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14 Comments on When Will Homeowners Be Made To Take Responsibility?????
It is a difficult decision for some. I can see where some may be working now and doing fine but will be forever under water until they reach their 70s or so when the income will be less. If one can afford to pay now should they take all their income and pay and go into "older" age with even less? This is a challenging time for many. Affordability today may not be affordability in 5 years so are they being responsible to walk now? There are so many questions. Sorry for being wordy!
In the mortgage contract there is a provision for a buyer not making the mortagae payments, and that is foreclosure. In many states the bank then has the option of going after the mortgagee for the deficiency.
So it boils down to being a legal business decision.
If a landlord is collecting rents and not making their payments then that could amount to fraud, and is a different story.
Well I'm sure every shot sale expert here at Active Rain will jump in on this discussion.
Gary - thanks for commenting; my main problem is that I think short sales should be for those who actually live in the home, it is their largest asset (and debt) and they really need the banks to take a loss so they can survive. I think there are just way too many that are abusing the system.
Val - Unfortunately, I have seen too many cases of the landlord NOT making payments and collecting rent. There need to be tighter regulations on these cases. If you live in the home and can't make the payments, I DO understand and think these people need a lifeline. It is those that are gaming the system that I have trouble with. They are hurting all of us!
Richard - I hope so, I would love to see a lively discussion on this topic which is a sore point.
I agree. Short sales should be for those truly hurting, not those wanting to save money. There have been too many bail outs for people and companies that don't really need it.
Shar - thanks for commenting! That is EXACTLY my point!
BarbaraJo, I agree with your post and know thay my home's value has taken a big hit through the economic downturn. I will wait it out but for those who, for the sole reason just want to dump their properties because they are no longer worth what they paid, then they should be held liable.
Wanda - thanks for stopping by to comment! I hope the laws are amended that these people cannot game the system like that - which is exactly what I feel they are doing!
Short sale approvals are generally only granted for those who truly do not have the capacity to repay. To determine this, the mortgage company will request recent financial documentation. Typically, someone who has, say $50,000 in savings, would not be allowed to do a short sale where the lender is losing less than than amount. This owner would be deemed to have the resources to complete a regular sale on the property.
Fannie Mae announced last week that they will be pursing those who do a strategic default. Hopefully, this will give home owner's a reason to re-think this as a viable option.
Rodney - I wish your first sentence was correct but unfortunately, it isn't. I am hoping that the current and future tweeking of the laws will reduce the number of short sales.
Fannie and Freddie are going to pursue people who strategically default and /or not allow short sales.
Marcy
Marcy - This is LONG overdue and great news for all of us!
I have to disagree with you. Part of "taking responsibility" means accepting when one has made a bad decision, rectifying it as well as possible, and moving on. One way to do that in real estate is with a short sale. Another way to do it is to simply walk away and let the bank foreclose. Yet one more way is to file for bankruptcy because that gets rid of all the credit card debt yet allows you to keep your home, so with all the debt gone, you can afford to make your house payment. Of course, that means that you didn't "take responsibilty" for running up all that credit card debt.
When you say, "live with it and take the loss like so many Americans are doing," so many Americans are also doing short sales, foreclosures, and bankruptcies. Besides, isn't a short sales, foreclosure, or bankruptcy "taking the loss"?
Jim - my main problem is all of those that purchased multiple homes as investments and are walking- not the average citizen who bought and is upside down and can't make the payments!
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