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(Written by an American expat who holds an MBA degree and is living in the European Union)

email: democratsramshield@yahoo dot com

Welcome to the lost continent of American Atlantis, the land of underwater mortgages, a country where waterfront property has a new meaning.

Daily Mail UK quote: "Housing market sinks deeper as ONE THIRD of homeowners are underwater on their mortgages and owe $1.2 TRILLION more than their homes are worth........Nearly one third of homeowners are underwater on their mortgages and owe an average of $75,000 more than their houses are worth, according to a startling new report by the real estate research firm Zillow." End of quote.
Daily Mail quote: For now, though, they keep making payments. Nine out of ten underwater homeowners are current on their mortgages." (End quote)
There is no better way in the modern day American neo-feudalist state to ensure a compliant population than through debt slavery. Therefore it becomes important to ensure that people are in debt longer. Ergo Wall Street newest gift to America, the underwater mortgage, where you too can become the proud owner of waterfront property like it or not. With that most innovative gift from Wall Street, your 20 year mortgage may now well take you 30 years to pay off, assuming that they don't force you into foreclosure first.

If one third of underwater mortgage holders all stood together, it would be a practical impossibility for the banks to evict everyone and ruin everyone's credit. That's not the problem. The problem is that working class American families en mass to date will not stand together! We must all stand together or surely we will fall apart.

The really great thing that plutocrats love about America's modern debt slavery is that they point to your signature and say 'they were stupid enough to sign it' while they laugh straight in your face. In fact they're laughing all the way to the bank that you bailed out.

HAVE WE BEEN BRAINWASHED? What's an underwater home owner?

But wait it gets worse some of these so called underwater homeowners in what may only be described as an economic Stockholm syndrome actually vociferously defend the policies of their Wall Street oppressors, in what may only be described as sophistry. Have we been brainwashed to act against our own self interest? In the same way that we vote against our own self interest for politicians who we know will sell us out to the K-Street lobbyists! When is it enough? When will our atomized society unite to defend working class values, which will include a European style social safety net, which includes universal medical, dental, paid sick leave, paid maternity leave and paid annual leave even for low wage workers, and affords people an opportunity to be secure in their possessions to include their mortgages!  

Daily Mail quote: Seeing red: Michigan, Georgia, FLORIDA, Nevada, Arizona and California are all hotspots for underwater homeowners
Keep paying: Despite their homes being underwater, most people continue to sign mortgage checks every month..

  Through a system of legalized theft the one time home owners lost all their equity and worse as the home is now underwater the banks are asking them to pay for nothing, because that's what negative equity is, it is nothing!
Amazingly 9 out of 10 American's are paying on time every month but getting nothing, that is no equity in return. The plutocrats are laughing all the way to the bank. But if we all stopped paying underwater mortgages who would
 have the last laugh then?

                         Why are we speaking language of the oppressors?


Daily Mail quote: "All together, American homeowners are saddled with $1.2 trillion more mortgage debt than home value -- a statistic that Zillow warns could cause even more people to walk away from their homes and bring even more foreclosures to the housing market."
Further evidence of brainwashed thinking:
People should in a free market be allowed to exercise the option of not paying en masse, therein allowing the market to make a correction. Wall Streeters profit from corrections all the time. Yet working class people have been brainwashed into thinking if they profit from such a market correction, it's immoral. It's only moral if the Wall Streeters profit from corrections.

But the plutocracy is literally banking on your compliance as a victim of their continued fraudulent real estate market manipulations. They depend on you to be atomized instead of unionized. If only people would stand together and refuse to pay these fraudulent charges and refuse to leave their homes, the market under the sheer weight of our numbers would make a correction in favor of working class homeowners. That's the most efficacious course of action en masse to get out from under America's underwater equity crisis. But there people must make the decision to stand together in working class solidarity to Occupy their homes!  

So tell us, fellow Americans when do you get to be mad as hell to the point where you're prepared to say, "I'm not going to take it anymore!". Is it when 50% of the homes are underwater in America? Is it when that figure gets to be 75%? Please tell us, what is your true percentage number when is it finally going to be enough for YOU. Of course we do recognize that American elections in our atomized society are largely a meaningless public relations media extravaganza where said elections are bought by private capital. However, this is an election year and you can simply opt to throw the rascals out and in keeping with the site mission of the Daily Kos to work to elect better progressive candidates in this election cycle and the next.

Quote:The number only fell one percentage point from last year -- a sign that home values are not recovering from the housing crash
The areas with the most underwater homes are also the deepest in debt. Five percent of homeowners owe at least twice as much as their houses are worth.
The only way  to effectuate change is through sustained collective action by the public.
Quote:"In Las Vegas, where the housing market cratered after the housing bubble popped, 71 percent of homeowners owe, on average, $106,000 more on their house than their value -- and 85 percent premium."


Despite the fact the 2012 elections will cost over $2 billion dollars, essentially bought by private capital (primarily financial capital). These elections are essentially depoliticized, focusing instead on so called character qualities of the candidates largely in what may only be referred to as a media public relations extravaganza! Wherein issues that confront the great American working class in the GOP led class warfare are never substantively addressed except in all but the most forgettable sound bytes. Therefore the American public has become completely atomized at this turn of events, wherein millions are angry and confused, no longer knowing the way out.

To win in America all we have to do is to care about each other and stick together!
If we are looking for change we must look to the Occupy movement to provide
that peaceful nonviolent approach to change in helping to elect better
progressive politicians to public office. The Occupy movement and the
American unions are the last great hope of the American working class dream!!

Thanks for taking the time to read my diary!

(I'd like to invite you to follow me at the Daily Kos (or on Twitter.) Just click on the links below. Thank you. )

Also I'd like to invite you to follow the Class Warfare newsletter group at the Daily Kos.

Originally posted to Democrats Ramshield on Sun Jun 17, 2012 at 01:24 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, Global Expats, Progressive Hippie, and Anti-Capitalist Chat.

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Comment Preferences

  •  Tip Jar (162+ / 0-)
    Recommended by:
    Horace Boothroyd III, k9disc, kaliope, Leo Flinnwood, DRo, roseeriter, reflectionsv37, hannah, Lupin, MartyM, Gemina13, ChemBob, mookins, MadRuth, markthshark, WheninRome, banjolele, dot farmer, irate, tinhut, Defiler, Militarytracy, doornob, youngsalt, Sedro, concernedamerican, salmo, xxdr zombiexx, beforedawn, shortgirl, sydneyluv, George Hier, GreyHawk, susakinovember, tidalwave1, Smoh, frisbee, Gooserock, wxorknot, Preston S, rat racer, gooderservice, tonyahky, LLPete, sb, jjellin, Lily O Lady, expatjourno, ask, dance you monster, Captain Chaos, rgjdmls, triv33, pat bunny, Voodoo, Herodotus Prime, opinionated, jdmorg, Only Needs a Beat, Clive all hat no horse Rodeo, paulsmith8, frandor55, SpecialKinFlag, jadt65, Sun Tzu, Yastreblyansky, ZappoDave, deha, Phil S 33, kerplunk, Egalitare, thomask, Deward Hastings, US Blues, Debs2, shypuffadder, pfiore8, Vicky, GMFORD, on the cusp, Tool, pgm 01, maybeeso in michigan, Orinoco, SherwoodB, turn blue, rmonroe, Its a New Day, DeminNewJ, Nica24, CanyonWren, bunsk, stormicats, BlackBandFedora, Mimikatz, LillithMc, aliasalias, arizonablue, Bluesee, Publius2008, LamontCranston, kevinpdx, RFK Lives, Alice Venturi, radarlady, whoknu, OpherGopher, tgrshark13, The Hindsight Times, cpresley, Alumbrados, Catesby, Sychotic1, emal, rwsab, Hayate Yagami, Chi, means are the ends, tgypsy, arendt, bnasley, madhaus, high uintas, Cliss, Jim P, leonard145b, old wobbly, bewild, Anthony Page aka SecondComing, madgranny, Losty, StateofEuphoria, glorificus, sockpuppet, RebeccaG, devis1, poligirl, cacamp, Roger Fox, adrianrf, pyegar, Hammerhand, slowbutsure, Brian76239, jennifree2bme, blue jersey mom, fromma, la urracca, NY brit expat, Sandino, Shockwave, Seneca Doane, fayea, techno, dRefractor, MrJayTee, radical simplicity, Diana in NoVa, Lucy2009, importer, samddobermann, KenBee

    sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

    by Democrats Ramshield on Sun Jun 17, 2012 at 01:24:32 AM PDT

  •  I always thought that the bank owned your home (17+ / 0-)

    until you paid it off. Silly me.

    Democracy - 1 person 1 vote. Free Markets - More dollars more power.

    by k9disc on Sun Jun 17, 2012 at 01:42:03 AM PDT

    •  to k9disc - thanks for your support of the diary (25+ / 0-)

      It is only with your support and the support of readers like yourself that the British Daily Mail piece, that I reviewed in this diary can be brought to the attention of an American readership, who otherwise may not visit the Daily Mail site.

      Thank you.

      PS: I agree that the term mortgage holder would be a more honest term, but it would not hide that most people in America own nothing, and worse now a third of so called homeowners also own nothing. As such shouldn't the question be asked what would happen if these homeowners stopped paying and simple allowed for a market correction, as it would be impossible for the courts to foreclose on everyone. Shouldn't we stand in working class unity now making a difference!

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 01:51:14 AM PDT

      [ Parent ]

      •  First, the Daily Mail is a conservative paper (5+ / 0-)

        and has flirted with fascists and published forged documents to slander leftists.

        Secondly, anyone who has a mortgage owns no more and no less than the right the occupy the space (and a few other perks as handed downed by Scalia). To say that Americans "own nothing" is deceptive and feeds a sense of despair into our citizens.

        And while it is true that Arizona or Nevada housing prices were in the stratosphere due to irresponsible and illegal corruptive networks of loan officers, appraisers and bankers... and the prices will not recover and they shouldn't because they were fake... those loans can and should be renegotiated. Those are the states and locales where the federal government and its oversight should focus and relieve the damage.

        In my honor he pulled out old forgotten dignity and walked straight in a crooked world. ~~poetry of young Barack Obama

        by bronte17 on Sun Jun 17, 2012 at 08:14:38 AM PDT

        [ Parent ]

      •  Let's use the correct term for these people (5+ / 0-)

        it certainly is not homeowners.

        Try "homeloaners" or "homedebtors."  What they have is not "nothing."  They have LESS than nothing.  For mortgage slaves who live in states where banks have recourse, they can't even walk away without being liable for the balance of the debt.  And if, like many homeloaners, they refinanced, then they lose their non-recourse protection, at least they do in California where I live.

        Non-recourse means that if they sign a mortgage, if they default the bank's only remedy is to sieze the collateral, namely the house.  The bank may not sue the former owner for the deficit.

        This information may be useful, which I copied from a forum that encourages "walking away" from one's underwater mortgage.

        List of Non-Recourse Mortgage States and Anti-Deficiency Statutes
        In a non-recourse mortgage state, borrowers are not held personally liable for more than the home’s value at the time that the loan is repaid. The lender may recoup some of its loss through foreclosure. However, the lender may not sue the borrower for additional funds. If the foreclosure sale does not generate enough money to satisfy the loan, the lender must accept the loss.

        Each non-recourse state has its own anti-deficiency statutes that prohibit lenders from seeking judgments. In a few cases, anti-deficiency statues do allow lenders to collect a limited amount of money from the borrower (such as the difference between the debt and the fair market value of the property).
        Note that in some states (such as California) non-recourse laws apply only to “purchase money” loans (i.e. original home loans that are used to purchase property). Almost all HELOCs and home equity loans are considered recourse loans and lenders for these loans may sue borrowers to recoup loss. (Except in some cases where the second mortgage lender forces the foreclosure. See: HELOC Foreclosures). There has been some speculation that mortgage refinances do not constitute “purchase money” loans. However, there have been no cases to determine this issue one way or the other.

        Anti-Deficiency / Non-Recourse States
        North Carolina
        North Dakota

        One Action States
        In some states, lenders are only permitted a single lawsuit to collect mortgage debt. This plays out differently depending on the state’s laws. In New York, for example, a lender must choose between the actions of foreclosing on the property or suing to collect the debt. The following states have some type of one action statute:

        New York

        So, if your state isn't on the list, the bank can sue you even if they foreclose and take "your" house.  I've spent some time in that forum and people there have discussed banks suing them for second mortgages or piggyback mortgages.  Since these mortgages sit behind the primary mortgage, in most cases the bank would get nothing by foreclosing on an underwater house.  They often sue and settle for a fraction, figuring that's better than nothing.  If they suspect strategic walkaway (what this forum is all about), they seem to be more aggressive.

        In capitalist America, bank robs you!

        by madhaus on Sun Jun 17, 2012 at 10:31:10 AM PDT

        [ Parent ]

    •  Bankers have been given the opportunity (59+ / 0-)

      to manage our currency by the Congress, which was originally tasked with that obligation.  They privatized the management of the currency in about 1913, under the guise of elected persons not being able to be trusted with that "responsibility" -- i.e. the management of things.
      Nowadays, the elaboration of that word into the phrase "personal responsibility" has given it an entirely new meaning.  In the conservative lingo, it either refers to the fact that persons, as opposed to inanimate objects, are "able to respond" to prompts, or it means that persons, rather than material things (assets) are to be managed.  In other words, instead of interacting with matter directly and transforming it into useful goods, there's a preference, especially on the part of people with a gift for gab, but nothing else, to manage or manipulate other people into doing FOR them, instead of managing or manipulating their material environment for themselves.  And, indeed, the market facilitates that, enabling traders to persuade both producers and users that by sitting at the nexus of the transaction, they deserve a "cut," like the highwaymen of old.
      Traders are parasites.  They have been the bane of human existence for a long time.  No matter how much the producers increase their effort, the traders manage to claim more and to proliferate their numbers.

      "In the name of the nation, and of the dollar and of the rule of law, you and your children shall sacrifice for the good of all." Rmoney's prayer

      by hannah on Sun Jun 17, 2012 at 02:52:51 AM PDT

      [ Parent ]

    •  If they can show the paper-work (23+ / 0-)

      Well....technically the bank sown your home until you pay off the mortgage....but only if they can show they actually own the mortgage.  And a lot of banks, when asked to do so, couldn't.

      Mortgages are often sold between financial institutions.  And there is supposed to be this electronic database to show what institution is holding the loan on which house.  And when banks have gone to court to foreclose on mortgaged property, it turns out this electronic database is wildly inaccurate: that often, there was no accurate record of the various transfers of ownership.

      So the bank may tell you they hold the mortgage when in fact the bank can provide no actual proof to back up that claim.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Sun Jun 17, 2012 at 05:26:03 AM PDT

      [ Parent ]

      •  And this (10+ / 0-)

        is hugely important.  Their own slipshod deceptiveness has created the reality that, for at least tens of thousands of mortgages, the banks claiming "debt due" from home purchasers are NOT legally able to prove that debt.

        On the theme of this diary, any homeowner with an underwater mortgage should challenge the bank's claim IN COURT.  

        A general legal defense fund to help impecunious challengers, and lots of pro bono work, could make this a reality and a true nightmare for the intransigent bankers who are in many cases, are guilty of malfeasance and worse.

        If such a practice became widespread, millions of mortgages would re renegotiated in short order.

        If the scam stops paying off, and costs huge legal fees and investigations by regulatory agencies, this idea could work.

      •  Let's be more specific about that database (7+ / 0-)

        I believe you are referring to MERS, which was a corporate creation of the banks to administer all that slicing and dicing of mortgages into various collateralized debt obligations (CDOs).  There is not "supposed" to be a giant-ass electronic database, the banks decided that was what they wanted because they didn't want to keep paying to update property liens with each county recorder's office.  By doing it this way, they seriously stiffed the counties on those fees, as well as creating the problem you mention with the information being inaccurate.

        But MERS isn't the only problem.  The banks didn't bother keeping their own paperwork up to date, and that's where the robo-signing scandal came in.  They would have to show the note during a foreclosure action, and with all the constant trading off of who had which mortgage, they couldn't.  So they forged them.  And thousands and thousands of people lost their homes FRAUDULENTLY and has a single one of these shitheads gone to JAIL over this?

        In capitalist America, bank robs you!

        by madhaus on Sun Jun 17, 2012 at 10:35:35 AM PDT

        [ Parent ]

        •  Robo Signing (3+ / 0-)

          Robo signing scandal involved banks signing off on "Affidavits of Default", signed under oath, that are used as exhibits in a foreclosure case usually at the Judgment stage (depends on jurisdication, state, etc) to demonstrate that the borrower is in fact behind on his/her payments under the terms of the note/mortgage.

          The issue with this, is that the Affiant states in the Affidavit, again under oath, that they had reviewed the pertinent internal records, and that the borrower is in fact in default - however, the "Robo-signing" scandal exposed the fact that the "signer" of the Affidavit was not in fact checking the records.

          This is a problem on many levels, however, I am curious to know how many borrowers were not actually in default when the bank said they were in default via a Robo-signed document.  My guess is that it is very minimal in total numbers, and probably even smaller in terms of percentage.  

          Further, any foreclosure action instituted by a bank against the borrower provides an opportunity for the borrower to demonstrate via an Answer to the Complaint that they are not, in fact, in default.  If they aren't actually in default of course, then they have a real defense to the foreclosure complaint.

          •  That is not ALL there was to robodoc (2+ / 0-)
            Recommended by:
            LillithMc, radical simplicity

            They also forged notes they couldn't find.  People have gone on record about blank forms being used to generate fake notes.

            In capitalist America, bank robs you!

            by madhaus on Sun Jun 17, 2012 at 12:22:33 PM PDT

            [ Parent ]

            •  There had (1+ / 0-)
              Recommended by:
              radical simplicity

              to be a note at some point that has wet ink signatures.  And when you say "blank forms being used to generate fake notes" - what do you mean?  In a case of a "lost note", there are other ways to prove in a Court of law that an entity is the particular party entitled to enforce the terms of a defaulted note/mortgage.

              Ultimately, a borrower/homeowner doesn't live in a house with a recorded mortgage without signing a note, correct?  I understand it's important, in theory, that the proper chain of custody took place between transfers (A to B to C to D) as opposed to what has happened on many occasions (A to D, skipping B and C), however at the end of the day, D is the party entitled to enforce the note.

              There is also a trail of paperwork that demonstrates the transfer of these documents and we all know at the end of the trail, there is but 1 party that is entitled to enforce the note.  Usually the Trustee ("U.S. Bank, as Trustee for the.....etc) of these huge trusts filled with mortgages.

              That said, if you are talking about the "endorsement" of a note, or an Allonge to the Note, then even in that scenario, the borrower doesn't have legal standing to challenge a "forged" endorsement.  

              The UCC theoretically allows someone who steals a note, or forges an endorsement, to present it for payment (enforce its terms).  

              Thus in that scenario, which is what you are pushing, the issue is between the thief and the real party that should have been entitled to enforce the terms of note....not the borrower and the thief.  

              •  No I am talking about forgeries (0+ / 0-)

                As in there were cases when banks had absolutely no connection to a property and foreclosed on them anyway, including houses that were owned FREE AND CLEAR.

                You're talking about original notes and assignments.  They forged assignments, they forged notes, they forged fracking EVERYTHING.

                In capitalist America, bank robs you!

                by madhaus on Mon Jun 18, 2012 at 01:41:48 AM PDT

                [ Parent ]

      •  "Hold the Mortgage" (3+ / 0-)
        Recommended by:
        fayea, ozsea1, Tuba Les

        In response to Hugh: the issue that most people miss when they make this argument that the "real party in interest" (or Plaintiff in a foreclosure action) isn't who they say they are or isn't the "holder" of the note/mortgage, "because they can't prove it", is the fact that the borrower does not have legal standing to assert such an argument.

        First, there is an underlying contract between the borrower and the original lender.  At all times, the duties and responsibilities of the borrower never change.  That is, the borrower must always make their payments on the monthly mortgage if they want to stay in their homes.  I think we all can agree with that.

        Second, when there is a transfer of a mortgage, or an "assignment", it creates a brand new and wholly separate contract between the assignor (1st time around would be the original lender), and the assignee (the new "holder" of the note/mortgage).  The borrower IS NOT A PARTY to this contract, and therefore does not have legal standing to assert that the alleged assignee, regardless of who the assignee is, is not the real party in interest to enforce the terms of a defaulted note/mortgage in any given foreclosure action because they can't "prove" they are the holder of the note/mortgage.  That is an argument to be made against the poser real party in interest, by the actual real party in interest.

        Example: let's hypothetically say that an entity (Bank of America) claims they are the real party in interest to enforce the terms of the note/mortgage when they in fact are not.  However, it is actually Chase Bank who is the real party in interest, but for whatever unlikely scenario, they aren't asserting their rights to enforce the terms of the note/mortgage and BANA somehow is. Who is the one who loses here if BANA recovers under the foreclosure suit?  Chase Bank, the real party in interest, is the actual loser. (from a contractual standpoint - important).

        In this hypothetical scenario, it would be Chase who has the legal standing to object to, Bank of America assertion that it (BANA) is the real party in interest, not the borrower.  If BANA actually recovers money from the foreclosure matter, Chase would have to sue to recover those monies, since they were in fact the real party in interest to enforce the terms of the note/mortgage when there has been a default by the borrower.  

        Let me add that the above hypothetical is also HIGHLY unlikely to ever occur.  Think about it.  Why would a bank go through the trouble of adding costs (legal, property preservation, advance on property taxes) to an already otherwise loss (negative equity problem), if it were not in fact the real party in interest entitled to enforce the terms of the note/mortgage.  I can't think of any bank who would go down this path.

        Ultimately this is the law with respect to legal standing and the challenging of assignments of mortgages, at least in the 6th Circuit (Ct of Appeals), and 2 other Circuits that I know of.  

        I'm not saying that I don't have sympathy for those who have gotten caught up with the foreclosure crisis, have lost their home and their sense of community in their neighborhoods, I'm just trying to make sure that folks have a grasp of the legalities of these "real party in interest" arguments that are so loosely thrown around and in most cases, provide false hope to the borrower that this is a defense to the borrower's default of their mortgage payments.

        •  Question (0+ / 0-)

          I have heard that many pieces of a mortgage were sold to entities like pension funds.  And some of these "investors" have gone to court due to the behavior of the bank.  The "owner" of the home usually speaks with "servicing agents".  In the case of a "short sale" or even a "foreclosure" would the "owner"  receive a legal release of their mortgage obligation that would hold up even if the house is currently in court due to a lawsuit from an investor?

          •  If there (1+ / 0-)
            Recommended by:

            is a short sale, once the papers are signed and the Deed recorded in new owner's name, the previous homeowners should be relieved of their obligations.  I can't think of a scenario where they'd be held accountable for a contract that no longer exists, but I guess I could be surprised (nothing surprises me anymore).

            In a foreclosure sale situation, once the new Deed is recorded in the name of whomever purchased the property at the public auction, the previous homeowner should again, be relieved of their mortgage obligations....

            Two things - 1) each state is different.  Where I practice, the above generally holds true - there could be rare examples of where the above doesn't hold true.  But not likely at all.

            2)And to answer your question, in my opinion, any suit filed by investors against the bank is a completely separate action that would have no bearing on a short sale, or foreclosure action where a borrower defaulted.  Such a lawsuit is a dispute between investors (probably not happy with their rate of return), and the bank only.

        •  What am I missing here? (0+ / 0-)

          I must say it is hard for me to wrap my mind around the idea that the owner of a property is not able to challenge the standing of an entity that arrives at his door claiming a right to foreclose.  

          Are you saying that he could not go into court and say he has no idea who this bank is and would like to challenge its representative to produce some documentation that they are, in fact, interested parties in this situation?  Would he, the owner, be told that it is he who is not a party to this action and be sent home to pack up with an order to vacate the premises to the favor of the unknown bank?

          If I did miss something I apologize, however it would seem such a state of affairs would be an opening for all manner of abuse and shenanigans, but that would seem to be the case if a party attempting to foreclose is not under an obligation to show they are indeed legally entitled to take the property and that the occupant of a property is without standing to challenge their claim.

        •  The mortgagee has standing if a bank (0+ / 0-)

          ... is threatening any kind of action against a mortgagee related to the mortgage, especially foreclosure.

          The borrower can sue whoever tries to foreclose to prove they have the right to do so. Otherwise, anyone could walk into a court and ask a judge for your house with a falsified affidavit, and you would have no recourse.

          Of course, that's what happened with robo-signing - leading to incidents such as banks trying to foreclose on homes that had no mortgages, and banks foreclosing on homes that had mortgages elsewhere, but never with that bank, not even through assignation.

      •  Wow, free houses. If only I new. (0+ / 0-)
  •  Please consider sharing this diary - Thank you! (8+ / 0-)

    sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

    by Democrats Ramshield on Sun Jun 17, 2012 at 01:53:53 AM PDT

    •  Thank you for this important article. (8+ / 0-)

      Thank you for this important article.  It is a routine and common occurence when a business declares bankruptcy and re-organizes their financial obligations.  Recently, Even though they were still making a profit, American Airlines recently declared bankruptcy because they projected a future drop in their profits (not a lose, a drop in profits).  They are now in the business of extracting concessions from their employees and re-neging on past promises made to retirees.

      So in the business world, a bankruptcy is a strategic move to gain a competitive edge.  But for home-owners, bankruptcy is a disaster.

      Of course, bankruptcy laws are much more favorable to business than to home-owners.  And who wrote the laws to give home-owners this disadvantage?  Law-makers who depend on business and banks to fund their elections.  And it should be no suprise that democratic law-makers share with republican law-makers this same willingness to screw home-owners.

      So voting democratic only is NOT going to level this unevan playing field.  Both Romney and Obama are fully bought and paid for by banks and lending institutions.  Choosing between Romney and Obama is like choosing between Bank of America and Chase.

      Who are you going to vote for in 2012: BofA or Chase?  

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Sun Jun 17, 2012 at 05:39:20 AM PDT

      [ Parent ]

      •  One way to take it into our own hands (3+ / 0-)
        Recommended by:
        Only Needs a Beat, ozsea1, bepanda

        is to send a donation--even a small one to candidates you like.  Obama recognizes the power in this, to his credit, and his campaign's willingness to scrounge for $3.00 donations, which is like coins under the couch cushions, shows that he values a large number of small donors.  Everyone should send in small donations to show that you are paying attention.  That will also get candidates wondering what they should do to get you to send in a second or third small donation.  It is very empowering.

        •  Really? (4+ / 0-)
          Recommended by:
          mkor7, Roadbed Guy, jjellin, Lucy2009

          1) You honestly believe that when it comes to making actual legislation, representatives give a tinker's damn about what the little $3 contributors want, need, or think?

          2)  You honestly believe that we can change ANYTHING in this stinking, rotten, corrupt bowl of crap we are pleased to pretend is a democracy, just by throwing enough change to buy a cup of coffee at it?

          Get real.  The American fondness for "optimism" is little more than a preference for living under the delusion that big, genuine problems can be solved by wishful thinking, meaningless gestures, and trivial sacrifices.  And that fondness has been diligently nurtured by corporate big-whigs who profit mightily from rendering the population of a once-great and feisty nation into complaisant blobs of jello on the couch.

      •  Durbin told a rare truth when bankruptcy reform (13+ / 0-)

        failed in 2009:

        "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place
        Those words are as true now as they were then.

        Some men see things as they are and ask why. I dream of things that never were and ask why not?

        by RFK Lives on Sun Jun 17, 2012 at 09:24:00 AM PDT

        [ Parent ]

  •  +110% n/t (14+ / 0-)

    I kinda screwed up with a careless uprate so (for now?) I'm a No Rate leper. So when I give a comment "+110% n/t", please consider that a recommend. (That's my workaround fix to participating in this community!)

    by The Angry Architect on Sun Jun 17, 2012 at 01:55:47 AM PDT

  •  Formula For Monthly Payment As % Of Income (36+ / 0-)

    use to be 25%. The banks upped it to 50% as the bubble inflated. Even with real estate prices dropping, monthly payments are still out of whack as a percentage of income. That money going to the banks is money not spent on Main Street. Banks worldwide have to realize that their refusal to take a haircut on loans they have made is making the business environment for the rest of their banking operations absolute shit. It is foolish that rising real estate prices are right now seen as desired. Prices should drop more.

    •  to Leo - great comment! (14+ / 0-)

      Let me add one quick observation, what has prevented Wall St from collapsing under the weight of its own corruption is twofold. Bank bailouts on the one end and peoples' willingness to pay for underwater mortgages on the other end has kept Wall St banking corruption gleefully afloat, while the working class American people are being drowned under waves of indebtedness.

      Pretty soon the whole American continent awash with debt will be underwater and disappear, just like the ancient continent of Atlantis did!

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 02:41:31 AM PDT

      [ Parent ]

      •  If 90% are paying (3+ / 0-)

        that is like voting with their pocketbooks, which means to me that most are doing it deliberately and know that they are helping to keep the economy from crashing utterly.  This should be recognized and rewarded, I believe, but I'm not sure how it could be done.  But, ordinary people who keep paying knowing that they could walk away should be able to trade their contribution for something--not a tax break, but something.  Personally, I'd rather see the benefit spread to society as a whole, with a single payer universal health care system, or free/nearly free college, and write-downs for current college debters who can not find anything but part-time $10/hour jobs while still required to pay horribly high loan payments.  I see all these ongoing payments as a way of saying let's do something to avoid the catastrophe.

        •  You're reading too much into it (9+ / 0-)

          People keep paying on their mortgages because they've been told they have a SACRED OBLIGATION to keep paying on things they agreed to pay on -- even if the thing they agreed to is fraudulent, and worth only 50-70% of what they agreed to.  Even if ownership of the agreement (the mortgage note) may be murky. They assume that they system works because they've been TOLD the system works.  They hear about the cases where it didn't work, and dismiss them as "anomalies."

          We can talk about citizen action and uprisings, but the truth is, most people will not challenge what they understand to be the law.  They've been raised to respect it.  They may mouth off a lot, but when push comes to shove, they wait for green lights, take their foot off the gas when the speedometer nudges too far over the limit, and pay their bills on time if they possibly can.

          They've been told this is how a good citizen behaves.  

          No one with credibility in their eyes has stepped up and told these law-abiding, credit-report fearing, non-economist, blue- and white-collar workers that they can LEGALLY do anything about their problem.  They have to CHALLENGE the law, and at their own expense -- with money they probably don't have.

          Also, as someone who has been in a home for 14 years, and had to watch my brother lose his in bankruptcy after 17, it is hideously wrenching to walk away from a home.  It's like a divorce, a death in the family.  Many people -- especially with children -- will not put themselves through that unless and until there is no choice.

          "There isn't a way things should be. There's just what happens, and what we do." — Terry Pratchett (A Hat Full of Sky)

          by stormicats on Sun Jun 17, 2012 at 09:01:39 AM PDT

          [ Parent ]

          •  That, and if you don't pay (1+ / 0-)
            Recommended by:

            You're screwed in many, many ways.

            Your credit rating will be trashed, which will be used against you by potential employers (can you say, "unemployable"?), potential landlords (can you say, "homeless"?), lenders (can you say, "13% interest rate on that car loan"?)

            People aren't really that stupid. They're paying because they know they'll be buried even worse if they don't pay. They stop paying when they have absolutely no other choice - or if they're wealthy enough that they're completely insulated from the ramifications.

      •  It Is The Era Of Lender Protection (5+ / 0-)

        It is a worldwide problem. Like your diaries because it does look at issues from a European perspective which usually differs from the American. One of the frustating things now is that Europe has been following the austerity path and can not be looked at as an example. Countries like Iceland and Sweden which have successfully come through financial debacles by making the banks pay the price are the exception worldwide.

        •  Exactly. (4+ / 0-)

          All the great "democracies" of our era, when the fire came down to the wire, raced to protect who?  The poor, the hungry, the dying?  The truck-drivers, the miners, the farmers who grow the food or the civil servants who assure public safety and Making It All Work Together?  NO.  They banded together with one stentorian voice to protect THE VERY, VERY RICH.  To hell with the ordinary people; throw them under the bus.  To hell with the Sovereign Voter; who cares about her?  She doesn't drive a Jaguar.  No, just like the Titanic, the only people who rate being rescued are those who can afford to lose a little.  The Banks, because the people who own and run them are rich, and their investors are rich.  High-ranking government officials know who their bosses really are.  The ordinary voters?  They can go out with the trash.

    •  Banks only want true capitalism for the (18+ / 0-)

      Average person, For themselves they want welfare.

    •  Taxes (1+ / 0-)
      Recommended by:

      The other problem in CA is that when the home drops 50% the taxes remain the same.  We pay 1% of the purchase price in taxes.  If the home was bought for $600,000 we pay $6000.  If the neighbor bought for $300,000 they pay $3000.  If the elderly have lived there 30 years, they may pay $500.  Not only is the homeowner paying too much in monthly payments, they are paying twice the amount of home taxes.

      •  That's relatively easy to rectify (5+ / 0-)

        Homes are reassessed all the time.  My house has been reassessed 30% lower in the last three years and thus my tax bill lowered accordingly.  And in my case, I didn't even have to ask.  Most if not all jurisdictions have a mechanism for challenging your assessment based on recent comps in your neighborhood.

        "A liberal is a man or a woman or a child who looks forward to a better day, a more tranquil night, and a bright, infinite future." - Leonard Bernstein

        by outragedinSF on Sun Jun 17, 2012 at 09:19:57 AM PDT

        [ Parent ]

        •  I don't think that is true in CA (0+ / 0-)

          Homes are not reassessed until they are sold.  The taxes can be adjusted a small amount up and down, but not in larger increments like it was before Prop. 13.  At least my taxes have not decreased and I am down about 50% or more in value.

          •  It is absolutely true. I am in San Francisco (0+ / 0-)

            and the city has proactively revalued almost the entire southeastern sector of the city, where most overvaluations occurred during the bubble.

            "A liberal is a man or a woman or a child who looks forward to a better day, a more tranquil night, and a bright, infinite future." - Leonard Bernstein

            by outragedinSF on Sun Jun 17, 2012 at 10:54:38 PM PDT

            [ Parent ]

      •  Is That The Flip Side Of Prop 13? (0+ / 0-)

        Meant to keep property taxes from rising as the value of the property rose. I guess if the value goes down it stays the same as well.

        •  No, it goes down to comp (1+ / 0-)
          Recommended by:
          radical simplicity

          The ceiling it could rise to keeps going up, though, so when property values rise again, your assessment can go up much more than 2%.

          Here's a simple example.

          You buy a house for $500,000.  (Hey, it's California.  Half million houses are everywhere, and they aren't all that nice where I live.)  Your taxes would be set at somewhere north of 1% for property taxes as there's usually some county bonds and fees built in, plus any parcel taxes, etc.    Let's call it 1.25%, so your taxes would be 6125 the first year.

          For the next two years, assume home prices go up faster than the 2% limit, so your taxes go up 2% each year.  Now your house comps to $700,000 but you are assessed based on $520,200.

          Now comes the bubble pop.  Your house is now comped at $400,000.  Assuming you file for tax reassessment (because they aren't going to volunteer to do it), your taxes will go down to $5000.  BUT, your previous tax payment of $6502.50 would have gone up another 2% if prices continued to rise.  That's your new ceiling.  

          Let's say the bubble pop lasts two years and your taxes stay based on $400K for a couple of years.  But every year that ceiling rises 2% based on your purchase price.

          Eventually home prices rise again.

          Your assessment does not go just up 2% from the $400,000 rate the previous year.  It goes up 2% a year for every year you owned the house.  So seven years after you bought your house, your taxes look like this:

          Year    Value    Ceiling Assessed   Taxes (1.25%)
          1    500,000    500,000    500,000    6,250
          2    600,000    510,000    510,000    6,375
          3    700,000    520,200    520,200    6,503
          4    400,000    530,604    408,000    5,100
          5    400,000    541,216    408,000    5,100
          6    450,000    552,040    459,000    5,738
          7    600,000    563,081    563,081    7,039

          The ceiling is the maximum amount of your assessment, 2% more than the previous year.  When California home prices were riding high, that WAS your assessment.

          Note how much the taxes went up between Years 5 and 6, when the comps went up $50K, and 6 and 7, when they went up $150K.

          I have never filed for tax relief, but for three of the last five years, my assessment did not go up 2% and in two of the years it actually went down a small amount.  My home is assessed for about half of what it is actually worth, due to my living there 18 years.  I expect my taxes to take a big jump this year as prices are going back up where I live.

          In capitalist America, bank robs you!

          by madhaus on Sun Jun 17, 2012 at 11:00:07 AM PDT

          [ Parent ]

    •  Here's the thing about a 30 year (5+ / 0-)

      mortgage.  Over 30 years at 3.5 or 4% you still end up paying twice what you purchased your home for.  And you have to pay every month.  Do you think your home is going to be worth twice what you paid for it in 30 years?  Do you think you will have a job during that entire duration?

      There has not been a time in America in the last 150 years, maybe more, that you are unable to tell what the world will be like in 30 years than right now.  Will you have a job?  What will you be paid for it?  A long term mortgage is a very risky thing no matter the rate right now.

      “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” - Harriet Tubman

      by Publius2008 on Sun Jun 17, 2012 at 09:14:44 AM PDT

      [ Parent ]

      •  Banks Love Mortgages. House Is Collateral. (4+ / 0-)
        Recommended by:
        Cliss, devis1, bepanda, radical simplicity

        One of Elizabeth Warren's book cites real estate costs as the major reason for the middle class squeeze. Banks love making money off the materialistic dream. As people look back on this era those credit card "priceless" commercials will stand out as emblematic of this age. Having the economy stagnate while consumers deal with overwhelming debt. Priceless.

      •  You are neglecting to mention (3+ / 0-)
        Recommended by:
        adrianrf, Calamity Jean, Joe Bob

        That the person also gets to use the home while the mortgage is paid, which has significant value, and the interest is subsidized through lower income taxes and the mortgage is paid in cheaper dollars from inflation.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sun Jun 17, 2012 at 10:34:02 AM PDT

        [ Parent ]

        •  Yeah, if you don't buy you have to rent. Wherever (1+ / 0-)
          Recommended by:

          you live, you gotta pay to live there.

          Renewable energy brings national global security.     

          by Calamity Jean on Sun Jun 17, 2012 at 12:47:57 PM PDT

          [ Parent ]

          •  Well.... (1+ / 0-)
            Recommended by:
            Calamity Jean

            Mostly. Unless you can handle living in a tiny, tiny place where you can live mortgage-free after a very brief period.

            We live in a 1-room 12x20 space. 4 people, 3 pets. It sucks in a whole lot of ways, but it's far, far better than worrying about having a roof over our heads (it totally saved our butts when we were both unemployed - it didn't keep us all fed, but it kept us in shelter).

            Not everyone can do what we're doing, which is why the banking system needs to be hauled up short, and clipped to a short leash, and perhaps trained with a choke collar until it learns to heal. At the same time, it IS possible to not have to pay to have a roof over your head - it just takes way more effort and sacrifice than most Americans are ready for, and more than some can manage at all due to issues such as disability, age, etc.

      •  Yes, it probably will be worth double. (0+ / 0-)

        This is just a simple math problem. Assuming a doubling time of 30 years, what percentage rate of price appreciation would you need for the value of the house to double?

        Answer: about 2.35%/year

        As they say, past performance is not a guarantee of future results but staking your mortgage payment on a bet that prices will appreciate, on average, at least 2.35%/year is not much of a gamble.

        Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

        by Joe Bob on Sun Jun 17, 2012 at 01:02:48 PM PDT

        [ Parent ]

  •  The ownership society...HA! (13+ / 0-)

    Only applies to the 1% and STILL most don't or won't see it.

    Less is More!

    "Time is for careful people, not passionate ones."

    "Life without emotions is like an engine without fuel."

    by roseeriter on Sun Jun 17, 2012 at 02:31:20 AM PDT

  •  My 80 yr old parents paid 9K for their home back (35+ / 0-)

    in the 50s. Paid off the mortgage before they retired but now their property taxes are almost that same 9K every year.

    Go figure..

    "Time is for careful people, not passionate ones."

    "Life without emotions is like an engine without fuel."

    by roseeriter on Sun Jun 17, 2012 at 02:34:31 AM PDT

    •  to roseeriter - well said! (5+ / 0-)

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 02:42:31 AM PDT

      [ Parent ]

    •  We paid $2500 for a barn we converted into (18+ / 0-)

      a house in 1970.  Our annual property taxes are now four times as much.  However, comparisons aren't valid because much has changed in the interim, including going off the gold standard in 1971 and the advent of universal suffrage the same year.
      The first created the ideal currency, one that has no intrinsic value and relies entirely on the probity of the users of a potentially limitless tool. It was the realization of the potential limitlessness of the money supply which prompted banksters to put on the screws and devise strategies for limiting who could actually use it.  Charging a premium worked for a while.  As recently as 1981, the U.S. Treasury, which prints the stuff, was willing to pay a premium of 8.1 % to people who had managed to store some up by preventing other people from using it.  
      Since about 2000, that effort to ensure the scarcity of an infinite commodity has not been working.  However, keeping the majority of the population from having ready access to currency has been more successful, especially since the people who feel threatened by universal suffrage have been willing to co-operate in devising legal strategies to both restrict access (by reducing wage standards) and relieve them of any that's acquired (lending charges of 30%).  The banksters interest in gaining income for doing nothing useful came together with legislators' interest in retaining power despite not doing anything useful.

      It seems sort of ironic that the conservatives' anthem "Impossible Dream" was penned in 1972.

      "In the name of the nation, and of the dollar and of the rule of law, you and your children shall sacrifice for the good of all." Rmoney's prayer

      by hannah on Sun Jun 17, 2012 at 03:09:07 AM PDT

      [ Parent ]

    •  My property taxes now (5+ / 0-)

      are more than my mortgage was when I bought the house.  Paying it off was supposed to insure a comfortable and secure retirement, now it just enslaves me to the taxman instead of to the bank . . .

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Sun Jun 17, 2012 at 07:42:55 AM PDT

      [ Parent ]

    •  So? (4+ / 0-)
      Recommended by:
      adrianrf, mkor7, Joe Bob, jsquared

      9K in the 1950s would be worth how much today? $150K?  You can't compare prices 60 years apart as if they're the same thing.

      The question is whether their taxes have been rising steadily to the point they can't afford them.  That was the basis on which Prop 13 was sold to Californians (let's stop the government from taxing grannies out of their homes), but its real purpose was to starve government and lower taxes for CORPORATIONS.  If Prop 13 was really about tax relief for senior citizens, it would have been written only for senior citizens on fixed incomes, not EVERYONE and EVERYTHING.  Yes, commercial property is not only covered under Prop 13, most coporations NEVER have property reassessed because they change ownership under holding companies and claim it's the same owner all along.

      It's killing our schools, which used to be the best in the country.  I fucking hate Prop 13 and I would gladly nuke it and start over and I don't care if my property taxes would triple.

      In capitalist America, bank robs you!

      by madhaus on Sun Jun 17, 2012 at 11:07:45 AM PDT

      [ Parent ]

  •  My answer as to why I don't (23+ / 0-)

    Stop paying? It's because I borrowed the money to buy my home, and without the loan I would not have been able to do so. I promised to repay the bank for the money they lent me, and as long as I am lucky enough to afford to make my payments I will do so. Defaulting because one can no longer afford to pay is perfectly understandable. But defaulting just because you think you can get away with it is stealing, plain and simple.

    •  Sorry doc2... (35+ / 0-)

      but I have to disagree. The major banks have walked away from their own real estate loans and obligations when it is no longer in their best interest. When corporations do this, it's considered a business decision.

      Homeowners, more than any others because they're looking out for their own good, should be entitled to do the same without it being considered stealing.

      Never attribute to malice that which can be adequately explained by stupidity.

      by reflectionsv37 on Sun Jun 17, 2012 at 02:44:44 AM PDT

      [ Parent ]

    •  doc2 - Please read this (25+ / 0-)

      The money that you borrowed was a fiction. It never existed except on a manipulated ledger. Everyone knows that. I say honest people have the right to stop paying and let the market correct the problem in your favor.

      When the markets work in their favor we have no problem accepting that. We should also accept the markets working in our favor. When markets work in the favor of working class people it is not called stealing it is called justice!  

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 02:50:28 AM PDT

      [ Parent ]

      •  The market is an arena where legal (14+ / 0-)

        theft occurs whenever a middleman takes a cut of value (interest) from something he hasn't himself produced and for which he doesn't even have a use. Because the thief has no use for what he's stealing and just wants to take a little bit, we declare it legal.  But, legal should not be equated to moral.  Some immoral behavior is designated as illegal.  Some isn't.  Perhaps the best example of the latter was slavery -- a legal status recognized in the Constitution in the so-called 3/5 compromise.

        "In the name of the nation, and of the dollar and of the rule of law, you and your children shall sacrifice for the good of all." Rmoney's prayer

        by hannah on Sun Jun 17, 2012 at 03:16:51 AM PDT

        [ Parent ]

      •  That mortgage is a legal contract, not fiction (3+ / 0-)
        Recommended by:
        bronte17, virginislandsguy, Calfacon

        and what you propose is for people to ruin their credit rating and remain liable for the contracted mortgage amount.

        What was fiction were the inflated housing prices during the boom and the belief that people could borrow against that inflated equity without ever getting in negative equity during the boom and bust cycle.

        Underwater mortgages are significant only if the mortgagor wants to sell the house or borrow against equity. Some banks do accept "short sales", agreeing to take an amount lower than the mortgage amount when the house is sold.

        The amount the mortgage is underwater makes a difference, too. For many, the underwater amount will be resolved as the markets improve; for those who purchased houses during the housing boom, they may never recover. The latter group deserve some help, imo.

        San Diego housing was significantly overpriced during the boom and therefore took a big hit in the bust. Painful. But a friend of a friend put her house on the market last week and in the first 24 hours received six offers over the asking price. She'll make some money in the sale.

        The market is improving in some neighborhoods. I hope the sales prices don't reach the stratospheric levels of the housing boom.

        The sh*t those people [republicans] say just makes me weep for humanity! - Woody Harrelson

        by SoCalSal on Sun Jun 17, 2012 at 08:17:56 AM PDT

        [ Parent ]

        •  The Fiction (0+ / 0-)

          Money pumped into the market since 2006 or earlier came from Wall Street Banks not reading mortgages and funding them anyway.  I personally saw them fund "straw man" offers meaning someone wrote the offer with no buyer and the idiots funded it.  Some of those little people are now in jail, but the banksters walk free.  That is a fraud and a crime that had massive consequences including lots of little people being kicked to the curb.  If you live in an area of 50% or more decline, it is hard to put your home on the market and receive multiple offers because the bank is doing the selling, not the owner.  It is a "short sale".  If mortgages are sensibly funded, there will be some balance in the future, but we have a long way to go before the surplus garbage is out of the market not to mention the lack of a "chain of title" that is realistic.  Not to mention the massive numbers of investors buying these cheap foreclosures and probably creating slums.  I'm in the Central Valley and not as plush as San Diego.

    •  It is a business deal (29+ / 0-)

      In the land of broken business deals when corporations lose, you are setting yourself up to be the martyr over and over and over again.  You are encouraging Wall Street and corporations to continue to be predatory, because there are no consequences for their actions.

      It is your choice of course, how you handle this.  I will not be looking down on anyone who walks away, to include myself.

    •  Gasp (42+ / 0-)

      Um, no ... This is totally wrong.

      There are several reasons why people might want to keep paying on an underwater mortgage.

      But "because to do otherwise is stealing" is totally, completely, absolutely wrong.

      It's not stealing, since the bank will eventually seize the property. It will return to the mortgage owner.

      It's a voluntary default. This is very common in all sorts of real estate transactions. For commercial real estate, for example, it's done with a smile and a shrug whenever it makes the best business sense. These days, a homeowner must take the same attitude towards it.

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sun Jun 17, 2012 at 04:19:37 AM PDT

      [ Parent ]

      •  For whatever it's worth, (14+ / 0-)

        The wife and I pay our morgtage primarily because we just don't want to go back to apartment living. Believe me it is not out of any concern for our friendly banker.
        Not to mention that rents are almost on par with our current house payment. I am making a business decision. Period.

        Quite frankly they can go screw themselves every which way from here to hell and back as far as I am concerned.

        I was brought up to pay my obligations. I was also brought up in a time when things in this country wasn't so tilted against the middle class.

        Between the health insurance rackets, banks, republicans, and every other yahoo that is gunning for my money now days, I have entered into survival mode.

        My family comes first and I have to have their welfare at heart.
        I guaranfukintee the oligarchy could care less whether my family or I suffer and or dies.

        Just my 2 cents.

        "We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both." Louis Brandeis

        by wxorknot on Sun Jun 17, 2012 at 05:52:31 AM PDT

        [ Parent ]

        •  When I bought my condo in SoCal (2+ / 0-)
          Recommended by:
          Sychotic1, Losty

          in 2002 my family was against it because they thought a single person should rent. What they didn't realize was that at the time my rent was higher than my condo payment would be.

          That will be the case everywhere if people walk away from their mortgages. When more people are looking for rentals, rents will continue to rise until purchasing makes more sense.  But in the meantime there will be people forced to share apartments or live in their cars.

          •  Did you add all your other expenses to the (1+ / 0-)
            Recommended by:

            condo payment?  Taxes, insurance, and homeowner fees?  I owned a condo and only broke even AFTER depreciation (because I ended up renting it our for a while).

            In capitalist America, bank robs you!

            by madhaus on Sun Jun 17, 2012 at 11:12:31 AM PDT

            [ Parent ]

            •  My rent had been $1450 but there was talk of (0+ / 0-)

              it going up as other places like it were at $1500. My payment was $1000 plus $140 association and $2800/12 property taxes. With some creative financing I didn't have to pay mortgage insurance so it was a break even but I could deduct the interest portion of the payment.

              •  The deduction is overrated (0+ / 0-)

                it turns out unless you live in one of the high-tax/high-income areas, most people are better off taking the standard deduction and don't benefit from the tax deductability of mortgage and tax payments.

                So guess who benefits from the deduction?  Not the middle class.  The wealthy.  Interest on mortgages up to $1 million dollars are deductible.  That is ridiculous.  The deduction makes property cost more than it needs to.

                In capitalist America, bank robs you!

                by madhaus on Sun Jun 17, 2012 at 12:19:04 PM PDT

                [ Parent ]

        •  I really do not get this (1+ / 0-)
          Recommended by:

          I hear this all the time -- "I pay the mortgage so I don't have to live in an apartment."

          RENT A HOUSE.  I have done this many times, because I don't like apartments.  There is absolutely no reason to pay more than you can afford when you can rent a house for much less money.  In many cases you can rent a much nicer house in a better part of town/better town for MUCH less money.

          In capitalist America, bank robs you!

          by madhaus on Sun Jun 17, 2012 at 11:11:27 AM PDT

          [ Parent ]

          •  We are content right now. (0+ / 0-)
            There is absolutely no reason to pay more than you can afford when you can rent a house for much less money.
            We can afford our house currently, but barely and that is only because I have filed for disability and the funds are low.

            There is also the issue of location. I have looked at locales close to us and the rents are considerably more than what our morgtage is.

            That said, in general I agree with you. When we purchased  we never put ourselves in a corner. In fact we spent considerably less than what we had been approved for and that decision then, is saving us now.
            Even so, we are treading water and not under.

            If the market changes so much that rent becomes the viable choice; rent we will. Until then, we stay put.

            In the end, it all comes down to what is best for the family.

            "We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both." Louis Brandeis

            by wxorknot on Sun Jun 17, 2012 at 12:02:52 PM PDT

            [ Parent ]

            •  Of course you should do what's best for you (0+ / 0-)

              But you said you stayed in the house because you didn't want to live in an apartment, and that was what I responded to.  It's a completely false dichotomy.  At least it is here in Silicon Valley, where the homeowner rate is much lower because the homes are so expensive.

              In capitalist America, bank robs you!

              by madhaus on Sun Jun 17, 2012 at 12:20:49 PM PDT

              [ Parent ]

    •  The money leant to home buyers come from (4+ / 0-)
      Recommended by:
      stormicats, Sychotic1, sunbro, catwho

      depositors and investors that they gambled with. THey benefit and someone is going to suffer if the system crumbles... It won't be the banks. Walking away means many pension funds will go under and old people will die because they can no longer work. So I too pay because depositors will not be easily fooled again. Banks won't  lend and more will suffer hugely as loan money dries up and small business especially suffers.

      Saved money all your life so that you wouldn't be homeless at 75, too bad ... bankers gotta make thier profits and some find that they don't believe they should honor thier debts. Of course if home values are climbing then they don't hesitate to take the profit.

      The only way out is through and shortcuts or defaulting destroys trust which leaves us a faithless mess. I pay because I believe I will eventually be even again and because I believe in commitments even to deregulated pigs who are using other peoples money to gain huge profits.  I want Glass Steagal again, I want bankers to quit gambling or be shut down, I want people to quit behaving like thoughtless, self centered and cynical predators and I want contracts to be honored even when inconvenient.  I may be a fool but a failure of law in interactions is what got us into this mess and a expansion of that failure will simply take us down further... Two evils do not equal good...

      Proud Slut...Fear is the Mind Killer

      by boophus on Sun Jun 17, 2012 at 07:37:23 AM PDT

      [ Parent ]

      •  True. (0+ / 0-)

        However from your point of view of social conscience, a negotiated universal settlement where the banks are forced to take an across-the-board cramdown and debtors are forgiven a certain amount or percentage across the board would make a reasonable solution for the country as a whole.  The idea would be that as the pain is so widespread as to infect the entire social body, an agreement where we all lose a small but bearable amount is preferable and more conducive to recovery, than forcing random individuals to bear massively distorted burdens.  And forcing the banks to pay a solid share of the cost would be both just and sensible, as they are the ones who can best afford it.

        •  Yes if the political will is there to do cram down (0+ / 0-)

          to right the problem... fine ... Let it happen. If Romney is elected there may be worse to come since he is Bushian. And BOTH Bushes had a housing finance problem that harmed the buyers and the political body. The Senior Bush had a son involved in the Savings and Loan mess and a son in the 'loaning to people who were then bet on to fail to pay thier mortgage' mess. Neither of whom the political body should have approved of yet both won handily.

          If you are so far underwater that paying for your mortgage will pay a lot to jerks who made a profit taking you then fine walk away. But if your home is like ours where we are just slightly down and probably from the trend here will have come even in a few years then Stay the course. Vote for those who will tend to the problem not make it worse.

          We have contracts with each other beyond the obvious and these republican thugs are taking advantage of that. They depend on the impulse to treat others decently of Democrats and many people. Con artists are frequently that kind of leech who recognizes a potential victim. So we need to unwind this problem without burning down the house that some advocate but wholesale walking away will exacerbate the problem.

          If Romney is elected I may be willing to let them have the house if my taxes double so the rich and corporations pay less because I couldn't afford to keep it even if it was valued at exactly what I owe. As I tell my spouse. In uncertain times you have to have plan B and plan C and plan D .... We also worry that our pension will be destroyed by a continuation of the Bush Casino economy and the lashback of those suffering first under it.  So we are reducing every payment on anything to minimums and renting our house (we are going to live in our RV) so that we have a cushion until we can set up new living arrangements. And if the prospects look as if the Casino is going to open with more welfare for the richest we will then stop paying our mortgage.  We also thought of renting our 2 extra bedrooms and some space in our shop or in the back 1/4 acre which we could do since we are paying the mortagage... We will manage and we will help as many as we can to manage.

          I do not judge anyone if thier situation calls for walking away. But to walk away when you can uphold your side is not good for the social contract that so many put thier trust in.

          Proud Slut...Fear is the Mind Killer

          by boophus on Sun Jun 17, 2012 at 12:41:26 PM PDT

          [ Parent ]

    •  In California you would be wrong (2+ / 0-)
      Recommended by:
      Losty, cynndara

      California law says that the lenders should not lend you more than the house is worth and that the borrower can walk away (relatively) unscathed and the only thing the bank has a right to is the property.  

      This was intended to minimize risky property ventures with their patron's money.  It was also to discourage them from hiring appraisers that would inflate their appraisals.

      I do not owe the bank anything more than the property they loaned me the money on and they are welcome to it.  I stopped paying 13 months ago and moved out into a rental.  They have not foreclosed yet.

      "I watch Fox News for my comedy, and Comedy Central for my news." - Facebook Group

      by Sychotic1 on Sun Jun 17, 2012 at 09:56:06 AM PDT

      [ Parent ]

    •  Which is why (0+ / 0-)

      You, being an honest man, will remain a slave to the corporate system, while the bankers will Profit.  Because the bankers are not honest, and they don't give a fig for a promise unless it was made TO them.  Promises THEY made, are for wiggling out of however it can be arranged.

      Riddle me this riddle? What do you call a society, where the good are infinitely punished, and the evil are infinitely rewarded?  Have we figured out yet, that something is very WRONG here?

  •  It's actually worse than you even portray! (15+ / 0-)

    Those monthly payments aren't really going to pay for nothing. Since most of these loans were taken out only a few years ago, those still making payments are paying for the interest being charged on nothing!

    There probably aren't any statistics on this, but it would be very interesting to know, on average, how many years it will take the average homeowner to pay down his principal to no longer be underwater. Knowing the loans still have a number of years to be paid off, interest makes up a far bigger portion of those payments than the amount going to principal to pay off nothing.

    I have to fully agree with you! I don't understand why people don't just walk away. We gave the banks billions, and every month so many "homeowners" continue to give them even more.

    I know many people who truly believe that housing prices will once again rebound and get to their previous levels. I keep telling them that the only way that will happen in their lifetimes, is when a loaf of bread costs $25. They just don't get it!

    Never attribute to malice that which can be adequately explained by stupidity.

    by reflectionsv37 on Sun Jun 17, 2012 at 02:38:24 AM PDT

    •  The better question, I think, (22+ / 0-)

      is "just who are you going to sell your house to, someday, anyways?"

      It sure isn't going to be to the generation that's $40k in debt from university and can't even get a job a McDonald's.

      You're not going to be able to sell your stocks to them, either. They have no disposable income. They have nothing with which to invest. Nothing. Which means that all your boomer 401ks? Worthless. A stock you can't sell is worthless. Well, unless you're willing to get 10 cents on the dollar.

      The market's going to hit a goddamn brick wall any year now. Millions of boomers trying to retire, and they can't sell a damn thing. Millions of Gen Xers and Millenials trying to live a life, and they can't buy a damn thing. And the 1% standing on top of it all, laughing their asses off as we blame the illegals, the Greeks, the Chinese, the Jews, whatever minority the tubes tell us to hate today.

      We're so colossally fucked and we don't even know the full extent of it yet.

      Would it not be be simpler, if the government simply dissolved the people and elected another? Bertolt Brecht

      by George Hier on Sun Jun 17, 2012 at 04:55:31 AM PDT

      [ Parent ]

    •  I am sure there are statistics on this (3+ / 0-)
      Recommended by:
      mkor7, reflectionsv37, bepanda

      CoreLogic has been tracking this and would be very happy to sell you them.

      But we know when the bubble popped, so the typical underwater purchaser bought the house between 2002 and 2007.  That means most of them are only 5-10 years into their 30 year mortgages... unless they ended up with negative amortization in which case they are even more fvcked.

      Don't forget a lot of people got 80/20 or 80/15 mortgages and went into homedebtorship not owning any equity at all, and furthermore with the seller covering the realtor fee and transaction costs, knock 7% off the selling price of any home and ALL those people are underwater the minute they move in, even with 5% down.

      The other issue in computing how long it would take these underwater borrowers to get their heads above sea level is at what rate how prices will rise, or at least stop falling.

      According to this article, 15 percent of underwater homedebtors, or 2.4 million of them, owe DOUBLE what the home is "worth."  DOUBLE.

      In capitalist America, bank robs you!

      by madhaus on Sun Jun 17, 2012 at 11:20:05 AM PDT

      [ Parent ]

  •  Presumably, people send money to the (21+ / 0-)

    bank because they realize that the money is worthless, if they don't spend it and, whether or not they own it, a roof over one's head is worth something.  Also, there's still the comfort of believing that a man's home is his castle and can't be legally invaded, unless there's a very good reason (it's warranted). Some people have stopped paying on their mortgages and discovered, to their delight, that they can't be evicted because the mortgage holder can't find the paper-work to prove a property right.  Property rights still trump human rights, but only if they're well documented.

    Anyway, since it is estimated that $40 trillion of nominal value disappeared in the crash of 2008, $1.2 trillion is almost insignificant.  While it is half of what we spend on health care in a year, it's also significantly less than the $2 trillion + that the commercial/industrial sector is hoarding instead of using to "create jobs."

    What all of these numbers should tell us is that money saved up in vaults, bonds, derivatives and foreign accounts is worthless. One is left hoping that the example of Greece refusing to pay a ransom to continue using the Euro will finally convince people that currency is a useful measuring tool, making it possible to define equivalencies, but, like the inch or the centimeter, worthless in itself, albeit liable, like the ruler rapping knuckles of old, to being turned into an instrument of abuse.

    The tradition of free labor continues to bedevil America.  Making people work for their dinner is an ideal shared by many -- mostly people who have good reason to believe that, if they can't con people into doing their bidding, they won't survive. Because their practical skills are entirely lacking.

    "In the name of the nation, and of the dollar and of the rule of law, you and your children shall sacrifice for the good of all." Rmoney's prayer

    by hannah on Sun Jun 17, 2012 at 02:40:35 AM PDT

  •  This is sort of OT perhaps... (3+ / 0-)

    ...but there was an editorial in my local rag (context: L'INDEPENDENT, services the South of France, 80% local news + sports, mostly apolitical) in which the writer accused the United States (in rather strong words) of being responsible for the current financial crisis by forcing the rest of the world to pay for its deficit.

    I am not an economist and I did not/do not understand what the writer meant; and he didn't elaborate, moving on to related topics. This is however not an editorial writer known for his extreme positions.

    I wonder if someone here more versed in economics than I could explain what he meant?


    by Lupin on Sun Jun 17, 2012 at 02:51:33 AM PDT

    •  to Lupin - please read (6+ / 0-)

      I am at a disadvantage. First I am an MBA not an economist and second I don't read French so I can't read the article you referred to, but from your cogent description especially in view of the author's reputation as being reasonable, I think that particularly construct would go along the lines of something like this.

      As investors in America and people who do business with America have their costs inflated, not through ordinary market forces, but through irresponsible acquisition of continued indebtedness, then they are being drafted that is to say forced by these de facto circumstances to pay a premium for the fiscal irresponsible behavior of the American govt, which refuses to run solvent budgets as they would require that the rich and fortune 500 companies in America pay their fair share.

      If the investors get out in that type of a market it will mean a short sale for them. If they stay in they continue to operate at a loss by virtue of paying that premium. Same thing for trading partners. This is a generalized response read in an editorial pages all over the world of recognition that America is no longer prepared to pay her own way in a fiscal responsible manner, they are living on debt, which means they are living off others.

      Not just the American working class, but everyone worldwide is being exploited by America's 1% in a fashion never before seen. That at least is my humble opinion of the article you described which though I haven't read seems to make the same arguments that are present in many other like minded editorials worldwide.  The shameless actions of America's 1% or perhaps more accurately 1/10th of 1% are being felt globally and people are correctly complaining. That's my opinion. Thanks for sharing Lupin.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 03:01:40 AM PDT

      [ Parent ]

      •  Unfortunately... (1+ / 0-)
        Recommended by:

        ...L'INDEPENDANT only puts local stuff online on their website, so I can't provide you with a link.

        I have seen this statement regarding America making the rest of the world pay for/finance its deficit elsewhere, but I confess that, even after reading your explanation, I don't quite grasp the concept.

        Do you mean to say that by printing $$$ to pay for its deficit, $$$ which are in turn bought/held by other countries, America relies indeed on other countries to finance its chronic deficits?

        OVER HERE: AN AMERICAN EXPAT IN THE SOUTH OF FRANCE, is now available on Amazon US

        by Lupin on Sun Jun 17, 2012 at 03:11:11 AM PDT

        [ Parent ]

        •  to Lupin - Just a short response (2+ / 0-)
          Recommended by:
          adrianrf, Lupin

          As time presses I am only able to give  a short response but let me say this, America started the printing presses and by contrast France cannot do that. France is tied into a common currency the Euro. Its national govt cannot take the initiative to start the printing presses which inflates away its investor's money. Same thing for trading partners, likewise France is tied into the European Union, the decision making model in Brussels. It is forced to behave responsibly to an extent that America is not.

          Yet America's irresponsible behavior in other matters can be brought to bear  on french investors and French business partners and same is true across the EU and across the globe. Also not raising taxes on the 1% causes America to run unilateral deficits that its trading partners and investors have to foot the bill with or jump ship and potentially take a short sale loss in this economy. Hope that helps. I will try to email you as time permits.

          sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

          by Democrats Ramshield on Sun Jun 17, 2012 at 03:36:55 AM PDT

          [ Parent ]

        •  I'm certainly no economist... (1+ / 0-)
          Recommended by:

          but I think that may be exactly what is happening. When we fire up the printing presses and start creating money from nothing, we devalue the assets other countries have in US $$$. Again, IM'NE, but it seems to me the only way we ever get out of the mess we're in, is through inflation. We raise the value of nothing, so we pay off our debts with currency that is no longer worth what it once was. In the meantime, underwater homeowners finally see the value of their houses rise. I don't see any other way out of our current situation.

          Never attribute to malice that which can be adequately explained by stupidity.

          by reflectionsv37 on Sun Jun 17, 2012 at 03:53:22 AM PDT

          [ Parent ]

          •  Economists that long for stability complain (1+ / 0-)
            Recommended by:

            that nobody has any savings.  But there is no incentive for anyone to save because they won't quit flooding the economy with liquidity.  And it is often the same people complaining about not enough savings that also argue that we must flood with liquidity instead of making the banks actually have to work for their profits too...provide a true service with honest paychecks given to them.  They can complain all they want, but when my holding onto a dollar only spells watching it melt while the price of commodities goes through the roof WTF does anyone think is going to happen here?

          •  I am an economist. (2+ / 0-)
            Recommended by:
            adrianrf, Lupin

            I think that the French complaint is that the US runs a chronic trade deficit. By and large, the imports that we buy are paid for with dollars. That means that al our trade partners are flush with dollars. In order to have a current account deficit (trade in goods and services) we must have a financial and capital account surplus. Thus, our trading partners must buy American assets like American real estate, stocks, and Treasury bonds.
              The Treasury bonds, of course, are how our deficits are financed.
              Moreover, Treasuries are a very secure investment. As a result, the market bids down the interest rate on Treasuries. People and institutions who want to park their money somewhere safe park it in US Treasuries. That means that other countries have to pay higher interest rates to attract the remaining investors.
              So, the US gets to use more goods than it produces and, as a condition of doing that, it must borrow a large percentage of the savings of the rest of the world.

            •  You left off the final sentence . . . (3+ / 0-)
              Recommended by:
              adrianrf, mkor7, Lupin

              the one after "it must borrow a large percentage of the savings of the rest of the world" . . . which should be:

              Which it will pay back, if it pays it back at all, only in inflated (read "nearly worthless") dollars..

              Since the US is using more than it produces, and will continue to do so for the forseeable future, there is simply no way that it will ever pay back what it is borrowing.  US "sovreign debt" is worth no more than Greek "sovreign debt" . . . that it is treated otherwise is only because of the fear of systemic collapse.

              Fake Left, Drive Right . . . not my idea of a Democrat . . .

              by Deward Hastings on Sun Jun 17, 2012 at 08:00:45 AM PDT

              [ Parent ]

        •  If the US runs a $600 billion trade deficit (1+ / 0-)
          Recommended by:

          at least $600 billion must be created in new money or there won't be any money in American wallets within about a year, it would all wind up in Chinese and Arab controlled bank vaults.

          The same thinking applies even with electronically created money.

          Run a trade deficit with the USA or Greece and expect to get cheated.

      •  The 1% have no nationality. (18+ / 0-)

        They are citizens of all the countries and loyal to none. They are their own sovereign which manipulates markets and hoards money and property.

    •  if you can get a copy, (3+ / 0-)
      Recommended by:
      aliasalias, adrianrf, Lupin

      Joseph Stiglitz's book Freefall: America, Free Markets, and the Sinking of the World Economy is a pretty good primer.

      Republicans stand for raw, unbridled evil and greed and ignorance smothered in balloons and ribbons. -- Frank Zappa

      by Mnemosyne on Sun Jun 17, 2012 at 08:22:16 AM PDT

      [ Parent ]

  •  Every person (17+ / 0-)

    who bought a car on credit, was 'underwater' on the car as soon as they put they key in the ignition for the first time.  Should they stop paying for their cars?  

    The rationale does not hold up.

    We can have change for the better.

    by phillies on Sun Jun 17, 2012 at 03:25:24 AM PDT

    •  Amen. (3+ / 0-)

      I've never worked with an MBA who was worth a damn.  It's no wonder, if this is the kind of crap they're being taught.

      "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

      by Neuroptimalian on Sun Jun 17, 2012 at 03:34:54 AM PDT

      [ Parent ]

      •  when action becomes collective (2+ / 0-)
        Recommended by:
        Militarytracy, happymisanthropy

        It surpasses the individual effect. If you buy the whole "debt slavery" point of view (and I do wholeheartedly because that's the effect of what financial institutions have wrought if not the original intention), then it makes sense. Unfortunately, no one will act collectively (hah, a union of drowning mortgage payers), so it only feels good to talk about.

        History will see us as patsies.

        •  Maybe, maybe not (0+ / 0-)

          if * everybody * who was underwater walked away, the entire economy might very well crash and the walker awayees might very well be worse off than they currently are.

          Thus, their apparent apathy might very well be nicely self serving after all.

          •  to Roadbed Guy - I politely disagree (5+ / 0-)

            if people unionized in their dissent the market would have no choice but to correct the negative equity posture, in the over leveraged properties.

            sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

            by Democrats Ramshield on Sun Jun 17, 2012 at 07:33:22 AM PDT

            [ Parent ]

            •  yes, b/c wall street self interest (0+ / 0-)

              Would dictate they save themselves and the market. Too bad the current victims of wall street greed aren't sufficiently remote enough from good times to realize the need to act collectively. A generation from now, things could be very different.

            •  As was pointed out earlier, any writedown of (1+ / 0-)
              Recommended by:

              principal owed has to come from whoever holds the other side of the deal.  If a pension fund in Latvia holds MBS that must be marked down based on asset value, then the pensions must be reduced.  No free lunch.

              Now it is possible to argue about the bank profit that is taken off the transactions and paid out as shareholder value or bloated executive salaries, but that is not the entire problem.

              Where are we, now that we need us most?

              by Frank Knarf on Sun Jun 17, 2012 at 09:04:24 AM PDT

              [ Parent ]

              •  this very important and i hope (0+ / 0-)

                Democrats ramshield sees it. I spent the last two decades of my life as a housing activist and I can tell you what banks do with foreclosed homes. It's not anything that helps a Latvian pensioner, that's for sure.

                First, instead of helping the mortgage payer stay in their home by writing down the mortgage, they spend the legal fees booting them. Then the property sits abandoned for months or years, depending on the local housing market. They don't care that it hurts the neighborhood because it starts to fall apart. Don't care if squatters take over. Finally, they will dump it for a price that is far more detrimental to the mortgagee (the bank)...maybe half or a third of the value. They don't care that property values in the neighborhood are affected. They don't care that the local city or town loses tens of thousands in tax revenue when the property is devalued. Then flippers buy it.

                Banks don't have the institutional knowledgeto actually hold property. They are punitive. They punish the person who was underwater, even if it cost them thousands. They could have saved money by working ith the original homeowner. Instead they opt for chaos. Had they worked with the homeowner to begin with, the Lativan pension would have been far better off.

                So it's not just that they cause the problem, they make it far worse after foreclosure.

        •  union of drowning mortgage payers! (1+ / 0-)
          Recommended by:

          Run the infomercial everywhere! "Are you underwater on your mortgage? You can't take on the big bankers alone, but together millions of us can beat them!" "There are millions of us and hundreds of them!" Then tell everybody who signs up to stop paying and challenge the forclosures in court. Use the $5.00 one time membership fee to help coordinate legal help. Then the dems will propose a "Life raft for homeowners" plan.

          when I see a republican on tv, I always think of Monty Python: "Shut your festering gob you tit! Your type makes me puke!"

          by bunsk on Sun Jun 17, 2012 at 09:20:00 AM PDT

          [ Parent ]

    •  Exactly ... (4+ / 0-)

      As radical rhetoric this article scores an A+; as financial advice it is an "F".

      There are costs and benefits to defaulting that need to be considered very carefully in light of all alternatives available in an individual situation (re-financing, short sale, HAMP ....)

      •  Agreed. (2+ / 0-)
        Recommended by:
        Roadbed Guy, Bronxist

        I do not like it when people tell us not to pay on mortgages and not to pay our taxes.  A financial system and economy can thrive enough where everyone does not live like they are on the threshold of death if the vast majority of people act responsibly, regardless of the crooks.  If this group were the kids in Lord of the Flies, I'd be on the side of the responsible kids, and the ones wearing glasses, not the ones throwing on the headfeathers, canabalizing, and dancing around the flames acting like savages.

        Law and order are good things, and one must act in ways that you wish for others to emulate.

        If you have differences, handle it politically.  Organize, and throw the Mitt Romneys, Mitch McConnells, Eric Cantors, and John Boehners OUT!

        -4.75, -5.33 Cheney 10/05/04: "I have not suggested there is a connection between Iraq and 9/11."

        by sunbro on Sun Jun 17, 2012 at 10:46:00 AM PDT

        [ Parent ]

      •  To Bronxist - Can you read??? (0+ / 0-)

        So you give this diary an "F", do you? Well I think as the diarist, I give your honest reading comprehension of this diary  an "F".  What you say would be impossible if people stood together, if you have millions of underwater mortgage holders standing together in formation of unions and housing associations who in a collective bargaining effort could force market corrections, nothing that you said could happen.

         So tell us, what is it that you've done to resist these fraudulent mortgage charges. What efforts have you made to try to unite people? I think there's too many moral cowards out there who while they are bitter about being underwater are prepared to do nothing to help and try to berate anyone who wants to effectuate positive change.

        sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

        by Democrats Ramshield on Tue Jun 19, 2012 at 04:47:19 AM PDT

        [ Parent ]

    •  You are correct to a point (2+ / 0-)
      Recommended by:
      Losty, cynndara

      a car is expected to depreciate and any possible future value is based on that fact. The decision on whether to by used or new will be impacted on what you believe will be the value of the vehicle at the point at which you decide you want a new one. People were led to believe a house was more than a dwelling, it was an investment that will be worth more at some future point.  The question is whether it is more of a benefit to society for the government to step in and help homeowners by bringing what is owed more in line with the value, or by allowing people to take the loss.  

      If I put money in the stock market, I do so with the understanding that I am risking losing value.  It is a game of chance and I know I could lose out.  People bought into the housing market not simply as a shelter but as an investment, being told value would always go up and most people including many people who should have known better, did not doubt that assessment.  

      I think failing to pay when you can only ends up hurting the person, our system makes sure the bankers get their money.  However, there may be a legitimate reason to force the banks to take a haircut on the loans, if only to help ease the downward pressure in the markets.  From a moral perspective you could justify the haircuts because so many people were misled, believing that market forces will always drive home prices up making them more valuable.  It is debate worth having, one that is not even being discussed in the halls of power.

  •  I pay my mortgage because I live in the (16+ / 0-)

    Fucking house and can afford it. And you tell me where I can rent an apartment 3 bedroom, 2 bath (forget I'm on 1/4 acre) for $900/month?

    Fuck that. Pay the mortgage or give some building owner truly money for nothing? When rents are rising now and I have zero control over that?

    No thanks.

    Granted, I didnt buy more house than I could afford. And if I had a 500,000 mortgage on a home valued at 150,000 I'd probably walk. But I don't. So I won't. Fuck that.

    •  Then it sounds to me... (16+ / 0-)

      that you're not one of the ones that is underwater on their mortgage. By your own admission, you would walk, if you were underwater. I don't see the justification in castigating the diarist for suggesting that those that are underwater default. He wasn't suggesting that you default. Why the hostility?

      Never attribute to malice that which can be adequately explained by stupidity.

      by reflectionsv37 on Sun Jun 17, 2012 at 04:09:00 AM PDT

      [ Parent ]

      •  The point is that it costs more to rent, (10+ / 0-)

        so it doesn't matter if the house is underwater.  If one is saving money by owning rather than renting, then it's rational to keep paying the mortgage on an underwater house.

        And, of course, you'd want to look at the after-tax cost after amortizing a conservative estimate of resale value over the life of the mortgage.  

        IOW, if you're just looking at whether the house is underwater, you may want to go to accounting 101 or business 101 before making any significant financial decisions.

        •  Please show me a link... (4+ / 0-)
          Recommended by:
          shypuffadder, Losty, adrianrf, mkor7

          that shows where renting costs more that owning a home? That may be true in some cases and markets and the exact opposite in other locations.

          Owning a home is more than just the mortgage payment. It's insurance, water, gas, electricity, garbage collection, sewer bills, cable TV. And, the really big one, maintenance!

          And you are obviously assuming that someone who is walking away from a bad mortgage, might not be downsizing from a 3500sqft home they couldn't afford, to a 2000sqft rental that costs them half what they were paying on payments and upkeep on their home.

          I certainly don't have a calculation that shows the tipping point for every situation in the country, but everyone needs to evaluate their own situation, in their own area, to make an informed decision on which option is best for them.

          Never attribute to malice that which can be adequately explained by stupidity.

          by reflectionsv37 on Sun Jun 17, 2012 at 04:59:39 AM PDT

          [ Parent ]

          •  *if* it costs more to rent, *then* (5+ / 0-)

            it makes sense to own, regardless of whether one is underwater.

            Make sense?  

            That said: (1) I just agreed to buy a house, and my mortgage payment is about 15% less than my monthly rent.  And that's before tax; after-tax and after amortizing the NPV of some (very conservative) assumed resale price (net of deferred capital and maintenance), it'll probably be around 25% cheaper.  

            (2) link re: owning v. renting

            See here:



            It's insurance, water, gas, electricity, garbage collection, sewer bills, cable TV. And, the really big one, maintenance!
            I've rented all my life, and I've never had a LL that paid for gas, electricity, and cable TV.  Water depends on common practice in the area; right now I do pay for water in the current rental.


            I certainly don't have a calculation that shows the tipping point for every situation in the country, but everyone needs to evaluate their own situation
          •  Take a look ... (6+ / 0-)

            As you said, this is true in some cases but not others. But rents are going up and home prices still flat or down.


          •  here's link. Rents ARE rising. (5+ / 0-)


            And BTW the fastest Real Estate development category right now is in building apartments. Not CONDOS. Apartments.

            I know this because I am paying less for my mortgage than I ever paid for rent. With the exception of the $525/month I paid in university in 1987.

            My house in central Florida.

            The last two times I rented in FL I was paying 2600/month for a 2 bedroom 2 bath apartment in palm beach and then 1600/month for a 5 bedroom house in central florida.

            I'm not making shit up dear. This ain't academic. It's the reality.

          •  seriously? on what planet are you living where (1+ / 0-)
            Recommended by:
            insurance, water, gas, electricity, garbage collection, sewer bills, cable TV
            are only the requirements or expenditures of those who own homes?

            Because when I last lived in an apartment, I had no electricity, gas, water, sewer and garbage collection or TV.

            Seriously Next time, just shut up before you type this level of stupidity.

            MAINTENANCE! You'll say.

            Whatever. I get a tax write off that pays for any potential maintenance. Notice I said "potential" maintenance because believe it or not, not every house is crumbling to the ground and requires thousands of dollars in maintenance every month or year.  


          •  Definitely applies in our case (2+ / 0-)
            Recommended by:
            cynndara, reflectionsv37

            We're not under water because we started out with a strong down payment, but our house value deflated by $6,000 this last year even though we thought we bought it when the crisis was at rock bottom.

            However, our rent for a 3BR apartment was about $700 a month.  Our mortgage for our 3BR house (which was brand new and unowned and the bank fixed the handful of minor issues since it was still a foreclosure all the same) is about $640 a month.  We usually pay $700 a month anyway as a means of accelerating the mortgage and shaving a few years off at the end.

            The difference is, at the end of 25 years or so we'll have a house.  At the end of 25 years of paying the same amount in rent, we will have nothing.

            Tradition says that God gave us choice. Some of His disciples act like it is up to them to remove it. ~ kjoftherock

            by catwho on Sun Jun 17, 2012 at 11:21:53 AM PDT

            [ Parent ]

        •  I don't think the diarist is suggesting walking (12+ / 0-)

          away, though.  He's suggesting people default en masse, which would lead to a "correction" and allow people to stay in their homes.  He wants the banks to take the underwater parts of these mortgages on the chin, not for people to leave their homes.  

          •  to misslegalbeagle - thank you (2+ / 0-)

            You are exactly right, that was the intent of the diary. Thank you for your support.

            sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

            by Democrats Ramshield on Sun Jun 17, 2012 at 07:34:31 AM PDT

            [ Parent ]

          •  and what I;m saying is that an en masse walk out (3+ / 0-)
            Recommended by:
            SoCalSal, virginislandsguy, cynndara

            is ridiculous. Besides the fact that it will never happen, there are damned good reasons why.

            One of them is that many of us who are underwater are still paying less than we would for renting.

            There are other reasons, but this one is mine and why I would not participate in such an ill-guided stupid "mass walk away". I am not the only one, I'm quite sure, whose reasons are similar to mine.

            What a dumb idea.

        •  "The point is that it costs more to rent" -depends (0+ / 0-)

          And as you represent yourself here as a tax specialist, you know that.

          In my example, the mortgage interest deduction is a big reason for owning to be more cost-effective vs. renting. And my purchase basis is fairly low as I bought in before the market, fueled by the crack cocaine of easy credit and exotic investment instruments, went crazy high.


          Both parties are beholden to their corporate sponsors. The Democratic Party deigns to throw us a few bones from the table on which to gnaw and squabble over, but it's just kabuki.

          by ozsea1 on Sun Jun 17, 2012 at 04:13:23 PM PDT

          [ Parent ]

      •  I'm very underewater on y mortgage. (1+ / 0-)
        Recommended by:
        pgm 01

        i bought it in 2007 and its "worth" less than half what I paid for it.

        I;m underwater, dear.

      •  why the hostility? because the diarist (5+ / 0-)

        strongly implies (by basically outright stating) that I'm an IDIOT for paying my fucking mortgage.

        that's why.

        I'm not an idiot.

        I have an underwater house. Its worth half what I paid for it. I pay my mortgage. I'm an not an idiot who "can't see how I'm being used" or whatever else he says in the damned diary.

        That's why the "hostility". And BTW anyone one this blog who knows me know that that mild assed comment was not "mdmslle hostility". Not by a long shot. I'm quite capable of searing the skin off of someone with my words. This did not even approach that category.

      •  and just one more thing you need to know. (1+ / 0-)
        Recommended by:

        AFTER i walk away from my mortgage, as the diarist suggested I'm stupid not do, I get to take a major hit to my credit which also means I get to see any interest rates on credit cards rise immediately as well as it becoming much harder to rent a nice apartment in a decent area of town without putting up several thousand dollars worth of "deposits" because I'm a low life.

        Not only that, but I'm stuck renting for years BECAUSE of the bad credit and then I become subject to whatever rental rates some fat assed rich guy who lives in a a 12,000 square foot house wants to charge me for my crappy assed apartment in a marginal neighborhood. yay for me.

        Worst, I have little or no way to improve my credit rating which means I go back to going to the check cashing store to pay my electric bill. I'm serious, I've been there. I've done that. And FUCK NO, I will not put myself back there again as a result of something a stupid as walking away from my mortgage.

        If you think paying for something that has value is hell, maybe you and the diarist ought to try living for a decade or so without being able to even get a bank account or move into an apartment without "fist last and security". Been there. got the damned t-shirt and I'll be damned if I willingly go there ever again.

        I usually like this diarist but this diary sucks balls and yes, I'm hostile.

        •  to mdmslle - well I'm sorry you feel that way (6+ / 0-)

          I hope you will change your mind, because I think you have misread the diary. I think people should band together that is to say they should unionize in our atomized society and form unions made up of homeowners, that is to say housing associations or homeowners associations, where people refuse as a block to stop paying for what amounts to mortgage fraud, and stop rewarding the Wall Street banksters bad behavior.

          No one should walk away from their mortgage and leave their home. People should be allowed to remain in their homes and make the banks EAT the negative mortgage to employ a colloquial term. Rather than forcing the negative mortgage down the throats of working class Americans who did nothing wrong, who have played by the rules and whose lives are being torn apart by the greed of Wall St banksters.  

          sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

          by Democrats Ramshield on Sun Jun 17, 2012 at 07:57:24 AM PDT

          [ Parent ]

          •  I have no idea how you expect me to change my mind (8+ / 0-)

            See, academically what you say is very nice. It sounds just hunky dory.

            But practically it makes zero sense.

            I'd like to know how you think something like this happens. because the unfortunate reality is that the leverage the banks have is that I'M LIVING IN MY HOUSE AND DON'T WANT TO LIVE IN THE STREET.

            Am I angry with the fraud that's happened? Um, yes. But Honestly, (and i like you DR), there is no way to force this. How, pray tell do you expect that the banks will eat the negative mortgage? I'm dying to hear it. And this phrase you use, "Until the market corrects itself". What in the world does that mean? And have you forgotten the abject corruption in U.S. politics while you're sitting over in Germany? WHO, pray tell again, is going to see to it that we don't get screwed WHILE we become homeless? Seriously. My point is that your diary is academic. And esoteric. It lacks any real practical idea. And while ideas and action have to start somewhere, I'm letting you know why there are many homeowners ("you own nothing" - thanks that's me, I guess. I guess I should feel like shit) like me who wouldn't be a party to it unless we are assured we can't be screwed. I've lived too long in the god forsaken country (of which I am planning my imminent escape) to think I won't be screwed when it comes to this housing and banking issue.

            Excuse me for not wanting to bloody myself even more.

            •  to mdmslle - please read (1+ / 0-)
              Recommended by:

              You know what if we go it alone you are absolutely right there is troubled waters ahead of we go it alone in this cult of rugged atomized individualism. But if we stick together, if everyone en masse stopped paying these market manipulated fraudulent mortgage charges, there is no way that the banks could ever foreclose on all underwater mortgage holders.

              First of all the courts would be over burdened and couldn't handle the load because there would be too many cases. Second it would be too expensive for the banks to litigate against virtually everyone who has an underwater mortgage, because there is strength in numbers, if everyone and I do mean everyone stood together in simple working class solidarity, the market would force a correction and the underwater home prices would simply be written off, because that is what happens when market forces corrections. If no one would be willing to pay this, the market would have to correct it. The problem isn't that this wouldn't work, it would definitely work. It is not just an economic theory dreamed up by this goofy MBA.

              The problem is will American homeowners like yourself all stick together long enough to force a market correction that would allow working class homeowners like yourself to benefit from said correction, and that is the issue that this diary tries to broach, because literally there is not a serious discussion of this issue in the media, even with $1.2 trillion dollars in mortgages,  and the diary asks the question how big of a percentage does the underwater mortgage holders have to be for us to seriously start having this conversation.

              If a third of homeowners being underwater is not sufficient to have this conversation, how much larger does it have to get, does it have to be 50% Or 75%. When people en masse stand together, stop paying and concurrently refuse to move out of their homes. How much longer will it take, when will Americans stand up and say I'm mad as hell I'm not gonna take it anymore.

              sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

              by Democrats Ramshield on Sun Jun 17, 2012 at 09:00:12 AM PDT

              [ Parent ]

              •  how do you know this: (0+ / 0-)
                if everyone en masse stopped paying these market manipulated fraudulent mortgage charges, there is no way that the banks could ever foreclose on all underwater mortgage holders.
                The courts can rubber stamp as many things as they want as soon as the legislators in washington and as the state level collude to make the foreclosure processes easier (to give the banks some leverage).

                Are you kidding?

                Your error in thought is assuming that the rules cannot be changed midstream. I think there's every indication that can be because they AHVE BEEN. Yes is a world of fairness and justice, the banks would have to litigate and would be forced to add up the cost of litigation vs just renegotiating  the mortgage.

                God bless your you really think that's what would happen?

                I don't. And I have every reason in the world to back up my assumptions.

              •  and one more thing: (0+ / 0-)

                I'm suggesting to you that there won't be 75% of Americans because many Americans like me are actually BETTER OFF in our upside down mortgage homes than we would be on the rental market, especially after our credit is destroyed for non-payment of a legal obligation.

                Rents in the US are at an all time high. Know why? Foreclosures. People out on their asses who can't buy now or ever and are desperate to have a place to live. Apartment development is the #1 building going on in the US right now. Landlords are loving it and the rents are getting ridiculous. And worse, there are fewer protections for renters than there are for homeowners.

                So no. I wouldn't participate. It's not going to help me. Whatsoever. I have zero faith that doing this wouldn't cause my life to go into a tailspin financially and otherwise. Zero. I don't trust them to play by the rules whatsoever. If it would hurt the banks, they;ll just change the rules and I'll be completely fucked and either out of a house on my ass and forced to pay astronomical rates for renting (with little or no protection) or be stuck in a house with an "adjusted mortgage" but with 25% interest or some other such bullshit to go with my ruined credit.

                No thanks. But I think its sweet you believe that the system that fucked us all would be fair in the loss of over a trillion dollars.

                that's just funny.

      •  He said he would walk if he owed 3x the asset (1+ / 0-)
        Recommended by:

        value.  Get real.  How many underwater owners are that deep?

        Where are we, now that we need us most?

        by Frank Knarf on Sun Jun 17, 2012 at 09:06:19 AM PDT

        [ Parent ]

        •  to Frank Knarf - I don't advocate walking away (1+ / 0-)
          Recommended by:

          What I advocate for in this diary is everyone get together en masse and stop paying fraudulent mortgage charges that are market manipulated. If everyone would do that en masse, in working class solidarity there is no way the banks could afford to foreclose on a third of underwater mortgage owners. There would be a market price correction. People would be allowed to remain in their homes and their mortgages would reflect current values in the current real estate market.

          The problem is people will not stick together. We can't even get a discussion started in the American media. I therefore urge you and the other readers to please support this diary and others like it that advocate for a public discussion of this issue.

          sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

          by Democrats Ramshield on Sun Jun 17, 2012 at 09:26:35 AM PDT

          [ Parent ]

          •  There. You just said it. (1+ / 0-)
            Recommended by:

            " If everyone would do that en masse, in working class solidarity . . ."

            Ram, I wish.  I fervently wish.  But there has been no "working class solidarity" in this country since the 40's.  The working class was bought off with a few improvements in working conditions and unionization for a couple of decades, until the Communist Menace was put down and any hope of support from international socialists was eliminated.  Then the screws were tightened until we are nearly back where we started at the turn of the century.  There is no working class solidarity because that's illegal, and they can put you in jail for it.  There's no working class solidarity because it's "immoral" to band together to demand better living conditions than an individual can negotiate for himself or especially, to deny an individual the right to make a separate peace or collaborate with the enemy by taking any steps that might enforce group cohesion.  There's no working class solidarity because it's "unethical" for an American not to work 40 hours a week for 35 years, day in and day out with two weeks off in the summer, in order to enrich his masters and buy whatever consumer products they want him to be owned by.

            Europe has a tradition of active socialist organization.  America has a tradition of McCarthyism, Red Scares, harassment, intimidation, and assassination of anyone who dares to stand up for working-class rights.  You can't get there from here without a revolution.

        •  just saw article on Market Watch (0+ / 0-)

          that said 15% of underwater owners owe twice what the home is worth.  it didn't give triple.  But that was 2.4 million homeowners.

          In capitalist America, bank robs you!

          by madhaus on Sun Jun 17, 2012 at 11:29:28 AM PDT

          [ Parent ]

  •  If you bought a house for $250,000 and.. (6+ / 0-)

    it's now worth half that or less, sure, walking away from the loan makes sense - if you have somewhere to walk away to. If everyone who bought property at inflated prices walked away en mass from their loans, where would they go? Would they be able to rent a place to stay for less money than their monthly house payments? Or get another loan to buy a house at a deflated price? I know that if I was in such a bind, I'd want to line up a place to walk to before I walked away.

  •  a very irresponsible diary (4+ / 0-)
    Recommended by:
    sydneyluv, VClib, virginislandsguy, catwho

    Surely you know the answer to your rhetorical question--because potential employers do credit checks, with full access to your credit rating.  So yes, if a person is a full tenure professor, then why pay an underwater mortgage?  But for the rest of us, wrecking a credit score is a ticket to long-term unemployment.

    I thank my lucky stars I had the good sense not to buy a home and continue to rent.  Although here in Massachusetts, home prices have held up well.

    •  Stop playing into the fear. (13+ / 0-)

      My brother and my parents are both in foreclosure. Although my parents are retired, my brother--who has a good jjob--has not lost it, nor will he.

      I think the shoe would be on a different foot if you owned a home that was underwater. As it is, don't talk about what you don't know. @OOccupied

      by jvantin1 on Sun Jun 17, 2012 at 04:29:12 AM PDT

      [ Parent ]

    •  I think it is safe to say that the credit rating (15+ / 0-)

      agencies are completely full of shit. They were giving AAA+++ ratings to people who weren't even fully employed prior to 2008. I don't recall anyone getting fired from the agencies for those fuckups.

      I've never missed a bill (that wasn't the phone company's fault), I've opened a few credit cards, put modest charges on them, paid them off early every time. By all accounts, I am a perfect fucking investment. I pull up my free credit report every year with all three companies, and my credit rating is still dead average or worse. Fuck the banks.

      These guys aren't interested in people who pay their bills. They want people who rack up late fees and hit the payday-cash shark shop every month. That's where the real blood money is, baby.

      A boring guy like me, yeah, in the 1970s would have been money in the bank for a boring accountant looking at the 30 year mortgage return. But today's flash-crash algorithm jockeys? Man, they gotta pump up the quarterly earnings reports by 20%, or this cocaine ain't gonna pay for itself!

      Fuck the banks.

      Would it not be be simpler, if the government simply dissolved the people and elected another? Bertolt Brecht

      by George Hier on Sun Jun 17, 2012 at 05:11:18 AM PDT

      [ Parent ]

  •  paying on an underwater house still (9+ / 0-)

    makes sense if its cheaper than paying rent.  the diarist drank the banks' koolaid and thinks of a house as an investment rather than an expense.  

    •  To johnny wurster - Can't drink koolaid underwater (4+ / 0-)

      Forgive me for the short reply.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 04:48:00 AM PDT

      [ Parent ]

    •  Sure, for the time being perhaps in some (7+ / 0-)

      situations.  People need to do what takes care of them best.

      Through bailouts though, banks have been able to make it and not have to work with any of us.  That hasn't worked out so well for any of us who aren't the banks though.  The economy is tanking again, property values are going to tank again.  I'm not underwater in my house yet, but it is coming.

      Life is a negotiation, as much as I have wanted to escape this at times it will not be escaped.  Everything is on the table for me, just as it is for the corporations and banks.  It is only me who denies myself these basic rights.

      We are employed.  It makes sense for us to understand what is coming and prepare, and prepare to look for a better place for my money and our hardwork....a better positioning.  I lived in Gillette WY when the oil and gas industry went to hell though in the 80's.  Half the population was in a hell of mess, lost their homes...bankruptcy....and then four years later everyone was fine again.

      For those who aren't employed, what are their options as we tank again?

      It is going to happen whether you like it or not.  People will be compelled to seek a different situation for themselves and as they find situations that hold more promise for them they will walk away.

  •  The problem is that the banks are TBTF, so as more (5+ / 0-)

    mortgages default, the USA government has to spend even more money to prop up these de facto bankrupt institutions, which is paid for by American taxpayers - which includes ALL Americans Overseas and Green Card holders and all others who cannot escape the tentacles of the US IRS.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Sun Jun 17, 2012 at 04:02:32 AM PDT

  •  Great diary (12+ / 0-)

    As Stiglitz said on Maher, "from economics 101, that which cannot be sustained will not be sustained".

    The screws will be applied, the guilt will be administered, and still people will look upon the impossible and only be able to force themselves to live a hopeless existence for so long.  It is where we are going.  I'm ready for it.  Worse things have happened to me.

    As people simply give up and walk away too, the banks will finally be compelled to return your calls and stop losing your paperwork.  Accountability will return to the whole equation.

  •  Home 'ownership' (7+ / 0-)

    I came across this article a while back and added it to my Cutnotes.

    Those markets with lower homeownership rates are less at risk from a sharp downturn in property prices.
    We're not the first ones to note a dark side to high homeownership rates. As long ago as 1999, a British economist named Andrew Oswald was documenting a correlation between unemployment and homeownership across countries in Europe and elsewhere. I interviewed Oswald back then and wrote:
    In the 1950s, most European countries had very low rates of homeownership and also low unemployment . Today, some of those countries have dramatically increased the number of people who own their homes - and unemployment has gone up in those countries as well.

The two most dramatic examples are Spain, where 80 percent of the residents own their homes, and Switzerland, where only 28 percent do. Spain's jobless rate is 18 percent, while Switzerland's is only 3 percent, Oswald reports...Unemployment in Europe doesn't match the pattern of welfare benefits in different countries; nor is it higher in areas with strong labor unions, he says.

``This American conception that the European countries are ossified because of the welfare state being so generous just isn't true,'' he told me.

The missing piece is homeownership, Oswald insists, in part for the reasons Jones mentions above. People who own houses are less mobile; therefore they tend to go jobless longer rather than uproot themselves.

But there's more. Subsidies and tax breaks that encourage homeownership—such as the deduction Americans take for home-mortgage interest—weaken the market for rental housing, Oswald believes. With fewer available apartments, younger people tend to live at home longer rather than move where the jobs are...

Oswald also notes that high homeownership areas tend to put roadblocks in front of entrepreneurs, with zoning and other rules that make it hard for the economy to grow and change.

This won't affect unemployment when times are good...But during a downturn, he warns, areas without an active and flexible rental market may find it's much harder to get the economic engine rolling again.

Oswald isn't saying there's anything wrong with owning a home; he owns one himself. The question is whether countries, or regions, are smart to be promoting homeownership, or treating it as an unalloyed social blessing.

    It seems to fit in with what you're saying.

    •  What's the correlation between the above numbers (1+ / 0-)
      Recommended by:

      and population growth? Maybe that's a key factor, as well.

      "A cynical, mercenary, demagogic press will produce in time a people as base as itself." - Joseph Pulitzer

      by CFAmick on Sun Jun 17, 2012 at 08:26:01 AM PDT

      [ Parent ]

      •  There doesn't seem to be any correlation (0+ / 0-)

        between home owndership and population growth.  I'm no statistician, but your question intgrigued me so I spent some time googling around and came up with a couple of links.  The first shows home ownership rates by country. This one gives population increases by country.

        The two countries at the top of the home ownership list, Bulgaria and Hungary, are way down on the population increase list at 232 and 216 respectively.  Germany, with a home ownership of 42% is right next to Hungary in population growth (ranked 217).  

        I'm not at all sure what all of this means - if anything.  It makes sense that a bunch of underwater 'homeowners' are going to be a drag on the economy, but, assuming that folks who own their homes outright with no mortgage are living in countries with stronger economies doesn't seem to be provable.  Then you have Hungary, where you have about a million people who took out mortgages denominated in a currency other than the native florint (Swiss francs was a popular one) and who are now in deep doodoo as the florint has plunged in value.

        This is a complex mix of bad political decisions, bad economic policy and bad personal choices, and nobody really seems to have a handle on how to resolve the mess.

  •  There Are Several Good But Reasons (15+ / 0-)

    That I can think of to keep paying on an underwater mortgage. Mostly, these have to do with the relative costs of continuing to pay the mortgage vs. moving and renting. But you also have to think of the utility of property and sentimental reasons you might want to stay as well. It's complicated.

    However, if you really don't want to own the property anymore and it is feasible for you to do so, both economically and legally, I really don't see anything wrong with a voluntary default. It might make good financial sense for some percentage of underwater homeowners.

    "I'll believe that corporations are people when I see Rick Perry execute one."

    by bink on Sun Jun 17, 2012 at 04:23:54 AM PDT

    •  I have a friend who ended up choosing to do a (6+ / 0-)

      'short-sell' vs just walking away. He still got screwed in the deal but he's got kids and is super-responsible and didn't want to just default and wreck what was left of his credit score.

      He had lived in California for years, where houses were heinosly over-valued. He came back here to buy one and paid far less for a nice place than he could have ever afforded in Cali.

      Unfortunately, that house was over-valued as well and his wife decided to cheat on him about the time the housing market went into the toilet. He has now had 3 years of ugliness, is renting a house for far more than I am buying mine for but he's got his kids in a great school district.

      His ex-wife is an idiot.

      The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men.

      by xxdr zombiexx on Sun Jun 17, 2012 at 05:01:55 AM PDT

      [ Parent ]

  •  If you're paying on an underwater mortgage (3+ / 0-)
    Recommended by:
    Militarytracy, Publius2008, Losty

    at some point, you have to stop and ask yourself what you're afraid of.

    Are you more afraid of losing your house, or facing what this country has become? @OOccupied

    by jvantin1 on Sun Jun 17, 2012 at 04:25:21 AM PDT

  •  It depends (5+ / 0-)

    If when you bought the house, you could afford it, you liked the house, it was convenient to work, etc, why would you stop paying? The only reason I could see is if you had to move because of work - but if you "bought" a house within your budget; you really liked it; and payments are not that much higher than renting in your area, then why not keep paying?  Ultimately you will pay the house off, whether it is underwater now or not. It is not paying for nothing. True, you do not have equity now, but you are paying to have a roof over your head that presumably you like.

    If you bought your house as a speculation, or bought more than  you could afford, if the bank offered one of the variable interest rates and you didn't realize the ultimate  liability, if there was unscrupulous or misleading financing on the part of the bank, or you have lost a job, that is another story. But you have to balance leaving with the stain on your credit score, meaning you may not be able to buy another house for a long time, have trouble finding a job, etc.

    •  It appears many people bought a WHOLE (6+ / 0-)

      LOT MORE than they could afford and those 'ARMS' were the key to getting into them.

      I am a small-thinking dullard who has never believed he'd make much money (and so far, I have been right!) so when I finally got around to buying a home - back in 2001, just a couple months after 9/11 when interest rates plummeted) my guiding principle was to be able to PAY for the house with unemployment - because I ALWAYS figured as soon as I made the massive commitment to buy, I'd lose my job.

      Which is exactly what happened. Laid-off ~7 months later, entering a horrible period of terrible, low-paying jobs after a period of rather blissful unemployment. I have now had a proper job for a scant 2 years. My house is just barely worth what's left on the loan after struggling to pay for it for nearly 11 years.

      But the payment itself is about to decrease as the assessed value has dropped and the property taxes are about to be cut in half.

      It is a very small, humble place, in nearly an acre and a half, at the end of a dead end road, butting up against a massive field, making it seem like the friggin Ponderosa.

      There's no way I could rent such a place in this area (Atlanta) and a 3-bedroom apt would be more, probably.

      I'm happy here, have no desire to move and thank myself regularly for setting my sights so low.

      If I was getting reamed, like so many are, it'd be tempting to default and just leave, but that's gonna ream the credit score.

      Credit score = how good a slave you are.

      The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men.

      by xxdr zombiexx on Sun Jun 17, 2012 at 04:56:56 AM PDT

      [ Parent ]

      •  hee hee (1+ / 0-)
        Recommended by:

        I know what you mean. Back 30-40 years ago when there was a big oil boom in Texas, someone offered me some oil deal to invest in. It was presented as a sure chance to make a lot of money.  I didn't have any money to invest, so no problem when the oil bust came a few months later. I realized from that experience, that when the "great deal to make a lot of money" offers  trickle down to me it is just about when the bust is about to come.  

      •  With books on Kindles, etc. (0+ / 0-)

        the need for bigger houses will diminish.

        Location (NYC, DC, LA, etc.) and amount of land will take greater importance than mere dwelling size.

  •  I stopped paying my underwater mortgage... (12+ / 0-)

    Almost two years ago. I had moved out of said property two years earlier because I found a new job out of state. I rented the unit out for those two years. But, when my job hit me with the 15% pay cut I finally decided to stop paying and file for bankruptcy.

    I'm still waiting to finish the foreclosure process in Florida. When I finally made the decision to give up and start over, similar units were selling for half of what my purchase price was. And according to the tax assessor the unit was worth one third the purchase price.

    Banksters are pond scum.

  •  I don't agree fully with the premise of this diary (8+ / 0-)

    for the reasons others have listed above.  I think some of the reasoning in it uses faulty logic.

    It's not paying for nothing.  The alternative is renting, which is paying for a number of rooms to live in.  Paying an underwater mortgage is at least paying for the same thing as renting.  If the mortgage isn't far underwater, it's paying for a chance to climb out of a hole and establish equity and ultimately own the house.

    When I read the diarist's idea that people should, en masse, abandon these underwater homes and walk away, my first thought was, "I wonder if he owns rental properties."

    Throughout this whole mortgage fiasco, my favorite resolution would be to take the banks' heavy-handed assertion of ownership of these houses and shove it back in their faces -  

    YOU, Mr. Banker,  own the house.  In addition to vetting the mortgage holder's income, you also insisted on an appraisal and a title search to protect YOUR investment.  It is not our fault if your protections failed.  Therefore, if the value of the house is now down by 100k, and the home owner has 10% equity, it is up to you to reduce the principal by 90k.  This represents your share of the financial beating everyone must take because the big banks and Wall St. were irresponsible.

    Don't like it?  Then don't do it next time.  And try pushing for some regulations to prevent it, if you don't want another haircut, you bastards.

    •  to Clues - you have misread my diary (0+ / 0-)

      At no point does this diary advocate that people walk away from their homes. This diary advocates that everyone should band together refuse to pay these fraudulent mortgage charges, and refuse to move out of their homes. If everyone stuck together, this would work. The market would force a correction in favor of working class homeowners.

      The problem is that not only presently do working class underwater homeowners not sticking together, they are not even willing to talk about this issue, which is that everyone who is underwater should stick together, stop paying fraudulent bank charges and refuse to move out of their house. They can't evict one third of mortgage holders. The courts would be overloaded. It would be too expensive. The market would force a correction in the favor of working class home owners. To my knowledge this diary is the only media source in America that attempts to broach this issue, so won't you please change your mind and support this diary and keep posting because we need everyone's support.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 09:06:31 AM PDT

      [ Parent ]

      •  Well, you're assuming (1+ / 0-)
        Recommended by:

        that as soon as people start defaulting, the banks will stop throwing them out of their houses because they'll be overwhelmed and the courts will be overwhelmed.

        Frankly, I don't see that happening.

        Even if this occurs, the banks and the courts have the capacity to handle X number of cases and they'll continue to do that.  Do you think they'll just throw up their hands and say, "It's too much!  We give up!  Instead of taking back a billion in capital this year, because it's all we can do, we'll settle for not taking back anything at all!"

        It's not a market correction you're asking for.  The market correction has already happened.  The bubble burst and the falsely inflated price of these houses plummeted.  (Along with the prices of homes that were NOT falsely inflated)  A market correction now would be somehow forcing the banks to pump the value of these homes back up so that no one is underwater.  What you're asking for is legislation mandating that the banks pay their fair share of the market loss of these houses.  I agree that's a desirable goal but I think your assumption that nobody would get thrown out of their houses while this fought its way through congress and the courts is pretty unrealistic.

        And honestly, I haven't misread your diary.  I've read it twice.  I think you're advocating for the same basic things I've been supporting for years, but the diary is hyperbolic, impractical, and over-emotional with it's lurid colors, bolding, all caps, and sensationalized phrases.  If you want people to take your ideas seriously, discuss them seriously, and be realistic in your predictions.

        If all the underwater homeowners in the US gathered together online and all agreed to stop paying, a good percentage of them are going to have to be martyrs for the cause.  They'll get thrown out.  That's a simple fact.  It makes a number of your other statements, like this one -  DON'T WE KNOW PAYING OFF NEGATIVE EQUITY IS PAYING FOR NOTHING! STOP PAYING!  incorrect.  And coming from someone sitting in Europe with no skin in the game, it shows a bit of a cavalier attitude toward people who really are in trouble and facing hard decisions here.

        Your diary is not the only "media in the US' that broaches this issue, there have been numerous reports on it in the major media, and in fact we've had a lot of discussions of it right here over the past 2 years or so.  I won't support this diary, because I think it's irresponsible.  If you write another diary seriously discussing what's happening with these mortgages and what can realistically be done about it, I'd likely support that.

  •  Oh, and....Dear Europe (0+ / 0-)

    Most of you have pensions and healthcare and other support for people in their golden years.  Here we only have what we can manage to amass from the fruits of years of labor and then we're on our own.

    By the time you're old here, if you're wise and lucky, you own a home and aren't paying rent.  Because if you're paying rent, you're probably not buying medical care..or enjoying some of your other European benefits like eating meals and wearing clothes.

    (Not that Europe actually suggested that everyone walk out of their homes..that was the diarist, I think.  The Daily Mail just commented on the sad state of underwater mortgages.)

    •  I think that the Daily Mail (0+ / 0-)

      and the diarist are only stating the obvious, a new "concept" in ownership thinking is about to begin crashing onto our shores again.  We hoped it would be on time deal after the first crash.  Social economic incentives wax and wane though, come and go all the time.  It isn't the first time people have taken a look at their obligations and said enough...I can't do this and what has happened here is not my fault.

      It is obvious, we have all that underwater debt and the only people officially on the hook are the little people.  Our leaders and the banks have magically taken themselves off of all hooks for the time being.  The people are going to fold on this hand unless relief for them is applied in some fashion.  It is much easier to afford eating and going to the doctor too when you stop paying your mortgage :)  Just saying :)

      •  Yeah, you know I don't fundamentally disagree (2+ / 0-)
        Recommended by:
        johnny wurster, Diana in NoVa

        with dumping the results of this back on the banks where it belongs, but I think we need to be careful that we don't cut off our own noses to spite our own faces.  It's very viscerally satisfying to tell a bank to fuck off and walk away.  It even makes sense if you have nearly no equity and are extremely underwater.

        But the idea that everyone should do this all at once, just to stick it to the banks, would produce some unexpected results.  It would drive rents up, probably.  Way up.  What if you're the guy with a $1000 monthly mortgage and 40% equity in your home, and you walk away to pay $1500/month in rent and now have no equity at all?  Is that an improvement?

        It is much easier to afford eating and going to the doctor too when you stop paying your mortgage :)  Just saying :)
        That's only true until they throw you out of the house.  After that it's only true if you go to live under a bridge.

        The only way to get out of paying money every month for a roof over your head is to actually own the roof over your head.

  •  "If Americans All Suddnly Began Acting Differntly" (4+ / 0-)
    Recommended by:
    mightymouse, stormicats, adrianrf, ozsea1

    seems to be the opening phrase in most of our diaries that point out realworld realities in the country.

    And they're generally right about those realities.

    But in between there and Americans-behaving-differently lies an informational, educational problem nobody's yet trying to figure out.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Jun 17, 2012 at 05:48:38 AM PDT

    •  I think a fresh new wave (2+ / 0-)
      Recommended by:
      rgjdmls, ozsea1

      of folks not paying their mortgage has arrived.  But it is shameful to not be paying your mortgage so nobody is going to talk about it openly at this time.  I'm certain it is a horrible new reality to be experiencing.  When Josh was having surgery in Atlanta about 8 weeks ago I forgot to pay our mortgage until mid month.  When I got home, the servicer had rang our phone OFF THE HOOK for the whole week.  I was seven days late, paid a small late fee...not something that troubled me.  But something is going on here when they are arming people at the phones in that style and dedication.  Something is happening and someone was scared and it wasn't me...well at least not about the mortgage.

      The economic and job numbers are getting worse the summer man, gas prices had no place else to go but the summer man, the writing is sort of on the wall and soon it will be on the street too.

  •  I didn't buy my house as an investment (10+ / 0-)

    I bought it for several reasons:

    (1) It's close enough to work that I commute via motorcycle.  The reduced fuel costs are a consequence of my location.  If I moved, those costs would increase, especially if distance forced me to use another mode of transportation.

    (2) It's close to several community colleges and universities, and I have 3 college-age children.  One of them starts school this fall.  Since we live so close to her school, no one has to pay for her housing.  That is an enormous cost savings.

    (3) It's a financial buffer for the whole family.  One of my children has elected to get her own apartment and is doing okay.  However, she has the "fall back" option of moving back in with us if necessary.

    (4) My mortgage is cheaper than an equivalent rent.

    (5) My income tax itemizations further reduce the apparent 'underwater' state of my mortgage.  Those deductions are money I would pay if I didn't have a mortgage.  In essence, some of the future dollars I'll pay on the house are being returned to me as today's dollars.  Unless the value of a dollar increases over time, it's like me borrowing $100 from you today and repaying you $90 later.

    (6) Getting back to commuting expenses:  Since my transportation wear-and-tear occur on a very cheap motorcycle, my much more expensive car will last years longer than it would if I had to drive it to work every day.  This isn't just about vehicle maintenance, it also means I can go longer without borrowing money for a replacement car.

    (7)  Needless to say, my college-bound daughter won't spend much on transportation.  She could walk to school if she wanted to, or take the city bus, or use my wife's motorcycle to get her to class.

    (8)  I bought an older home in need of updates, and I'm a good carpenter, plumber, and electrician.  The house was cheap relative to newer homes of the same size, and I've already dealt with the plumbing and electrical work, and did so in cash because I used my own labor.  Those upgrades add practical value now, and increase the home's sales appeal later.  In other words, I used sweat equity to offset part of the apparent underwater state of the mortgage.

    (9) I have no intention of moving.  I'm a military pensioner, so I'm not particularly worried about moving in order to find high-paying employment.  If I lose my current job I can still make the mortgage payment.  This gives me the luxury of "waiting out" the market.  Any future rise in home values reduces the apparent underwater state of my mortgage.

    Considering all of the above, and considering that I'm only underwater about 12% in an area where home prices have stabilized, I don't see any good reasons to walk away from my mortgage.  I'd be cutting off my nose to spite my face.

    "First they ignore you, then they laugh at you, then they fight you, then you win". Mohandas K. Gandhi

    by DaveinBremerton on Sun Jun 17, 2012 at 05:56:30 AM PDT

    •  And it works for you (1+ / 0-)
      Recommended by:

      We have 23 years in the military, I feel the safety of that pension. And as pensioners not relying on Wall Street we are in a very different cone of safety too right now.  I feel the same way about our home, but I knew some people in the Gillette WY crash who were financially in a good place.  They decided to buy an even better house better positioned at the new bargain prices, and because they were one of the few people in good shape the bank loaned them the money, and then they defaulted on their first perfectly adequate property.  Everyone was defaulting though, it was a landslide, nobody had time to care about their default overmuch and that's capitalism?

    •  to DaveinBremerton - the diary doesn't advocate (2+ / 0-)
      Recommended by:
      DaveinBremerton, Losty

      walking away from your mortgage. The diary merely attempts to point out as a discussion starter that if everyone who is underwater with their mortgage would simply band together and stop paying for these market manipulated fraudulent charges, then no one would be underwater anymore because the market would correct it.

      If everyone stuck together no one could be foreclosed on. It is not possible for  the banks or the courts to foreclose on a third of American mortgage holders. No one needs to leave their home. Everyone needs to stick together rather than being cult of rugged individualists, instead be a cult of rugged unionists instead. The creed should be underwater homeowners of America unite in this homeowners union fight.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 09:13:34 AM PDT

      [ Parent ]

      •  I thought we should have spent the bailout... (5+ / 0-)
        Recommended by:
        stormicats, Clues, Losty, tidalwave1, cynndara

        ...on ourselves by paying off every primary residence mortgage for homes of $700K or less.

        ...and then open a federally owned business bank whose primary job is to make loans for inventory, payroll, and expansion capital for small and medium sized businesses who currently rely on the big banks for capital.

        ...and then tell Wall Street to go fuck itself.

        Main Street America would be unburdened of the banks, and the bankers would be stuck with the consequences of their own actions.

        As to whether or not it would be impossible to foreclose on millions of homeowners, I'm not so sure.  In spite of the underwater status of my current mortgage, I have lenders calling me every day, offering to refinance my home.  They would have to finance more than the home is worth, so I suspect they really just want to be the ones holding the note if / when I ever default.  It is possible they see a future where they are landlords.

        I'm going to get the thing above water and then refinance through my credit union.

        "First they ignore you, then they laugh at you, then they fight you, then you win". Mohandas K. Gandhi

        by DaveinBremerton on Sun Jun 17, 2012 at 09:23:47 AM PDT

        [ Parent ]

  •  Occupy Wall Street (1+ / 0-)
    Recommended by:

    and occupy this park and that park, all you want, until the cows come home, and it won't make a damned bit of difference.
    The powers that be can absorb that sort of trivial squawking with a bemused smirk, and keep on keeping.  That sort of protest is ineffectual, and even counter productive, because it exhausts the participants while giving them some sort of illusionary meaning in that, well they are doing something.  What will do something, what will have real impact, is what Democrats Ramshield suggests.

  •  Because if you stop paying, the sheriffs come (4+ / 0-)

    and kick you and your stuff to the curb. And they're none too gentle with your stuff. Nice idea, but the banksters own the government so it does their bidding even when they act illegally as with robo-signing.

    "The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?" ~Orwell, "1984"

    by Lily O Lady on Sun Jun 17, 2012 at 06:13:44 AM PDT

  •  Instead of calling us stupid (6+ / 0-)

    why not recognize the patriotism or committment to community that continuing to pay represents, at least for those who can pay. For me, I will continue to pay until I can't pay due to loss of a job, for example, or until I can work out a deal with the bank.  I think negotiating a short sale is perfectly fine, morally.  What I would like to see is a "program" or some kind of path created to help homeowners and banks negotiate a settlement.  I believe the government has to be involved, whether to force the banks/mortgage companies into dealing with underwater customers, to work out a reasonable settlement given the extreme situation we are in, or by creating appropriate incentives.  The government could do that--perhaps even state governments could step in and create some kind of incentive programs to make this happen.

    There could be incentives related to health care or higher ed.  In other words, lets designate some other kind of value that people could redeem their "overpayments" for, to create some kind of a balance.  

    People who own nothing but their home (and not even that now), don't have the wherewithal to fight with banks, so it is cheaper and gives more peace of mind to just keep paying in the hopes that things will get better.  I do not think housing values will ever come back, so I'm looking for a deal (a new new deal?) from the government to make this happen.

    I do however think that we should all be doing more to protest the stagnating situation and to call attention to how bad it is, and has been for several years.  I totally support the occupy movement and think it should keep going.

  •  The flaw is (7+ / 0-)

    The flaw is thinking of the home as an investment rather than a consumer good. Millions of people overspent on homes that were larger and more expensive than they needed because they believed that the house would go up in value. However, there is no guarantee that anything will rise in value and it is impossible for a good to rise in value indefinitely.
     .(Note that I'm using "value" interchangeably with "price.")
     I owe more on my car than it is worth in the market. Does that mean that I was cheated and should stop paying for it?
     The best advice for future homebuyers is to buy only enough house to meet your needs and that you can easily afford.
      For homeowners with underwater mortgages...Should you keep paying? It depends. Are you using your home as a place to live or as an investment. If you bought the house as a place to live, there is no point in walking away. Who knows? Prices might go up again

  •  people are underwater on car loans (4+ / 0-)

    I don't know of anyone who takes out a loan to purchase a new car who isn't underwater as soon as they drive it off the lot. No one panics - they enjoy their purchase and drive on.

    I think that with luck and time, the housing market will recover, and home values will slowly come up. Maybe that's just wishful thinking, but in the long run I think it is probable. Don't know if it will be in five, ten, or twenty years though.

    "The price of a memory is the memory of the sorrow it brings" Adam Durst/Counting Crows

    by zipn on Sun Jun 17, 2012 at 06:33:58 AM PDT

  •  I urge no one to decide based on this diary. (10+ / 0-)

    It is an emotional argument supported by editorial and pictures. Consult a financial advisor and a housing market specialist. It may be that you have little hope of ever breaking even...and if that's the case, only stay if your mortgage plus upkeep is less than rent. A lot of people's greed and ignorance built the housing bubble...not just those working for the banks (if nobody bought what they were sellingng, it wouldn't have happened). 'Im mad' comes from the same place as 'oh I can afford this house.'

    •  A housing market specialist? (1+ / 0-)
      Recommended by:

      Sorry, I just snarfed.  The "housing market specialists" have been wrong for years now.

      •  You seem to have really taken one on the chin (0+ / 0-)

        per your level of cynicism. I'm really empathetic for your troubles...worrying about your house is right up there with death and divorce in terms of stress.

        •  I think you are wrong there (2+ / 0-)
          Recommended by:
          Losty, cynndara

          I bought my house very "smartly".  I have a VA loan, an incredible fixed rate and it was about 30% under the market.   The people had bought a McMansion and they were running two mortgages and needed out NOW. The portion of my monthly income that goes to monthly mortgage is best not to discuss, but it is less than 20%.  I watched everybody get schmoozed though one way, and now I'm watching everyone get schmoozed the other way.  They tore up 40% of your worth man, do you read anything? Some people WILL play the martyr and that is their right, this is America.  I'm very smarty smart smart with my money though, and I'm a little pissed about my 40% flushed down the Wall Street TBTF toilet.  I have no guilt, this is business.  I was born in a capitalist country, I grew up in a capitalist country....I'm not stupid about capitalism.  If you want to live you must play. I will be looking for ways during the adjustment to be earning my 40% back.  That is what smart people will be doing and I support them fully to do that.  Go get your shit back man!  I have never been sheeple where money is concerned.  My grandfather once told me that if I found myself doing what everybody else was doing I was doing the wrong thing, I had become the dumb money where "markets" and the market vultures are concerned :)

    •  to GoEverton - I think you have misread my diary (0+ / 0-)

      This diary does not advocate anyone leaving their home. This diary advocates that homeowners underwater or not should all band together and form a united front to stop paying fraudulent mortgage charges that are market manipulated. No one should have to leave their home if we stick together. They can't foreclose on one third of mortgage holders. The courts would be overburdened. it would be too expensive for the banks. This would force a legitimate market correction. But people won't stick together, they won't even talk about this. So please stick together and support efforts like this diary which are meant as a public discussion starter.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 09:21:29 AM PDT

      [ Parent ]

  •  There are only 11 non-recourse states (4+ / 0-)

    If you live in one of the other 39 states then the only way to truly get out from under an underwater mortgage is to declare bankruptcy which is only viable if you have no other appreciable assets.  The non-recourse states are Alaska, Arizona, California, Iowa, Minnesota, Montana, North Carolina, North Dakota, Oregon, Washington and Wisconsin.

  •  Given the logic of this diary, on what basis (4+ / 0-)
    Recommended by:
    elsaf, cardinal, Frank Knarf, Calfacon

    should anyone comply with any contract?

    •  Precisely. Contracts usually include penalties (0+ / 0-)

      for breaking them.  Rather than casting this as an emotional issue, each owner should evaluate the entire set of costs and benefits associated with default, and make a decision based on the specifics of that case.  Unless one has expertise in such matters get both legal and financial consulting prior to acting.

      Fantasizing about organized mass defaults is good fun but of no real help to anybody.

      Where are we, now that we need us most?

      by Frank Knarf on Sun Jun 17, 2012 at 09:30:33 AM PDT

      [ Parent ]

  •  If you are paying off current negative equity (1+ / 0-)
    Recommended by:

    you are paying for a house.  In the end, you have a house, whose value may go up or down as time goes on.  They claim have have nothing is massively wrong.  You have a house.

    There is some likelihood that in some years houses will go p in price again, at which point the people who had negative equity, and quit, will complain they were suckered into losing their house to someone who paid a tiny part of its long term value and made a killing, and the people who were in negative equity go to positive equity.

    We can have change for the better.

    by phillies on Sun Jun 17, 2012 at 07:42:10 AM PDT

  •  I can't agree with this diary (7+ / 0-)

    I'm an underwater homeowner. My house is worth about $20,000 less than I owe on it.

    But the payments aren't causing me any distress. In fact, I'm paying almost three times what I'm required to per month.

    Why? Because I'm about four years from retirement. I like my house. If I keep paying at this rate (which I can do without going hungry), I'll be back in positive territory in less than two years, and at retirement, I'll have the option of paying the balance (probably $10,000 or less) and living mortgage free, or selling the place, because I'll be in positive equity territory.

    If I walked away from my mortgage, I would wreck my credit and I would have trouble buying another house to live in. So, I would end up renting and building no equity at all for my monthly payment -- which could well be a problem for me after I retire.

    The more people who walk away, the lower the value of the remaining houses sinks. The more people who dig in and pay their way out, the faster the market will start to recover.

    In the Detroit area, the market is showing signs of turning around. If it truly does, I'll be above water even faster, because the value of my house will rise to meet my principle balance. I'm not going to hold my breath for that, but it could happen.

    Since I can afford my payments, the whole equity question is intangible. I like my house. Why would I want to move?

    Wealth doesn't trickle down -- it rises up.

    by elsaf on Sun Jun 17, 2012 at 07:50:56 AM PDT

    •  The market changed, not your house. (2+ / 0-)
      Recommended by:
      virginislandsguy, Sharon Wraight

      I suppose I could see some concerns if the loan was a variable rate, the rate was being increased, and you couldn't switch to a fixed because of the negative equity.

      Otherwise, the diarist seems to be trying to get other people to ruin their daily lives in an attempt to give the banks a minor inconvenience of posting a foreclosure notice on your door.

      "To pass these defendants a poisoned chalice is to put it to our own lips as well." Justice Robert Jackson, Chief Prosecutor, Nuremberg.

      by Wayward Son on Sun Jun 17, 2012 at 08:24:31 AM PDT

      [ Parent ]

    •  To elsaf I think you have misread my diary! (2+ / 0-)
      Recommended by:
      aliasalias, Cliss

      I wonder why?
      This diary is clear, in that it never advocates that anyone move out of their home. In fact the diary clearly advocates for people to Occupy their homes by banning together en masse, which if everyone did no one would have to pay these fraudulent mortgage charges brought on by market manipulation.

      Clearly for this to work people would have to stick together to present a united front, rather than the atomized society of so called rugged individualists where everyone stands on their own. There is strength  in numbers. Working class people if they stick together can make a difference and force a legitimate market correction in their favor. That is what this diary advocates for and nothing else.  

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 08:47:19 AM PDT

      [ Parent ]

      •  I've got news for you (1+ / 0-)
        Recommended by:
        Sharon Wraight

        If you stop paying, you will be moving out of your home. You can talk about occupying en masse, but it isn't an realistic scenario.

        It doesn't work that way.

        Stop paying. Move out or the sheriff moves you out -- guns and all.

        To think otherwise is to live in a fantasy world.

        Wealth doesn't trickle down -- it rises up.

        by elsaf on Sun Jun 17, 2012 at 02:51:19 PM PDT

        [ Parent ]

        •  elsaf -the diary is about people standing together (0+ / 0-)

          You know if everyone who is in an underwater mortgage would actually stand together in solitary, there aren't enough sheriffs in America to evict everyone, there aren't enough courts in America to process all of the foreclosures notices. It would be backed up forever. The banks couldn't afford to pay for all of the litigation. There would be a market correction, there is no question about that.

          The question is will working class Americans stand together in a sustained effort to effectuate real change? That's what this diary is about. I guess you must of missed that part.

          sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

          by Democrats Ramshield on Sun Jun 17, 2012 at 02:59:58 PM PDT

          [ Parent ]

          •  Fantasy! (0+ / 0-)

            You think there aren't enough sheriffs in America. I beg to differ.

            There'll be many to spare.

            But forget the manpower issue.

            Since when do honorable people decide they don't have to participate in a contract they signed because it no longer benefits them the way it did at signing?

            I own my house -- lock, stock and barrel. However, I signed a contract with a bank that says I'll pay back the money I borrowed to buy it, and if I default, they get to take possession of my house.  There's nothing in there about "if the value of the house exceeds the amount I owe." There's nothing in there about "unless I say I'm occupying it." There is no "I don't feel like paying because I'm mad at the behavior of the banks with each other" clause.

            Let's be clear. The bank does not own my house. The bank owns a promissory note that says they can take my house if I default on the loan. The house is mine, the note is theirs. The money I borrowed went to the previous owner of the house, who used part of it to pay off his loan and kept the rest. He owned the house, then I owned the house. The bank never owned my house.

            There are two ways for the contract to end. 1. The good way, which is I pay off the loan and their right to throw me out ends. 2. I stop paying the loan and they exercise their right to take possession of my house.

            If we decide that the contract we made is null and void because we don't like it anymore, how can anyone enter into a contract for anything? How can I expect my employer to pay me for the work I did this week if he might decide that he'd rather just keep the money? How can I be sure the paycheck he gave me can be cashed if the bank doesn't have an obligation to honor the check?

            Contracts are one of the basic building blocks of society.

            Yes, the banks have shat on many of the contracts they made during the run up to housing collapse. They should be punished for that.

            But the fact that someone else somewhere has defaulted on a contract doesn't give me any license to default on the contracts I've entered into.

            One of the legitimate functions of government is enforcing legally entered contracts.

            I wish there hadn't been a housing bubble. My house would be worth more today if there hadn't been a collapse brought about by reckless and often idiotic actions by the nation's big commercial banks.

            But the fact remains. I bought this house. I entered into a contract to repay the money I needed to buy this house. So I'm obligated to pay if I can and leave if I can't.

            Wealth doesn't trickle down -- it rises up.

            by elsaf on Sun Jun 17, 2012 at 04:20:45 PM PDT

            [ Parent ]

  •  Because the (0+ / 0-)

    majority in this country are afraid of the banks, and they believe this economic disaster will get better before it stains them.

  •  The problem is lack of 'real' jobs. (1+ / 0-)
    Recommended by:
    pgm 01

    Over the last decade, incomes have been flat or declining due to globalization and technology. Deregulation opened up protected areas of the economy,
    such as homes, financials to rampant speculation which bid up prices. High home prices caused people to buy on credit or beyond levels that they could pay back even based on a reasonable expectation of future earning, i.e. flat. Now this are even worse with the high unemployment.
    We need to undo everything that was done in the past.
    Provide jobs, re-regulate, control prices/mortgages--this is the government's responsibility.
    Everyone must pay something but a sizeable percentage will be ruined.
    Thank God for the safety net.

  •  I do wonder about the mentality (and mental (0+ / 0-)

    stability) of people paying mortgages valued at twice what neighboring homes are now worth.

    Sometimes the govt must intervene, because as this dawns on folks, it will extend the feed of foreclosures and instability of mortgages for years.

    “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” - Harriet Tubman

    by Publius2008 on Sun Jun 17, 2012 at 09:08:13 AM PDT

  •  "Shouldn't Everyone Stand Together (2+ / 0-)
    Recommended by:
    Sychotic1, Cliss



    However, one thing I've learned here is we don't really believe (yet) in the power of the collective. And I think there's a certain level of xenophobia-- many people don't actually want to change our current system.

    The massive error here of course is change is indeed here, it's been forced upon us by the very worst sort of people, aided/abetted by our "representatives" in congress who Atrios points out are also the worst sort of people. They must be removed from office ASAP.

    Thus the answer is to stop pretending you can stop change, and control the change to a more positive result for all of us.

    The second error is not working in the collective.

    As Zinn's book A People's History of the United States readily points out, the only way to move the wealthy class to do what needs to be done is via sustained collective action by the people.

    The civil rights movement is a more recent example.

    "Think of _Huffington_ as HuffPost's more stylish offspring". A. Huffington. Uhhh, OK! Gimme a break.

    by Superpole on Sun Jun 17, 2012 at 09:35:40 AM PDT

  •  I may have mentioned this before (0+ / 0-)

    An attorney and an accountant (CPA) decided to get out from under their underwater mortgage.  They were not victims of predatory lenders, they were not naïve buyers.  They lied to banks about selling their condo, got approved for a loan on a brand new single family dwelling and moved out.  Then, interestingly enough, the “offer” on their condo (from a second cousin) fell through. The unit is in foreclosure, the valuation of my unit and others in our complex continues to drop and HOA dues continue to rise to make up the difference.  
    They certainly stood with all their former neighbors (NoT).
    I am not implying that there are not banks out there aimed solely at squeezing the very last drop of blood from Americans.  I am saying there are those, in addition to the banks, who are taking advantage of the situation.

    -approaching Curmudgeonry with pleasure

    by Calfacon on Sun Jun 17, 2012 at 09:48:42 AM PDT

    •  If this is California, they are allowed to do so (0+ / 0-)

      The rules don't even require them to have a fake offer.

      The problem with HOA dues is that, if you get at all behind (when I was getting docked 15 percent of my pay in the form of furloughs) they will not work with you, will not let you make payments and send you to a lawyer that hit (me personally) up for $3,000 dollars on top of the $300 I owed them (they don't apply it to the oldest month, they let that stay outstanding and they don't let you pay for the intervening months until you deal with their lawyer).

      Being upside down was only one reason I walked away from my condo 13 months ago.  The other reason was that there was no accomodation for catching up on HOA dues despite all of my letters to the HOA.  Now people like you are having to cover my portion because I live somewhere else.

      "I watch Fox News for my comedy, and Comedy Central for my news." - Facebook Group

      by Sychotic1 on Sun Jun 17, 2012 at 10:11:58 AM PDT

      [ Parent ]

  •  Maybe the diarist should (0+ / 0-)

    Start the movement to band all the underwater mortgage holders together...of course that would mean having to move back here rather than postulate from afar.

    Obama 2012

    by jiffypop on Sun Jun 17, 2012 at 10:29:21 AM PDT

    •  To jiffypop - You know you're a funny guy (0+ / 0-)

      So let me ask you a funny question. What have you done back home to try and help people with  underwater mortgages to stand together instead of individually falling apart?

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 02:52:16 PM PDT

      [ Parent ]

  •  As Marcy Kaptur says: (1+ / 0-)
    Recommended by:

    Being ignored is the difference between being a one percenter and an American.--sweeper

    by SouthernLiberalinMD on Sun Jun 17, 2012 at 10:37:44 AM PDT

  •  Most people buy homes, to live in, not equity. (1+ / 0-)
    Recommended by:

    There are investors, of course, but most US home buyers are purchasing a home to live in. You pay your down payment, pay your monthly mortgage, live in the house, and after 30 years or so you own the house. That's happening as we speak all around the country and is the usual and customary situation.

    Many wanting to sell their homes right now and retire have had to change plans. They still have a pace to live which may not be the most economical option but probably is. They have options.

    Through the misfortunes of bankruptcy, ill health, unemployment, divorce, timing, falling prey to scam artists, or just plain bad decisions many, not most, Americans have lost homes they no longer could afford and are now renting. Real estate prices was a bubble that never should have been inflated and burst as it should.

    Anyone misguided enough to have purchased a home without a down payment or with speculative goals in mind has learned an expensive lesson.

    The banks are operating as menaces to society and need to be reigned in. But I fail to understand how it would help (individuals, society, or the economy)  if the 2/3 of American homeowners in the black all stopped paying mortgage bills. One likely result of that would be that pension funds righteously invested in residential home industry would be threatened. Then what? People with no equity and no better option should simply walk away. That's a valid course. Why would the rest stop paying?  

    I'm trying to understand...but I don't even get the phrase, "paying off negative equity" beyond poetic license.

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Sun Jun 17, 2012 at 10:52:39 AM PDT

  •  "Sustained collective action . . ." (3+ / 0-)
    Recommended by:
    Cliss, jsquared, Diana in NoVa

    Are you kidding?   In AMERICA?  Where laws, social mores, and propaganda powers all extol and enforce complete separation of individuals, charging any three persons who decide to act collectively, whether to quit their jobs, to support friends in need, or, yes, to walk away from their mortgages, with Conspiracy?

    Tell me, how do you think this widespread, sustained collective action is going to occur?  Will everyone just magically put down their checkbooks on the same day of the month?  Because if they communicate ahead of time in ANY WAY -- by phone, by meetings, by internet -- then it's Conspiracy, and they can be charged and prosecuted.  And that threat alone reduces the number of people who would participate to a number that can be successfully suppressed and prosecuted, not to mention the propaganda that will always take out 50% of the most ignorant (and thanks to Republican educational policies and propaganda, the American population grows more ignorant every year).  Did you see what happened with the Occupy movement?  The enforcers of the various cities being protested against had a conference call.  One week later, SWAT teams moved in all across the country to illegally arrest and abuse people who were holding sit-down demonstrations in public places across the country.  It's not conspiracy when it's the Police State doing the conspiring.

    Europe needs to realize that the U.S. is a carefully-veiled Police State and has been for thirty years.  Forget your delusions of the Great Voice of Freedom.  That's just for rubes and foreigners who don't know any better (especially if they want to spend their good money coming here to become slave labor for the Corporate State for a while, then go home before running up any medical or retirement bills).  And Americans follow the rules because, delicate as the enforcement is when compared to Nazi jackboots, resistance takes twenty to forty years off your life expectancy and you spend most of that time in pain and desperation.  Compliance is usually made much more comfortable by comparison.

    Americans will rebel when they are as cold, wet, and miserable serving their corporate tyrants as they would be if they abandoned the pretense and got used to being entirely destitute and homeless.  Until then, Walmart, Fox-TV and an underwater mortgage aren't great, but they beat starving, freezing, and dying waiting to see a doctor in the emergency room.  Europeans are civilized.  They don't permit a stray dog to be subjected to the kind of abuse regularly received by the American poor.

  •  I have an underwater mortgage. (1+ / 0-)
    Recommended by:
    Democrats Ramshield

    I purchased my home for $135,000. I could probably sell it in the current market for around $70,000. I still have $90,000+ to pay off.

    I have no full-time job. I freelance, and freelancing has not been good. I am at poverty level (last year I made $16,000).

    It's easy for people whose mortgage is not underwater to say, "Stop paying", as easy as it is to say, "Go march and get pepper sprayed for me". I have no illusions that the game is not rigged. However, I'm not sure what my realistic options are. I hardly think that if I stop paying my mortgage will make my life better. There are penalties for not paying, although I have not investigated what those are, mostly because I wouldn't want to alert the financial industry that I'm struggling.

    Currently, at least I have a roof over my head, and I am allowed to use a credit card (which is handy).

    Can anyone give me any info or advice beyond "just stop paying"? What are the real ramifications of such a move?


    "Hey, what's a girl gotta do around here to get a Tiffany's tiara?"--Callista Gingrich

    by The Gryffin on Sun Jun 17, 2012 at 11:08:00 AM PDT

    •  to The Gryffin - please read (1+ / 0-)
      Recommended by:
      The Gryffin

      I'm not a financial counselor, I'm just a Kos diarist. I can't give you any legal advice, for that you'd have to talk to a lawyer.

      This is just a popular press article in the public domain. Its aim is to get people to band together and form groups or at least to start a conversation, because if people will stick together as part of a popular movement and refuse to pay these market manipulated fees, then they will force in aggregate a market correction. But to do that tens of thousands of people across America would have to agree and band together.

      The best of luck with your decision, and thank you for the great question. I hope that someone will contact you to help.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 11:56:35 AM PDT

      [ Parent ]

    •  If it works for you (1+ / 0-)
      Recommended by:
      The Gryffin

      stay in it.  Where I live the values have dropped so much we have hoards of investors buying property and probably creating slums.  My son just moved because he could no longer afford the payments.  The "short sale" or "foreclosure" will both be dings on his credit.  He found a nice landlady who likes his kids and dogs, but he was lucky.  Everyone needs to make their own decisions about where they live and how they do it.  I sold real estate a very long time and I know this is true.

  •  'Atlantis' (3+ / 0-)
    Recommended by:
    Cliss, ozsea1, cynndara

    The term "American Atlantis" may be right on. Many Americans do stand neck deep in water and fear drowning. As per a recent AP story Americans  lost 40% of their wealth in the past few years. Mostly due to the drop in home values, but incomes and stock-based retirement accounts fell too. It's not looking so good in the 'land of opportunity' anymore, at least not for the average person. The top few percent - now that's another story. Robber barons always do good. Though in this day and age they are called bankers, hedge fund managers and Wall Street brokers. :(

  •  Why is Europe asking America? (0+ / 0-)

    Europe is on a massive spree to line the pockets of bankers.

    Why doesn't Europe stop paying?

    What an odd diary.

    There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

    by upstate NY on Sun Jun 17, 2012 at 01:35:08 PM PDT

  •  Well, I have to go out and cut Citibank's lawn (0+ / 0-)

    Or, as my partner and I refer to them as Shittybank.

    Just as a wild thought experiment, if all of us mortgage-holders in overvalued homes collectively stopped paying our pound of flesh for ONE MONTH......

    Dare to dream.

    Both parties are beholden to their corporate sponsors. The Democratic Party deigns to throw us a few bones from the table on which to gnaw and squabble over, but it's just kabuki.

    by ozsea1 on Sun Jun 17, 2012 at 02:34:22 PM PDT

    •  To ozsea1 - please read (1+ / 0-)
      Recommended by:

      If the public will stand together in a sustain effort, it would eliminate the large scale underwater mortgage crisis that's strangling American home owners from sea to shining sea.  There would be a market correction. That would change the lives permanently of millions of working class Americans.  The problem is not only will people not stand together, but that there is no serious discussion anywhere in the American media of this issue. They don't want us talking about it, they don't even want us thinking about it collectively.

      That's why supporting efforts like this diary is so important because to change our lives, we have to stand together or we will individually fall apart.

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Sun Jun 17, 2012 at 02:48:59 PM PDT

      [ Parent ]

  •  I read somewhere that the (0+ / 0-)

    IRS waivers of the "income" from a loan forgiven/written off will no longer be given out starting next year.

    That means if $50,000 is forgiven/uncollectable in 2013, then a 1099 for $50,000 in taxable income will be mailed to the debtor.

    Republicans in the House may not want to fix this.

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