payments made by the mortgage insurance and reinsurance compnies such as AIG.  And AIG, for example, has received big taxpayer bailout funding so that they could make these payments to the banks.  Now, who are these taxpayers?  You and me, including those who are having to walk away from their mortgages. So the taxpayers bail out the banks, but the banks still want to hold the taxpayers responsible for their upside down mortgages.  Hmmmm . . .

And this is bad...why?

Banks make their decisions regarding the loan on my house as well as my credit card based on business factors...not emotional.

Why should I look at the arrangement any differently.  If you are not at least modifyng now, there is something wrong with you. 

Or do you think it is a wise business decision to pay for everyone else's mistakes yourself?   Try again kid.

My feeling is this: so many folks are in the same boat that soon everyone appliying for the the job, the rental, and the car loan will all have the same credit dings. Our 800 credit scores will become a memory. We will all be starting from the same creditworthiness. Or, credit worthlessness.  I am already counselling owners who wish to place tenants not to expect too much inthe way of a credit score---these are tenants who used to be homeowners. When that tide falls all boats float downwards.

Amy

One aspect of your post that I agree with is that Foreclosure hurts us all. It's a shame that banks grabbed TARP funds, yet continually do NOT address Homeowner's pleas for help. Many Homeonwers walk since when they call they are directed to a foreign country only to talk to a rep that will run them around the mega-banks voice mail tree and after talking to 5 or 6 bank reps finally give up.

I know I get frustrated with the banks aloof attiude toward homeowners and even their own bottom line. Too bad there's not some sort of mediation required for the banks. At least here in Nevada, there seems to be such a thing... problem is the mediation is NON-BINDING. Too bad. Too bad for the banks... but even more "too bad"" (I know grammatically incorrect) for the homeowners.

Hi Mark,

Very nice post! It really reiterates what I tell my clients, friends and family.  Just last night I was having this exact discussion with a neighbor.  I am going to forward this to them so they in turn can tell their family member who is thinking of just walking away from a house that has lost equity. Again very well done!

I'd like to hear more from Joseph Alfe about how he always gets every short sale approved.

Joseph Alfe's statement, "Lenders will ALWAYS do a short sale even with no delinquency," is ridiculous on its face.

Ken: I say "Amen," I agree with every single word you said. Yes, sir--you got it right. I believe that there are dire circumstances in which people cannot save themselves from financial heartache. But we should have compassion for the exceptional cases, and not just believe that it's OK to jump on the bandwagon of letting our responsibilities go. I think you said it very well, we can stand up for right behavior even as we acknowlege the many wrongs in our industry. Shari Kay Hunter, Loan Officer

TWO GREAT ARTICLES,I missed the earlier one and appreciate the link so I could read it.

You have a really good outlook on the situation,but I am sorry to say I FEEL it may not be so realistic.If only because the burdon to the home buyer even if they could struggle and make the payment are then desimated when they fall.They can money that may be needed to save their lives and no longer have an chance to recover.

Perhaps if lenders were morrally responsible  (Their sole purpose is to make money)

and tried to make the situation AFFORDABLE,in some way SUSAINABLE ,85% of the 8 to 10 million homeowner that are Defaulting and soon to be defaulting would START PAYING and continue paying until the PROPERTY become an asset that is 100% equal to loan value.

BUT THE LENDERS have so leveraged the notes that they have loss more money then they have and can not MODTIFY in a manner that could work because there is no one out there that will MODIFY the losses they have to pay up.

The loan amount may be 4 to 6 trillion,what we are not being told is if that amount were modified where will the banks get the additional 8 trillion that they have already spent from the profits they made leveraging those notes?

There is already a way to solve the 8 to 10 million loans even at a 100% asset value,even 110% being given to the banks,but they cannot afford to take the DEAL!

You should also put a link to Zaretky's article "Should I stop paying my mtg?'

If you have an opportunity check my "Everybody wins Plan"

a special 10 year mtg that allows for a payment of $500/ per month per $100,000

for PITI which makes the bad loans affordable.

I am neither an accountant or lawyer so I would like to have both reveiw all Short Sales and Foreclosure advice I give.

For a free copy of "The Everybody Wins Plan" request via email ..bestsolutionsfl at aim dot com  

I am a 73 yr old real estate broker that's not too good at this,but here goes;


Subject: Please Read then TRASH or POST:The solution to the finanial crisis?

DAVID STEVENS,FHA COMMISSIONER could single handed STOP the speeding bullet (recession,foreclosures)
Armed with the "Housing and Economic Recovery Act of 2008" the FHA could, at no cost to the taxpayers
and with no new money needed , put an to end this crisis.Stabalize housing prices and their increase tax revenue.
JUNE  2009  " We do have options for changing the HECM program",HUD Sect Donovan told a  Senate commitee.
FHA and HUD could modify the terms and conditions of the HECM
and allow all loan modifications at a lower rate with a longer term-
100% asset GUARANTEED and very AFFORDABLE! Please HELP!This may be long,but I guarantee it may keep you up at nights wondering,OH MY GOD,Can it be???
Just PROVE if the MODEL,Business Plan, is correct or not.Challenge it.
"The Everybody Wins Plan"
All home loans could be modified so that they would be AFFORDABLE;
thereby ending ALL Foreclosures and Short Sales.
Regardless of how the loan amount is negotiated the payment plan
makes it 100% AAA+ and very affordable.
The formula:The Solution:A LOW RATE OVER A LONGER PERIOD OF TIME
AT NO COST to the taxpayers.
This new loan is GUARANTEED by using the already legal Home Equity Conversion Loan(HECM)
A loan that uses the lenders money(not taxpayers) that has a government (FHA,HUD
guarrantee of payback.
Since the TOTAL PAYMENT of Prin.Int.,Taxes,and Insurance are so low and affordable
everyone will pay PERIOD!
The "Everybody Wins Plan" loan:
TWO PARTS:

Part one-a 10 year note,120 payments with payment 121 being the payoff of the balance owed.

Part two-payment number 121 is a 30 year fixed rate mortgage.

The FULL monthly payment for this special mortgage would be $500 per month
per $100,000 for the first 120 payments.
This is for Principal,Interest,Taxes,and Insurance.A mortgage payment PITI
$500/month per $100,000!!
Now that would be affordable.
Of the 8 to 10 million homeowners in trouble ,the nightmare would be over.
Payment number 121 a new fixed 30 year mortgage for the 90% balance
PAYMENT DISTRIBUTION FOR PART ONE:
Prin...........15% of total note
Int...........100%.times 10  (10 years interest on total note)
Taxes and Insurance....15% of total note.
End foreclosures,short sales,makes for affordable homes Can you help me keep my sanity?
I am ,I believe "That one poor fool" that believes this could be  the answer as to HOW: The Foreclosure,Subprime Mortgage,Housing and Economic Crisis can be resolved at a PROFIT to the taxpayer.
THE END OF FORECLOSURES AND SHORT SALES
AND THE BEGINNING OF AFFORDABLE HOMES FOR ALL AMERICANS.
Would you please challenge this plan?Post this plan?It is not copyrighted.
The HECM,Home Equity Conversion Mortgage provide by the "Housing and Economic Recovery Act of 2008 could end this recession.End all foreclosures and end housing prices declines.
Please read on if for no other reason than to prove a plan wrong , that states it could end ALL this grief for all AMERICANS.    
"The Everybody Wins Plan" by BASILOVECCHIO
  BASILOVECCHIO wrote:  Would it be irresponsible to resolve at least the portion of the financial crisis that pertains to ALL underwater mortgages
subprime and of course , now even those that were prime in such a manner
AS TO BE PROFITABLE to the taxpayers????
Thank you,Paul Volcker......"An outside agency" 
                     Robert Shiller...."properly funded"
                     Dr. Yunus..........." a profittable business that does
                                                      a  social  good."
The legality is already there.
Funding is already there.Actually NO NEW MONEY NEEDED,This is just a government guarantee of payment.
And in  90 days or less 8 to 12 million homeowners
would be paying their mortgages not only on time but one month in advance.
85% want to stay and pay,the other 15% will have a waiting list of those who would
wish to pay for the home using THIS FEDERAL APPROVED REGULATED PROGRAM.
 EVERYONE knows about the $700 billion TARP program Where the feds gave away
 $350 billion and are looking to give away the other $350 billion.
Everyone knows about the $787 Billion Stimulus package
to create jobs etc.....but why is it That
IT is so difficult to get the word out on TV or internet
that the feds passed the Economic Recovery Act Oct 2008
in which  THE FHA  AND HUD WILL GUARANTEE PAYMENT OF
BILLIONS AND BILLIONS OF DOLLARS IN HOME LOANS!
This program could be the basis for 100% recovery of ALL
defaulting mortgages,ALL and with no cost to taxpayers ,
with  A PROFIT to the taxpayer. "THE EVERYBODY WINS PLAN"
TAKE ALL LOANS MARK THEM TO 100% TRUE MARKET VALUE.
YES 100% Fair Market Value"
NEW MORTGAGE (TWO PARTS)10 Yr plus 30 YEAR
with A VERY LOW PAYMENT is the solution.
Just as in the 1930's
A LOWER RATE OVER A LONGER TERM got people back to buying the ranches
 because it turned the 5 year loans into 25 year loan-
Thank You ,Dreyfus School for the Arts and Wellington High School Debate teams for that bit of info.
 Please feel free to:
print- edit- copy- trash-challenge or endorse .This is not copyrighted.
A SOLUTION TO THE HOUSING MORTGAGE CRISIS AT NO COST to the taxpayers,rather at a profit to the taxpayers.
Using today's rates and knowledge,the entire inventory of troubled homes will become EXTREMELY AFFORDABLE and thereby
AAA and 100% asset based. A special 10 year year mortgage with an automatic 30 year mortgage that includes
PRINCIPAL
INTEREST
TAXES and
INSURANCE. PER $100,000 loan there would be a total fixed 10 yr. PITI payment of
.........$500........PITI followed  with a 30 year fixed mortgage that will
pay the loan in full..
FOR HOMEOWNERS;
Let them stay in their homes,
Let them be able to afford it,
and be able to manage it.
THIS IS THE REAL AMERICAN DREAM.
Turn this challenge into a greater good for all.Re-establishing "CREDARE" .Faith in the American people and home values.
This is a fast and great solution to the problem and it allows for time
to fix the blame and to do what is necessary for  future prevention. We simply must get off the idea that we should only help "the good" people and leave the "reckless" ones to their own ends. Whether the foreclosed house next to me was owned by a good guy or a reckless flipper doesn't matter.. my home value goes down either way due to the foreclosure.
We simply have to set aside moral judgments and fix the problem.Why not at the same time create revenue for all taxpayers. 
The Housing and Economic Recovery Act allows the FHA and HUD to guarantee the FULL payment of a Mortgage  until  the homeowner either sells the home or dies.The asset value of the home is the 100%  security for the loan.We need only modify the conditions for this loan:
(a) change age conditions from 62 Plus to NO AGE REQUIREMENT.
and (b) instead of age percentage base asset required,use 100% of REAL APPRAISED VALUE.
Problem solved: All homes  become owner occupied.All housing supply will be eliminated by demand,demand by end-users.(85% that wish to stay and 15% that wish to get an AFFORDABLE home) ACTION:Solve this trillions of dollars crisis  at no cost to the taxpayers,and allow for a taxpayer profit.
RESOLVED:ALL "underwater" loans and foreclosed homes to be re- purchased (by present lender or any FDIC insured lender)at 100% of FAIR MARKET VALUE.Old Loan to be marked "paid-in-full"This is a one time deal and could be done in 6 months or less,as all that is needed is an appraisal and a closing,settlement.
PURCHASE to be made by any lender willing to take 10 year treasury rate on note FULLY BACKED 100% by FHA,creating a 100% backed,100% asset!
And why not?a loan on the books that would require NO reserves!
 
Legislation is  already in place for FHA to do this and NO NEW FUNDING IS REQUIRED.
PAYMENT IS GUARANTEED.We need only to enhance the present HECM rules
to allow 100% asset without any owner age restriction to be made for the ten year portion
will be very low and for that reason perhaps 0% ,yes, 0% loss.Anyone that wishes to default will have people in line willing to pick up their payments and even give something for the right to do it.
NEW LOAN: is a special  "EVERYBODY WINS PLAN" loan
A 10 Year  loan that has fixed payments (120)  with  payment number 121 (the magic bullet) ......  paying the balance in full.Because of the low cost of the funding(12/31/08 @ 2.08%)now @ 3% and maybe even lower because upon announcement of this solution which does not require $4 Trillion in federal borrowing.This is a  special long term payback that will  be a very affordable payback.
TERMS FOR THE NEW LOAN:120 fixed, low, and affordable monthly payments that consists of........
.............. (A) payment  of  total interest (10 yrs);
                (B)15% of principal ; 
                 (C)15% for  taxes and insurance.
This is a total payment ,known as  P.I.T.I.   
MAGIC BULLET:Payment number 121..the new 30 year mortgage.. is given by a third party lender to the owner at a fixed prevailing rate,for the 85% balance,PLUS 5% TAXPAYER PROFIT ,then the  NEW 30 year NOTE  is to be 90% of what  the original modified loan was.(If $4 Trillion needed that's $200 Billion profit).
Example:$100,000 "EVERYBODY WINS LOAN"
LOAN AMOUNT $100,000 with payments to include:
A...Total 10 years interest.(3%).............. $30,000
B...15% for principle reduction........... .$15,000
C..15%..TAXES and INSURANCE.....$15,000
TOTAL.......................................................$60.000
paid by 120 fixed equal  payments of $500.00 each...... wow, how affordable is a $100,000 mortgage at a total
P.I.T.I.
payment of $500.00 per month???)
Then the  with payment number 121 the note is paid in full with a new
30 year loan that is 90% loan to value (or less,if values increase)
To calculate payment for 10 year portion use a factor of $5.00 per $1,000.
Example:, if loan amount is $250,000;payments of $1250.00
 ($250 X 5.00 = TOTAL PITI FOR A HOME VALUE OF $250,000
at an unbelievable low $1250.00
 REPEAT: Extremely affordable.A sibling working at a minimum wage could pay the mortgage for the entire family! It is total payment...P.I.T.I. Thank you,Paul Volcker......"An outside agency"  THE FHA AND HUD
                     Robert Shiller...."properly funded" 100% ASSET BASED GUARANTEED LOAN
                     Dr. Yunus..........." a profitablebest business that does
                                                      a  social  good." STOP ALL FORECLOSURES AND SHORT  SALES,REPLACE              
 WITH AFFORDABLE HOUSING FOR ALL AMERICANS "EVERYBODY WINS PLAN"
 
An anouncement of this plan with details could create an immediate RELIEF and "CREDARE"-CREDIT-TRUST in the AMERICAN SYSTEM.
"THE EVERYBODY WINS PLAN"    REQUEST DETAILS,ASK QUESTIONS:email
bestsolutionsfl at aim dot com
7/17/09 ADDED:
The 5% tax payers profit does not have to be a given.That 5% can be used to pay off loses for the lenders.This could make it better for them to use this modification becuse If they modify they may lose some recovery benefits they might have otherwise gotten.(Insurence?) Hi,
Just wanted to cover some questions.
I believe at least 75% of lenders would accept this plan,because they are doing foreclosures and shortsales
that are netting them 20% to 25% LESS THAN FAIR MARKET VALUE.
Some banks may not OK 100% of  todays value as payment in full on the old loan.
All loans would of course be subject to each lenders approval and there could be
a point where they would have to be worked on to reach a yes.
IF THE CORE BASE FORMULA IS CORRECT,It has room to cover different conditions.
EXAMPLE:
The 120 payments allocation could be;
10%....prin
30%....Int
15%..Taxes and Ins.
5%...cover lenders loss.,instead of taxpayer profit.This still makes the payments very affordable at $500 per month for ten years,
.We could live with that.
The 121st payment would be the 90%  which is the balance of the note.
DOES A LOW RATE WITH A LONG TERM make an affordable solution? If the model is correct,it simply becomes a question of how the money is to be allocated.
Hope to hear from you soon
Carmen
PS
A charity or 501 (c3)This illustratesthe point that LOW COST MONEY (no cost) makes for more affordable housing.
Could buy forclosures,short sales and let people regain home ownership with a $250 per $100,000 PITI payment.
Example;
Organization receives $1,000,000 Gift,or better yet grant from State.
Buys 10 homes @ $100,000 each
PAYMENTS EACH per month per $100,000
10%...principal...................................................$10,000
15%...taxes and Ins............................................$15,000
 5%... Recovery,expences...................................$ 5,0000 
 equals $250/month per $100,000
NO INTEREST COST AS MONEY IS DONATED MONEY THAT HAS NO COST AND THE MOST UNBELIEVABLE PART IS THAT WITH PAYMENT NUMBER 121 THE ENTIRE MILLION IS RECOVERED TO DO THIS OVER AGAIN FOR AN ETERNITY! God Bless American and thanks to Dr Yunus "Banker to the Poor'
Giving money away creates a problem,it cost time and money to replace it.Why not have
the money replace itself but in a very affordable manner. Carmen Basilovecchio

There are comments on here stating that the comments are all over the board.  They are not.  Mark, you got it wrong here and except for a few self-rightous and mislead colleauges in your corner, you need to join the rest of society.  If you can afford to pay, then you are smart with your money.  If you are smart with your money, you know that 10-20 year window to reach parity is absurd from an investment perspective.  if you realize this from a business/investment perspective then you realize that you and your buddies see this as a moral issue, rather than one of self preservation (credit score my ass).  It's about fear and underneath it all- judgment, for you and your few pals.  "How can I get a job?", "How can I buy a car?" , "Those schucks just want a free ride!", etc....

Mark, life throws us ALL curves of different types and unless we lash out with the intention of hurting another human, it is up to the individual to figure out the best path.  Banks are a hard sell in terms of compassion my friend, and if an employer thinks you are a bad ass at what you do they will find a way to get you in there.  If yur lot in life is to be a cookie cutter "employee" then you probably are not reading this anyway as 99% of us are commission based self starters. (You are not preaching to the choir on this one believe me.)

Ideas, solutions etc...

Hey, how about re-inventing ourselves to fit the new paradigm?  You know, change our career, get an education, start a small business, and just get creative generally.  I'ts the only way.

Isnt it possible that credit got us all into this mess in the first place?

Perhaps this should be a repository of solutions or ideas for help.  (Anyone reading this far who cares to add something, feel free)

For instance, if you cant get a car loan, how about renting an apartmant close to work and ........ WALK.  (its actually good excercise).  I used to ride my bike to work, 4 miles, and get there in 20 minutes, and the office thought I was cool (not at first) because they came to realize I was saving money, getting to work faster than they were, and getting fit!\

If you cant get an apartment, then rent a room close to work. etc....

THERE IS ALWAYS A SOLUTION AND YOU CAN MAINTAIN YOUR DIGNITY IF YOU EMBRACE CHANGE WITH GRACE.

And without the need to mention deities, rest assured we are able as a group and individually to get through this current curve......but we might have to walk away from material pinnings (mortgage etc..). sorry :)

Mark-

Thnaks for having th guts to speak the truth.

I am about to puke all over the unbridled entitlement of stupid Americans that think they don't need to hold their commitments.

Consequences for those in the actions that are walking away will and should prevail, especially when they have the capacity to pay Hold the line!

Kenton

I totally disagree-did you forget the taxes-I know seniors that there house is pay-off and they can afford to pay for the taxes.  what good is it if the township is going to take your house anyway.  In NJ is a major issue. Banks they don't want to help anyone-why you think they don't want to short sale a property that the owner is current on the mortgage( Indy mac is very good at this)- Credit Cards! as soon as one credit card company finds out that you were late for one month on your mortgage-they will close it- it does not matter to them how long you paid on time-

My advise depending on your situation-do what is best for your family and you-forget about the credit score.

It is fairly easy for someone to be under water on their mortgage. Anyone who bought or refinanced a home three years ago with less thatn 20% down is probably under water with prices having fallen by more than that in most communities. 

Mortgage management companies aren't stupid. They understand a lot of people would like their lender(s) to assume a part of their loss. They aren't going to modify a loan to do that just because they are asked. They need to be convinced it is in their financial interest and the lenders will come out ahead.

The people we are talking about are people whose income allows them to make the payments on their mortgage. So the mortgage company is very unlikely to be convinced they need to do anything. The question is whether it still makes sense for the homeowner to continue making payments. That is not a simple question with a variety of factors that effect the decision:

1) How much would it cost them to move and find another place to live.

2) Do they want to stay in their current home.

3) How far under water are they? How long is the term of their mortgage, is the interest rate fixed.

A home is a great hedge against inflation. If you have a 30 year loan at less than 6% fixed rate, it may well pay you to hold onto it if you expect high inflation and higher interest rates in the future. While housing prices in REAL terms may never get back to where they were, its likely inflation will eventually get people out from under water.

On the other hand, if you have a $500M mortgage on a $300M house that you aren't really fond of, living in it for 15-20 years until you can get out from under water may not be the best choice. You will have spent far more than the house is worth when you are finally able to leave.

Will walking away from a mortgage cause problems on your credit record? Sure. And that is a consideration. Another consideration is that, in some states, the mortgage holder could come after you for the difference between your mortgage and what the house sold for after you handed them the keys. Its not a bankruptcy where your debts are expunged. 

One thing you should NOT do is feel guilty about it. This was a business venture where the price you paid included the possibility that you would default. The lenders who bought your loan knowlingly took on sharing the risk that your home value would fall. It did and there is nothing wrong with you letting them take their part in the consequences. 

though i have many opinions and views on this topic, i can only speak of one at the moment. i am going to explode...i am outraged that qualified people are being denied employment due to credit.  this practice will exacerbate the problem.  as unemployment continues to climb our economy will not recover. it doesn't take a rocket scientist to look at a credit report and determine whether or not a person has had a history of financial irresponsibility or not.

let's say someone paid their bills on time for the past 10 years and their credit was damaged in 2008.  you look at their resume and see that they have been unemployed for 6 months or longer.  duh... their credit is likely to be damaged!!!

this should be illegal. 

after 6 years of being a new home sales agent, i lost my job, for obvious reasons. i didn't earn an exuberant income but it was much higher than i had earned in previouspositions. over the six year period my average income was about 80,000 a year.  however, i paid much higher taxes than a w2 employee at the same income would pay. in new homes sales, you don't have many expenses to write off, if any.

i can't find a job to save my life. not even a job i was over qualified for 10 years ago. it seems as though anyone associated with real estate in any capacity is on some kind of "DO NOT HIRE" list.  often times i feel as though i am being punished for a crime i did not commit or take part in.

i remained in my 115,000 dollar home though i could afford and qualify for a more expensive home during that time. i didn't have much credit debt and paid for most purchases with cash.  i have been unemployed for nearly a year. ran out of money months ago... now running out of time.

i didn't qualify for unemployment because i was 1099.  there are millions of people that are not suffering because of irresponsible behavior but as innocent bystanders to this crisis. where is our help? is this American?  why did i pay those high taxes? it seems so unfair.

what's that saying... "there is more than one way to skin a cat." there is no one size fits all solution to this problem, however, there are deserving people that need help and it's unfortunate that it's not available. to add insult to injury our lives will be even more difficult because of damaged credit.

i am not walking away, i'm being thrown out!

Spoken like a true expert of the mortgage industry.  You all stick together, don't you?  Mark, your bio is very impressive and you seem rather intelligent, but your blog just goes to show how ignorant you truly are about the real world. 

I so agree with Cindy Jones...after awhile a home owner can only deal with so much stress.  I've said since the very beginning of all of this mess that the lenders need to lower the monthly payment and rate, no question ask, when a home owner has been making the payment out of their savings, or retirement funds. This gives them a chance at least to get on their feet, and hopefully get things under control.

Mark,

Nice point, nobody, and I mean...NOBODY would like to loose their credit;

however, stoping mortgage payment is not a simple desicion. In some cases a borrower must take the determination to feed his family, or pay the mortgage...

On the other hand, it could be an strategic financial plan. 7 years in the dar, vesrus 1000s of dolalrs lost in the next 10-15 years.

It all depends on a case by case basis. For example, not everybody would qualify for a loan modification, not everybody lost their job, not everybody is upside down, and not everybody would file for bankruptcy, and not everybody has the same amount of debt; lastly, not everybody has run a business and took risk, have lost everything, and so on....see my point?

I have filed for BK, and have already recieved 3 offers to buy a brand new car, open a credit card, I am renting, I am working, and have move from and to a different company. It all depends on the circumstance.

I live in the Northwest and we are seeing a lot of shortsales.  Most homeowners just cant afford the monthly requirements.  They are sinking. Staying afloat is hard....If the bank had the opportunity they could throw a life preserver.  They dont care to. 

 Business decision. 

Some people have negative equity and dont want to stay since they are upside down by hundreds of thousands dollars usually.

Every situation is different.  We can see there are a handful of scenarios, the bottom line is theres a problem that the homeowners and lenders created.....who has the ability, power and influence to do it?

If you really want to look at refinancing a mortagage you'll want to check out: http://refinance-mortgage-refinance-loans.com

and http://homeloanmortgagemortgagerefinance.com

they both have good refinancing information on them.

www.nomortgage4u.com and the http://therefinanceunit.com also have some good pointers on mortgage and refinancing options.

I'm not sure that NOT paying your mortgage is a good idea, uinless you like a bad credit history of course.  Refinancing or moding your loan is generally a better long term option

Just came across this site while searching for answers to our dilemma , my husband and I hold a deed of trust along with a promissory note that stated 3 payments of interest due once a yr for 3 yrs and on the fourth year balance due.  The borrower has not paid us the 3rd payment and now we are forced to pay a lawyer to foreclose. That " contract " the borrower agreed to was our main source of income . Now we are screwed . I don't pity banks but what about us private lenders ??? Where is our recourse ???  Just because the borrower( in our case ) decided to be irresponsible. This is pertaining to a commercial property which he shut down business and gave up , rather then try to lease it out , etc. In my research it is all about the borrower what about the lender , not finding anything that cares about us .

Ken, I would like to here your opinion on my situation. My husband and I are about to, as you say, "Walk Away" from our mortgage. At this point we do not feel we have any other choice. We have exhausted our options. As it stands we are current, but our County is requiring us to replace our septic system @ a cost of $12,000.00. if we don't they eventually will shut off the water which will make the home unlivable. We will be filing banktruptcy as we cannot dig our way out so obviously we don't have $12,000.00 laying around anywhere. There isn't a bank that will work with us nor will our mortgage company rework our loan. The reason being is that we are upside down and needing the new septic falls under needing repair and they don't do anything with homes that need repair. If you know of a way we can stick with it I would like to here it. We have been here for 20 years. Husband had been unemployed 3 years out of the last 8. We make $30,000.00 less than when he first lost his job 8 years ago. Unfortunately our bills went up as we were raising 2 children and all other costs have gone up with inflation.