As beta testers, they have my support. If Congress doesn’t have the nerve to regulate the derivatives market, the beta testers will impose their on regulation.

BTW, your Peter Gibbons link includes Outback as an advertiser. Too funny.

The fact that Congress is doing very little about the foreclosure tsunami should tell you something about how little of an idea of the future it has.

Yeah, it’s just an example of the market regulating itself! Although I don’t think that’s exactly what the free marketeers have in mind.

Will Obama have an epiphany when his approvals are down to 30%?

Why stop with the mortgage?

Why not ignore the debts incurred by the family business. Get up and walk out on the tab at Outback occasionally. Do a drive off at the gas station after filling up the gas-guzzling airboat next weekend. Visit the Hard Rock Casino and, well, better pay that bill. They’ll break your kneecaps.

It’s got to be someone else’s fault.

Here’s the fault in your reasoning. The house can be repossessed and the banks don’t want to put that loss on their books. The meal and gasoline cannot. The deal they signed with the bank was to make monthly payments and if they do not live up to their end of the bargain, the bank gets the house. It is strictly a business decision to walk away, just like many businesses decide to do when they close their doors and leave customers in the lurch.

You make being irresponsible sound down right noble.

You make the banks who didn’t do proper vetting of their customers sound like innocent victims.

If I had a million dollars to loan out, I sure would make sure I only lent it to someone I felt quite certain would pay me back.

Walking out on a meal is not the same as walking out on a mortgage. Your agreement with the restaurant is that you can be charged with theft of services, a misdemeanor, if you don’t pay.

Your agreement with the lender is that if you don’t pay, they can come and get the property. It’s not the BORROWER’s fault if the lender declines to do so, or if the loan has been sold so many times that no one knows who owns it any more, or if the lender cannot produce the original loan documents.

Everybody loves a “free market” until it drives prices down.

Just like Wall Street. Weren’t they doing “God’s Work” by crashing the economy?

If the so called elites have no sense of obligation to the larger society that supports them in their activities, then why should we?

If the house you bought is now worth far less than the mortage, and will never be worth what you paid for it, I say you should walk away. No business would continue to pay a bad debt just out of some sense of obligation.

The NYT story seems to be trying to pick the least sympathetic representatives of those people in foreclosure. Of course, contrary to the title, nearly anyone in foreclosure would probably stop paying the mortgage unless they have managed to workout something with the mortgage holder. The foreclosure process is started by the people that are owed not the debtor. Money down a rathole being more or less the same as paying when the bank has told you they are going to take it anyway.

Banks and other businesses do strategic defaults as a matter of course when it makes sense. If the lenders made loans without doing due diligence with the expectation that the debtor would sacrifice everything in order to protect the profits of those making the loan, they deserve the losses.

How about a little shoplifting against Wal-Mart too. They expect a certain amount of loss. Maybe some insurance fraud as well. Stick it to the man. LOL.

We just walked away from our mortgage. It was a financial decision. We bought a small house in 2004 near the top of the market; the mortgage payment was well within our means (it was less than we had previously been paying for rent). We made some improvements and refinanced in two years, then used that relatively modest amount of money to start building a small second house on the lot. My husband is a carpenter and did 95% of the work himself. By last year, our poor but “up and coming” inner-city neighborhood that was supposed to be the recipient of downtown redevelopment funds was awash in foreclosures. There were two empty houses directly across the street from us and at least half a dozen more within two blocks. Our property – with twice the livable square footage than when we bought it – was worth significantly less than we owed on it. There was no construction work for my husband and no likelihood for the market to recover, especially in that neighborhood, for many years. And it was in the odious state of Arizona. We didn’t want to be there; we had planned to move back to California as soon as we were able to sell the house. We put the house on craigslist for a break-even price and got ZERO, let me repeat, ZERO, inquiries. So we stopped paying the mortgage, put the money in savings every month instead, and hired a foreclosure attorney. Our loan was owned by a subsidiary of Goldman Sachs (which made it a lot easier to stop making those payments). They did everything exactly by the book; the attorney thought we might be able to hold out for 9-12 months but it turned out to be exactly six months. We declared bankruptcy right before the auction date, which put everything on hold for another 45 days. But by that time, we had enough to move out and we didn’t need to be there any longer. The bankruptcy relieves us of the potential tax bill on the difference between the first mortgage and the refinance. We have no credit cards and a fucked up credit score and must live entirely within our means, but we do that anyway so it’s not that big of a deal. My heart goes out to people who are forced into foreclosure and don’t want to leave their homes. But if you want to leave, or it’s inevitable, it certainly makes sense to start taking care of yourself and STOP PAYING THE MORTGAGE!

Nah. Rahmbama was hired to do the job he’s doing, and he’s doing just what his corporate masters hired him to do. One term? BHO’s already declared – well in advance, ya see – that he “doesn’t care” if he’s a one-termer. So-called “approval ratings” are meaningless anyway. Who cares what the serfs think? Seriously, BHO will walk outta this job and continue to rake in millions. As Dick Cheney would say: 30%? SO?????

I have mixed emotions about people not paying anything on their mortgages whilst leading a rather high-end lifestyle. Yes, consumers were definitely screwed, and yes, if we had a “functional” democracy, there would be appropriate regulations and real consequences for the banks, etc.

I don’t blame consumers for fashioning their own mortgages, but I get the willies a tad when I read that they’re spending on gas guzzling boat trips and restaurant meals and such. There are those of us out here who continue to do the “right thing,” pay our bills, live frugally and such. This kind of behavior just reeks of the same corruption that congress and the banksters engage in. I don’t blame the consumers for not paying the mortgage, otoh, but I guess I would feel “better” if they stated that they were saving money and trying to scale back their exhorbitant lifestyles.

That’s just me, of course.

If you have to be “responsible” and the banks, insurance companies, oil companies, U.S. government, etc. do not – what does that make you alan?

A one legged man in an ass kicking contest.

[modnote: please don't make it personal.]

You are completely mischaracterizing the process of defaulting on a loan. Defaulting is not theft, it is a legal avenue available to the borrower and has consequences outside of the failure to repay.

Again, you don’t seem to get it. They aren’t stealing their house. The bank now will own it. That’s the deal they struck with the bank when they signed the papers. They simply have to tell the inhabitants it’s time to leave. Totally different than stealing from a store.

As you say though this decision requires hiring a smart lawyer. Every state has different rules and the process has plenty of pitfalls. Business default during down times and owning a house should also be a rational decision based upon it’s cost effectiveness.

I don’t blame you one iota for what you did. The NYT article seems slanted to present this “picture” of people living large bc they don’t pay their mortgage. Perhaps written that way to subtlely demonize such folks??

Your situation is more common, and one that I read about more often. Where I live there are numerous “ghost town” neighborhoods with almost no one living in them. Needless to say, at this point the houses in such neighborhoods are nearly worthless esp bc they’ve been looted and vandalized. Who would want to buy there?

OTOH, though, I have friends in real estate, and I keep *hearing* (nothing substantiated to link to) that there’s all of these “rich buyers” currently running around scooping up very cheap real estate, making it harder for the less weatlhy to get a “real deal” in this climate. I don’t know for sure, but it almost seems as if the banks, etc, want people to walk away. And then syndicates do seem to be swooping into some areas and buying in bulk for pennies on the dollar… but at a rate higher than the average consumer would want to pay.

More scams? Why not??

Good luck to you.

Thank you. People continue to believe that “moral hazard” nonsense that only seems to apply to working class people. When you default, your credit score tanks and your ability to continue to play free market bingo is greatly diminished, but I consider that to be a good thing.

I guess I’m the chump for having too narrow a perception of right and wrong.

I don’t agree.They(congress)knows full well what they are
doing.

Remember the banksters are their constituents.
You & I don’t mean a damn thing but monies for corporations.

If your definition of right and wrong is wider than the questions of law and what is best for your family in a down economy then you could be on the way to be a chump. Any business that operates without a concern for gains and losses is doomed. Families owe no less to themselves than businesses do to their investors.

Thanks onitgoes. We are doing great; I don’t really consider us to be victims. We decided pretty early on to stop playing; the hardest part was walking away from a really nice little house that my husband built with his own hands. I think that this is the beginning of the market resetting – the longer people continue to pay for houses that are almost worthless, the longer the prices stay artificially inflated. Of course, this is easy for me to say as someone who has had the same job for 20 years and can work anywhere, and has no kids at home. Our situation does not compare to people who are unemployed and have kids in school and may want to stay in their homes. The bottom line, however, is that once foreclosure is inevitable, there are a few things you can do to make it easier for yourself.

As for the banks, it seems like they would want to negotiate, lower your payments, whatever, instead of ending up with another house on their books. However, I was told that many of them were getting bailout money for every foreclosure. I don’t know if that’s accurate but it sounds just machiavellian enough to be true!

what is best for your family in a down economy

Like a nice steak dinner or weekend get-away.

I would expect firepups to be a little more discerning, yet some appear to be painting all foreclosees as ‘Pembertons’. Not everyone who stopped making payments turned and spent those funds on airboats and restaurant meals. Many, if not most, tried their damnedest to get relief from their lenders, refinance, sell, whatever, and simply couldn’t keep up either through predatory rate increases, loss of employment, or both.

I, for one, was told I had to default (I was there anyway) in order to get help, which never came through. I used the bit extra that left me to pay back the credit cards I’d cashed out trying to keep up (which promptly got canceled), and most of my severance to pay back the 401k loan I’d taken initially to cover refi closing costs and also got spent on house payments. The rest went to get us into a travel trailer, so we’d have someplace to go at the end. We were able to complete a short sale just before foreclosure started; by staying in the house until the end it was left clean and intact as it surely would not have been were it left empty for the months we didn’t pay.

I am still unemployed and feel absolutely ZERO shame at the situation I was and am in. Anybody that doesn’t like it can kiss my fat white ass.

My sense is that the majority of what is keeping current housing prices up is intervention via propping up the mortgage market. For the last year the government has been the mortgage market and that has allowed banks to continue to not have to recognize write-downs on their loan portfolios. HAMP has been a godsend to protecting bank profits while stabilizing housing values but has done precious little good for the borrowers except lock them into even worse loans than they started with while eliminating recourse.

‘But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers. ‘
I agree. Its a business decision to walk away from your debts. Its not a noble one. And most people taking out mortgages could tell if they would be able to pay them off or not. But, heck, other people did bad things, so I guess we all can do bad things.

It sounds like you made a very smart decision. Can’t address the issues of relative anatomy though.

You’re absolutely right not to feel any shame. Shame is for misguided people who buy into the notion that corporations have our best interests at heart and we must play by their rules. It will be interesting to see how long it takes everyone else to let go of shame.

Transocean just make huge payouts to their investors and management in the face of their involvement with PB. Significantly less ethical than swapping a house for a truck I’d say.

Oh please. How many people took out mortgages based on the fact that Mom and Dad both had jobs, and then one or both of them suddenly became unemployed? Paying the mortgage when you can’t put food on the table is not a noble decision, it’s a stupid one.

Today we breach our modification agreement. We were approved for a modificaton but WF raised our payment by $350 a month. We were only able to make one of the three required payments to qualify to continue with the mod. We owe over $100,000 more than the house is worth.

Yes, we were irresponsible in refinancing our house 3 times. If you call irresponsibility due to four major illnesses in two years and the loss of our biggest client due to the company being bought by a Mexican corporation. Our health insurance was canceled. We filed for bk in the middle of the four illnesses so when we both both got sick again the bills were over $250,000. We are classic irresponsible citizens in an irresponsible world. And we are not alone. There are millions of us out there with stories like this.

PS-We stopped paying our debts other than the mortgage a year ago. When the credit card companies raised our interest rates to 25% and 30% we said screw this. I think we were ahead of the curve in making this decision. We are finding out that it is pretty easy to find a place to rent since apartment complexes are desperate to find renters. Our credit scores are probably around 300.

Anyone who defends these people should be ashamed. Sorry, but this is not being progressive. Responsibility ultimately lies with the holder of the mortgage UNLESS there was outright fraud by the lender.

The people in this article stopped paying the mortgage on a $280k house that’s now worth $140k, and the housesitter says that’s the starting point if the bank wants to renegotiate. Disgusting. Utterly disgusting.
Wow – it’s really nice when you get to change the rules in your contracts!! I’ll just tell my landlord I only want to pay $100 a month, even though I signed for $1400!! Wheee!! This is fun!!

Seriously, the bank should boot them from the house and re-sell it. They should attach the lifelong earnings of the previous mortgage owner or liquidate their business if necessary. It’s time to stop propping up this market.

Thanks for revealing that you stopped paying your credit cards too. So did we, well ahead of most of the rest of the people who are still trying to be “responsible.” We have no health insurance (again, we’re irresponsible self-employed people with pre-existing conditions like allergies). We had mediocre credit to begin with and consequently our cards were high-interest, with ever-changing due dates and myriad new ways of screwing you every month.

I wish you the best of luck and I encourage you to do whatever you need to do to take care of your family. Unfortunately nobody else will.

Wow – it’s really nice when you get to change the rules in your contracts!!

They should attach the lifelong earnings of the owner or liquidate their business if necessary. It’s time to stop propping up this market.

Mortgages are secured by the house. That is in the contract.

That means you leave the house and move somewhere you can afford. Sorry, but THAT’S the noble thing to do. There is no more nobility nor shame in America anymore. It’s all about me and mine. Screw everyone else. Mom and Pop America are just as much to blame as anyone.

It’s time to stop propping up this market.

Say what? By definition, a house is worth market value at any given time. The banks would be better off resetting everyone’s mortgage to the market. That would be the way to stop propping up this market.

You were forced to take out those credit cards, right? Let me explain something to you: Just because you think you’re being noble or just doesn’t mean you are. Also, the “responsible” people (you put it quotes apparently to chide those who actually honor their debts) are paying for your irresponsibility in the form of higher rates. Thanks again. You should be proud.

Maybe the boat is paid for and maybe taking it out is the only recreation they can afford. Maybe they have tried to sell it with no luck? If their house had a pool,like just about all of the numerous foreclosures in CA and FL do, we wouldn’t be criticizing them for swimming in it, even though chlorine costs $$. I don’t have an excuse for them for the Outback meals though. I can’t afford to eat there so maybe I’m just jealous.

If the banksters can screw us over with impunity, which they have, I certainly have no problem with anyone finding some legal relief. If the gov cared as much about us as they do about them, people wouldn’t need to walk away because they would have jobs and reasonable mortgages.

Gee. I didn’t mean any disrespect. Sorry alan.

Homelessness and poverty are noble? Your idea of nobility is pretty sad. The oligarchy still has you fooled but the rest of us are catching on.

Please address issues of unemployment and illnesses. Please address the issue of creditors raising interest rates to absurd levels on the most vulnerable. Please address issues of the usury laws being repealed by congress. Please address the issue of that there has been no real wage growth in twenty years. Please address the issue of jobs leaving the country. And corporations not being taxed on a reasonable level. And the ever increasing cost in tuition and loans for college. And, if you have not noticed, we are in a depression.

That sort of response is exactly what’s wrong with Americans today. It hardly merits a response.

“The banks would be better off resetting everyone’s mortgage to the market.”

Seriously, you need mental health therapy for saying that. The homeowner would be better off, that’s for sure. While we’re at it why don’t we throw in free vacations and new cars for everyone!! Whoopee!!!

It’s nice when you can change the rules, right? Oops I made a mistake, let’s press the reset button!! Yaaahhh!!!

Sorry, but no. The best thing the banks can do is boot these people from their homes, and do whatever it takes to recover the cost of the mortgage. Attach lifetime earnings if necessary. Put the house on the market at the current market value and let the RESPONSIBLE people have a crack at it.

I am sick and tired of being punished by the irresponsible.

[modnote: please don't make it personal.]

Never said I was being noble. I tend not to use those sorts of words. I am not portraying myself as a victim, or on the other hand as a particularly responsible person. I am just an average American, dealing with life here in America. USA! USA!

So. When exactly are the banks ever wrong? Should they be held responsible for loaning to people who might be less than creditworthy?

Or do you believe “you can’t cheat an honest man?”. If you can’t cheat an honest man, who do the crooks cheat? Who is the dishonest one in the cheating? Apparently for bank fans it is the one that the banks are actively pursuing to hook into their fee system.

And thank YOU for encouraging the irresponsibility of banks.

So mister capitalist, how do you feel about the bailouts? How does that play into your worldview, having upstanding, responsible taxpayers like yourself pay for the mistakes of the banksters? How do you feel when Bernanke and the Fed decide to just reset things?

If Americans didn’t live like such gluttonous pigs – they wouldn’t have these problems.

If Americans didn’t sit and watch TV 24/7, but were involved with their communities and government – they wouldn’t have these problems.

If Americans didn’t act like such entitled prima donnas – they wouldn’t have these problems.

Sorry, you’ll get no sympathy here. When I look around at the gluttonous behavior of the average American – and their kids – I don’t have any remorse at all for their current situation. None.

We will soon be paying for the mess in the Gulf of Mexico, too.

It’s time to stop propping up this market.

See, we agree on one thing.

Our family that paid off our mortgage last year mostly because we bought the mortgage before the boom. That doesn’t make us more moral nor does it mean that people should be slaves to debt because the mortgage seller was dumb enough to believe that prices should always go up and that he could solve his problem by selling complex CDOs that would make money by losing small amounts in volume. If you pay $1400 to rent, your neighbor pays $600 and you don’t renegotiate or move that doesn’t make you ethical.

Good luck to you HFCarol. I mean it. It can’t be easy.

BTW, this commenter knows that banks renegotiate contracts all. the. fricking. time. See: JPMorgan, Lehman Bros.

This commenter knows that banks are not exactly easy to approach to renegotiate. So, they can take the house. They agreed to that. In a contract that they wrote.

The bailouts were a travesty. You should know that by my comments. Who said this was a us/them situation. How about responsibility across the board. That’d be nice for a change. It won’t happen, but it would be nice.

Do you really think that the NYT chose those people at randum? You should know that the Times wanted to make a point: that people who default on loans are bad (unlike businesses who are smart).

You haven’t read any of Mary’s other posts, have you? Mary and most people here are more involved with their communities and government than you could possibly imagine.

OK, now I have fed you for the last time.

Sorry to hear that your family life isn’t going so well. What you describe has no bearing on my life, thankfully.

Methinks we have found a troll.

So, you are not going to address any of the issues I raised? Just name calling and generalizations about types of people? Your emotions have run away with you, my dear. You think you are being rational but you are not. I look around my lower middle class neighborhood and see people working hard and trying to push that pay check to last long enough to feed the family. And the lower class? A thousand children walk out of the Sacramento schools everyday without a home to go to.

My definition of gluttonous pig is:

Anthem/BC raising rates – because they can, not because they need to.

Goldman Sachs, BofA, etc etc paying themselves enormous bonuses after running the economy into the ground. By doing what? selling faulty derivatives – legalized (?) gambling. With people’s pension funds.

Yeah right. they are the honest brokers here for sure. /s

Thanks. It’s really OK for us. You’d be surprised at how little your credit score matters now, because everybody’s got a bad credit score. We’re back in California, living where we want to live, and feeling less stress than we have in years.

Did you know that bonuses given to the top players in corporate America almost equal the negative amounts that the states have on their budgets?

I know. And Israel. Lord only knows how that one’s going to play out.

“back in California?” You came back? *g*

I’ve live in California all my life and it’s not the state I grew up in. wow.

exkiodexian reminds me of the people who blamed the victims of Katrina who did not leave the city before the hurricane. It didn’t matter to them that 24% of the people in NO had no cars or the money to get out of town. They were stuck and many drowned. That is what is happening right now to the middle class.

ooh, I love fun facts! I didn’t know that! :)

anyone who defends the banks has got to have their head examined. srsly.

Another fun fact: The Megster is running the most expensive campaign in history. Think of what that money could do.

We’re native Californians. I know things aren’t the same but for us, it’s home. We left when things got so expensive and crazy we couldn’t even find a place to rent, but we always intended to come back. And Arizona is an ugly place to be right now.

Yeah, as Colbert said “hey poor people! Stop being poor. You’re making us look bad.”

Well, I’m still paying on most of my cards, but they trippled the interest (at least), not on the new debts, but on all the debt on the cards. Now you tell me just who were the noble ones there.

Where did you move back to? We need to figure out where to go.

It isn’t a question of fault. It’s just business.

omfg. yes, time to get the H of out Dodge for sure! lol.

Masaccio! there you go, putting all our arguments into one tidy phrase. you rock, dude.

Yep, gotta love that logic. If you can’t pay the original amount, they expect you to pay more. when you can’t pay.

gtg, pups. bbl.

I think we’re mostly on the same page, and I certainly have nothing but anger and disgust for the banks and mortgage companies who engaged in ridiculous and financially irresponsible (to say the least) behaviors and knowingly loaned outrageous sums to people who didn’t really qualify for the loans.

But to take you discussion point a bit further (for the heck of it)… boats tend to be very expensive to run and maintain, even when fully paid for. So if this purported family cannot afford their mortgage, then I do have some hesitations about them somehow having enough to play around in a boat. There’s plenty of recreational activities that one can do with one’s family that are either free or low cost. In general, boating tends to be pricey.

As far as swimming pools go, they are also somewhat pricey to maintain. I do know neighbors in CA who have chosen to close down their pools and not use them bc of the cost, plus the issues with water in CA (drought, etc). In my neighborhood, there is a community pool, which is less convenient for families to use but much more cost-effective.

It’s all a matter of choices. I don’t really care much what others do, but I do feel that, as a nation, there has been a tendency for many to live beyond their means. My notion is that now is a good time to question all expenditures and perhaps discard luxuries that one can no longer easily afford. There are usually options and alternatives that can replace expensive activities and hobbies with lower cost ones.

I would really like to see more articles in the nooz about such options; I do see some in my local newspapers and sometimes on tv. I think it’s good for everyone to really think through choices; I don’t feel that enough of us did this “back in the day.” Just my opinion. I’m not into “dissing” people for their choices but much more into “encouraging” better choices going forward. Live and learn.

If Americans didn’t live like such gluttonous pigs – they wouldn’t have these problems.

Consumer spending is 70% of the economy, “gluttonous pigs” are the only thing keeping the country going.
I guess it would be better to just let the whole thing collapse into a smoldering pile of self righteousness.

So how do you feel about bankruptcy? You must think it’s really immoral.

Yes, thanks for the reminder about that bc it needs to be repeated as much as possible. Citizens are being made to feel guility for having govt programs that, for ex, assist the elderly and the disabled. It’s like these disabiled folks should all go out and get a job and stop being such a DRAIN on the obscenely wealthy. It’s despicable, but a lot of citizens buy into the memes that anyone who wants assistance is a lazy bum. Not true.

Plus in response to a prior comment about e-Meg’s crapulous campaign for gov in CA: it’s disgusting. e-Meg happily spends like the drunken sailor that she is (never having ever voted in her life…!!!), but uses her soap box to beat up on poor people for being such a DRAG on Queen Meg and her outrageously wealthy business buddies in CA. e-Meg really hits new “lows” in terms of her campaign. Talk about a leech on society – that’s e-Meg.

When I look around at the gluttonous behavior of the average American – and their kids – I don’t have any remorse at all for their current situation. None.

The LAST person to blame for America’s current economic predicament is the “average” American. The “average” American has no economic or political power. They are victims. And they are not “gluttonous.”

You are laboring under some pretty large misconceptions. You need to look into what has happened to their income and the way “average” Americans have actually spent their money over the last decade or two. Your mental image of the “average” American and how they spend is pure fiction.

Google “Elizabeth Warren.”

OTOH I do kinda feel like we Americans are waaaay over the top in our consumption and materialistic ways (I’m looking in the mirror when I write this), but otoh, yes, consummerism drives our economy, esp now that our fabulous corporations – having been released from having to paying any dreadful taxes – have offshored the “making” of “things” to third-world slave labor sweat shops (I’m loooking at you Foxcon). So we don’t have many manufacturing jobs here anymore.

What drives the “engine” anymore is the buying of stuff, including expensive houses, etc. GW Bush really pushed and encouraged ALL citizens to take advantage of the “American dream” and buy a house, and et voila – suddenly there were loans a-plenty for everyone. WHAT a coincidence….

Just saying… and let us not forget how the Shrub’s main exortation after 9/11 was for all “good” citizens to hit the mall!!

I don’t agree with that philosophy of consummerism, but I do see the propoganda encouraging citizens to spend, spend, spend, and I also recognize the reality of our nation’s economy right now. Yes, citizens are responsible for their choices, but where is the accountability at the top???

We moved into a live/work warehouse in Oakland. My husband is way more likely to find work here, despite California’s bad economy, and the people I work for are here. Our landlords overlooked our bankruptcy/foreclosure/bad credit because we were (1) very upfront about it and (2) planned to actually LIVE in the warehouse and not use it to grow pot. *g*

If you possibly can, I suggest you figure out exactly where you’d like to be, and then find a way to go there. We decided life is short and we needed to try to do what we want NOW instead of soon.

The neat thing about legalized usury is how much it has done for the economies of South Dakota and Delaware. Without providing a safe haven for credit-card companies all SD would have is those rocks with faces on them and Wall Drug.

Nobody came to you asking for your sympathy. You are in OUR space. You don’t like it? You’re very welcome to go elsewhere.
If you’re not going elsewhere then you need to try to listen a little better. It’s not “changing the rules” to walk away from an upside down mortgage, it’s right there in the contract: If you fail to pay your mortgage, your house will be taken back by the bank. It is hardly your responsibility to see to it that the bank fulfills it’s contract. And no where in the contract does it say that the bank can come after you, garnish your wages (if you have any), and force you to pay for an overpriced house you can no longer afford. That would be the very definition of serfdom.

[modnote: please don't make it personal.]

http://consumerist.com/2007/04/snl-skit-dont-buy-stuff-you-cant-afford.html
Yes, life changes happen. Sometimes awful and terrible. And for that I feel badly. And insurance companies and banks care about making money, not where you live. And some of them have broken the rules or been bailed out.
That said, you (the royal ‘you’) can only afford to spend so much on housing, even with optimistic assumptions. Don’t buy more house than you can afford. And if your life changes and you can’t afford that, you move down. Its hard and it hurts, but that’s how it works for everyone, eventually.
I don’t begrudge these people the choices they’ve made. Default and bankruptcy are terrible places to be, but may be better than where they were. But they aren’t heros for sticking it to the banks. They are people that made a financial decision to walk away from obligations.

I agree we need to revert our economy to manufacturing based.
As it is, money is just circulating with a little at a time being skimmed off by Wall Street, eventually it will all be gone.

But you can not just pull the plug, crash the economy and hope there is something left to build on.

And no where in the contract does it say that the bank can come after you, garnish your wages (if you have any), and force you to pay for an overpriced house you can no longer afford

Not being difficult, because we agree on this except that non-recourse rules vary from state to state and once you look at other countries the option of non-recourse is pretty much zero. The non-recourse movement was a result of the effects of the truly bad old days when nearly all home loans were promissory notes.

There is precious little in the process of buying, borrowing or paying debts back that involves heroism. Pragmatism perhaps but not much more.

That is exactly where I have been looking. West Oakland. New art center for california.

My business cratered in 2008, followed by a huge loss on a particular project and a tax issue. This all followed on a couple bad years and a couple refinancings on my place. Come the end of 08, I stopped making payments on the mortgage and started sliding sideways into foreclosure and default on the overextended credit card, all the while having next-to-no work coming in.

I economized and gutted it out, managing to keep the lights, heat, and phone on, gas in the car and cadging food and such as I could. I became expert in sussing out when the supermarket would be putting almost-expired chicken on sale for 59 cents a pound. Living in a city, I was able to walk a lot of places and economize further.

After about 6 months of this, I grew tired of the constant phone calls both from bill collectors and from people trying to sell me one flavor of debt salvation or another. I’m a lawyer and I know that most of those schemes were not worth the money, assuming I had the money in the first place. I decided to sell out because even after a couple refinancings, I still had some equity in the place.

All the while, the creditors were trying everything.

The mortgage company and the credit card company tried every line: angry, pleading, appeal to morality, making one feel guilty or ashamed for not paying, you name it.

If it was Bob With The Indian Accent and obvious intercontinental connection, I told him I didn’t understand him and that I had to hang up. Other cases, I’d tell the guy I’d pay when I could. To the inevitable followup question “When do you think that will be?” I’d answer “I don’t know but you’ll find out shortly after I do.”

They would try, try, try to get me to make a promise to pay. Falling into that trap is a bad idea for the debtor for two reasons. First, it can (and a creditor will construe it as) a “novation” of the debt, that is to say, an entirely new contract affirming (and admitting) the validity of the debt. It’s a variation on the scheme Sears used to play with people who got their Sears card debts discharged in bankruptcy and who Sears later approached to try to collect on it anyway. Second, it opens the debtor up to the emotional appeal of not wanting to break your promises and will be used against the debtor that way.

To all that, I would answer “how can you expect me to make you a good-faith promise to pay you this [alleged] debt when the circumstances that put me in the position of getting phone calls from you have not changed? How can you come to me and tell me that it’s OK to make a promise to pay, when I don’t have the means to do that?” and similar logical flips. I would stick to my positions and let the bill collector do all the arguing.

When they wanted to be my friend, I’d remind them “you’re a bill collector. You are not my friend. You are not trying to help me. You are trying to take money from me – food out of my mouth – so as to move the odometer on this [alleged] debt. That’s all it is – an odometer. Just numbers that have no relation to reality or anything. you want me to move the numbers in your favor, when I can either eat and make sure the dog is fed or move the numbers in your favor. If our positions were reversed, what would you do?” Not a few times, the collector admitted he’d be doing pretty much the same as I was.

I felt no guilt about taking up their time. If they were working on an hourly wage (highly unlikely), then I was making sure this guy got some hours in and got paid while getting nothing to the employer paying him for it. Screw the employer. If they were working on a percentage of recovery (much more likely) and weren’t bright enough to recognize they were wasting their time with me, well, screw them. Their problem, not mine.

In all things, I was unfailingly polite. I recognized and kept in mind that these were peons trying to do a nasty job, quite probably the only job available to them. “Do unto others…” is something one has to work on all the time. I also knew that they were recording whatever went on, so making a promise or blowing up or making a threat or whatever would be there and pointed at, time and again, for whatever purpose.

The one time, one of the collectors blew up and flew into a tirade about how he hated lawyers and how he hated how we thought we were above the law and a whole panoply of personal insults. I flew back at him and told him to go fuck himself. I then took the time to calm down and straighten my head out first. Then, I called the credit card issuer – they had sent the debt out to a collection agency – and spoke to someone. Since they had shipped this out to an agency, they tried to demur and send me back to the agency. But I reminded them the debt was with them and, more importantly, their agent was violating the law. That’s the Federal Fair Debt Collection Practices Act.

When you start waving the FDCPA around, creditors sit up and listen. I worked my way up the chain of supervisors until I reached, I believe, a senior vice-president at the creditor. I explained to him the situation:

I knew there was a problem with the credit card,
I had issues with the way his company had handled it (independent of the collection agency) which left me ill-disposed to view his company as my friend (despite a long, good relationship),
I had serious issues with the illegality of the collector’s conduct,
I admitted and apologized for my blowing up and profanity,
I’m a lawyer and I know all about the FDCPA,
I don’t want to go down the lawsuit road though I easily could and would win.

Having thus set the table, I then told him what I wanted was that I wanted that bill collector fired. Because if he’d done that to me there was little doubt he’d done it to others and he was a litigational ticking time bomb waiting to tear into both his company and the collectors. I then repeated that I could not now pay, but would in the future.

In other words, I dealt with a sensible, sophisticated, professional person in a sensible, sophisticated, professional way.

I didn’t get Mr. Abusive fired, but I got no collection calls for a couple months and none from him for a good six months.

This went on all summer while I was listing and showing the property and going to contract. When the mortgage company filed the foreclosure suit, I waited as long as I could, then filed an answer asserting they had no standing to sue – the documents had been run through the MERS and there was all sorts of assignment language. This bought me months through the legal procedure while I managed to bring the contract to the point of a buyer with a mortgage committment coming. Another six weeks and we closed the sale. The mortgage was paid off, the other debts that had liened the property were paid off and title closed.

I had the good fortune of having lived in a desirable neighborhood that had not suffered a big decline in value and equity in the property and a buyer who wanted the property because it really made an improvement in the work commute; I managed to walk away with some money.

As to the credit card debt, which was not secured by the property, I held out on them. Ultimately, they offered to take 40 cents on the dollar and I paid them the same afternoon.

In the course of economizing, I lost something on the order of 15 or 20 pounds, the result of stress, cutting out beer and ice cream (and just about anything else other than the cheapest staples I could find or cadge) and making sure my money was allocated so the dog got fed first. I went on a vacation – paid for by a friend employed in a good job and repaid by me after closing on the sale. I avoided bankruptcy. I was too broke to go bankrupt (and I didn’t want to prepare, let alone file, the schedules, nor to go through the required debt counseling – a sick joke that favors only the creditors).

The NYT article linked is aimed at propagandizing a specific audience – the judges, lawyers and financilists on the institutions’ side of the foreclosure debate. They’ll read this and every contesting defendant will suddenly be running around in the gas-guzzling airboats, just like every welfare recipient was driving down to the welfare office in their new Cadillac after Reagan said so.

Could you go to my facebook and send me a message with your email? I would love to talk with you. or just email me at mary at mccurnin design dot com.

Yes, will do. I am on the phone right now but will be in contact soon!

Agree: cannot just “pull the plug.” As with any addiction (which over consummerism sort of is), things must change gradually.

That’s why I advocate for everyone to analyze their choices and options and make wiser decisions. Simple? Yes. Easy to do? Not so much.

I’ve always strived to live below my means; that’s just me. But if more could adopt that practice, they might be somewhat better off for it. One book that is helpful is called The Millionaire Next Door.

http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206

Perhaps speaking about “millionaires” is a bit passe in this day and age of ridiculously wealthy multi-billionaires, but still… the principles apply. Just something to consider.

It seems this is the perfect time for us to come to terms with the excesses of our way of life. We need to live in smaller homes, get rid of our cars, eat in ways that promote healthy living, exercise, etc. We need to truly become green.

Thanks very much for your personal story. That makes all of this so much more real and relevant. I wish you the best, and just btw, while not a JD I work in the “legal industry.” Most lawyers aren’t all that wealthy; that’s another snow job that comes out of Hollywood and the fake nooz of the day. So people get mad at lawyers not realizing that the majority probably only make as much as teachers, if they’re lucky. I can’t speak for your personal circumstances, of course.

As for your final comment about the gas-guzzling boaters who welshed on their mortgages: I suspect that you’re correct, and it’s ye olde “liberal” NYT’s attempt to demonize those who stop paying their mortgages… and look how riled up a few of our commenters got here bc of it. That kind of propoganda really does work, doesn’t it?

I quite agree. For those of us of a certain age, recall the so-called “energy crisis” in the 1970s when Carter was POTUS? At that point, MANY citizens immediately began driving much smaller cars that consumed much less gas. Consumers were WILLING to economize and to live more simply.

We really need to question what happened since then? And why were consumers (I include myself) so driven to achieve a certain type of lifestyle that usually included driving huge cars & trucks that consumed too much gas, plus possibly buying properties that we really couldn’t afford.

Why? What collectively drove us into these choices and decisions? That is what all citizens should be asking themselves right now, while using that as a guide for making better choices.

Plus the oil volcano currently gushing in the Gulf should push all citizens to question wisely their modes of transportation and how we can collectively make improvements to urban and rural transportation systems that much more green and do more serve our citizens, our economy and our ecololgy. BHO allegedly ran on a platform of improving and promoting green technologies, plus improving the infrastructure. I would like to *try* to hold him to it (yes, yes, see my many comments here about BHO being a corporatist, but we can *try* to make him meet some of his promises).

In the next article the NYT will quote some analyst saying that the key to recovery and jobs is for consumers to spend again. In other words, stop servicing those unproductive dead-end loans and use your money to buy a new jet-ski. Those horribly irresponsible people are actually helping to rebuild the economy!

With all due respect, many of the folks up thread have (unwittingly) accepted a false, pro-corporate, right-wing narrative: that of “average” Americans overspending or “gluttony.”

This is NOT a legitimate cause of the current crisis. Elizabeth Warren has fully debunked this myth. While there are certainly exceptions, “average” Americans have not “overspent.” Yes, they relied more on credit, but not — repeat, NOT — to buy extravagances.

See: http://bostonreview.net/BR30.5/warrentyagi.php

Thanks. Very good article and good point.

Exactly. Many of those credit card bills are for groceries to tide people over when the paycheck ran out. Now we’re supposed to believe that people are spending their mortgage money on boats and cars. The truth is that when you stop paying your mortgage, you start counting every penny and every minute. It ain’t no picnic.

There is the problem right there. Jetskis used to rebuild the economy. We should be redoing the economy in a way that does not tax the earth. Jetskis, motorcycles, boats, suvs, trucks, mcmansions, are nonproductive ways to solve this crisis. We are in an economic crisis and a moral one. Jeebus, am I sounding like the earlier troll? The world is not our oyster it is our responsibility.

Yes, I do know that most people are not buying these things.

The finger wagging moralists need to realize that any creditor/debtor relationship involves two parties placing bets. If the terms of the bet include attaching wages in case of default, fine. If it was in the terms of the contract. If not, then the creditor will have to suck it up in case of a default. It’s just business. Everyone has to look after their business as they see fit, knowing that there are consequences for each choice.

If creditors extended too much credit without covering their asses in case of default they have only themselves to blame.

I’m not arguing for my take on how to build a better world, just finding fault in the logic of the NYT — and other guardians of the establishment — talking out of both sides of their faces.

They also created the housing bubble to maximize huge profits. How much did all of those refis cost the customer?

They cost us all about 12 trillion, which we will all keep paying and paying and paying. But it was fun for a while, for some people.

We live in the most bass ackward of times.

Hopefully not forever. People are slowly waking up to what an utter scam American capitalism is. Never have I seen the corruption so blatant, at all levels of society, than I have in the past 10 years. It could go either way: a dark age of facsism or a humanistic awakening, and I’m hoping for the latter.

They(congress)knows full well what they are
doing.

No. Congress thinks it is helping its bankster friends. But the help-your-bankster-friends-and-fuck-everyone-else system is not sustainable.

I guess what bothers me about all this is that because I DO pay all my bills, I do not have money to do the things that these foreclosed upon people do. I do not go out to dinner (and if I did, I would order the cheapest thing on the menu), I do not have an airboat! etc. It just really sucks for the people who play by the rules–who live within their means even when it is tempting not to.

I just find the whole thing (and I am not forgetting about the banks) discouraging and defeating.

Whether it is immigration or mortgages, I am caught surprised by the realization that it is actually liberals that favor anarchy even more than your average libertarian! Follow the rules that fit you. And follow the rules while you can. But if you can justify that your personally better off not following the rules than break them. And, even more ironically (catching you before you get on the ‘they break the rules’ high horse), you are throwing yourselves in a coalition with the worst elements of big business and Wall Street! Big business hires ‘undocumented workers’ for big fat profits. And Wall Street puts people in tough mortgage situations for big profits. And now we have a cat-and-mouse, anarchy coalition. Let each play their games and break whatever rules and see who gets the last laugh.

A very valuable post on many levels. Thanks for taking the time.

A classic example of why FDL is such an effective resource to us all.

what i like the best about this whole series of articles is the way the Times started with condemning walking away, then added the fact that “well, the banks do it too”, culminating in todays “the banks are crooks.”

I’ve been actively encouraging my underwater friends to walk away. Fuck it.

What rules are you talking about? The ever changing interest rate rules? Please see my comment at 43 and answer some of those questions. We have been striped of our economic viability and you want us to play by the rules?

karens, the NYT article highlights the exception and not the rule. The vast majority of people who are not paying their mortgages or credit cards are not going out to eat or buying luxury items. The oligarchy wants you to believe that, though, because they need to divide and conquer in order to keep us all in line and playing by their rules. You will feel less discouraged and defeated when you throw off those chains. And I don’t necessarily mean you should stop paying your bills. I just mean that you should stop thinking that “playing by the rules” gets you somewhere in America. It doesn’t, because the house will win every time.

Rules = Regulations, and thus far in the great debate it is only the left that seems to favor having them. So if you’re fuming on the right I guess you’ve had an epiphany and now favor regulating businesses? If so perhaps we’ve made some progress afterall.

Exactly. The government/corporations are like the mafia. It is a protection racket and ponsi scheme rolled into one. We are the suckers.

All this talk of “rules” reminds me of Lakoff’s “strict father” conservative framing devices. It’s kind of shocking to hear this kind of talk at FDL. The rules were put in place by the conservatives and we liberals are all too happy to follow them. Enough!

It could go either way: a dark age of facsism or a humanistic awakening, and I’m hoping for the latter.

Or, w may have to have the 1st, before we get the 2nd.

oh bullshit.
banks and companies walk away from their properties ALL THE TIME: I drive past a dead mall in NJ every weekend on my way to visit friends.

if it’s OK for the banks, it’s OK for everyone else. The banks knew they were taking huge risks by selling people on more house than they could afford, and they lost the bet. Too fuckin’ bad.

The Speaker of the House embraces “the word” of God and Jesus Christ
http://cnsnews.com/news/article/66208

Nancy needs to go back on her meds.

Too horrible to contemplate. The last time it meant 50+ million mangled corpses. But of course you may be on the right track. Horrible.

Yes, it has become a free-for all with everyone trying to thrive or survive to the best of their abilities. But look at who started this anarchy. It is the oligarchy that set the tone and started the slaughter. They sent the message that playing by the rules was for suckers and Americans are finally, understandably, taking that message and running with it.

I wonder how long it will be before we have debtors prisons?

From the article:

After Pope Benedict XVI met privately with Speaker Pelosi in February 2009, the Vatican issued a statement saying:”The raping of children in God’s house is a matter for the Church to decide and any further inquiries will have to be directed through our lawyers. And that’s the WORD, motherfuckers!”

(OK, I made up the quote. The real one was scolding Pelosi about abortion)

I wonder how long it will be before we have debtors prisons?

If people can’t pay their individual mandate penalty we may see them in the near future.

…where, ironically, there is likely to be government-provided healthcare.

Yes, and all at a cost of $120,000 per year!

Yeah. Didn’t say it would be fun. Just that it might happen.

On the other hand, perhaps we are all closer to change than we know. A commenter above said that there was nothing ‘heroic’ in all this foreclosure and bankruptcy business. Well maybe these are small acts of heroism in that they are making a statement and inducing cuts on an increasing scale. If there is one thing the HCR fiasco taught us, it is that the oligarchical behemoth can withstand any full frontal assault. Even big broadsides. Where it may be vulnerable is from millions of small bites and cuts – to the feet, to the knees, to the eyes and in the ears. I was intrigued by Dr Stone’s diary of the Wellpoint shareholder’s meeting. He is slinging stones at Goliath from his vantage point. Maybe there are some in the Gulf states that are having their eyes pried open. Perhaps they will begin to see that it is corporate domination that is killing us – and our planet – and will take action in their small way. Maybe there is a young leader brewing out there amid the pain and frustration.
Sometimes the tide of battle can change when you least expect it. And sometimes victory does not go to the strong or the swift, but to the persistent.

I hope you’re right. I hope people in America are paying attention to what happens in the rest of the world when the people are oppressed . . . general strikes, protests, extended periods of civil disobedience. Americans may still think they have something to left to lose, but they really don’t. We are all one paycheck or illness away from the streets.

None taken.

Don’t count on it. I heard the mayor from Thibodaux (maybe) say she thought that an occasional spill is acceptable and that their economy cannot take the loss of the jobs.

That’s the thing. People are waking up, and finding that they have nowhere to run within establishment circles. Neither the NYT nor FOX offers them an answer. Obama, Tea Bags, Repub. — all in the pockets of big business.

I understand this position. I believe in playing by the rules. I also believe that we shouldn’t borrow money except for capital goods, things that will last longer than the time we have to pay for them, like cars and houses.

I spent 25 years doing bankruptcy law, representing a Chapter 7 Trustee, and a lot of individual and corporate debtors. I never met anyone who set out to put themselves in a position where they would be bankrupt. Never. Not one among thousands.

Failure is a miserable outcome, and people were miserable about it.

I always told people that they had to put themselves first, because they couldn’t meet their obligations to their families, their churches and communities and their work if they weren’t sleeping, if they were wretched, abused by collectors and getting sued, and sucking the money out of their retirements to survive. I hope they got relief by filing, and returned to being productive citizens.

That misery is something you will never know. I hope you continue. People who don’t borrow don’t pay interest and don’t worry. That kind of security is priceless.

It may be closer than you think. On the other hand, it just forces people to file Chapter 7.

Holy crap.

The bankruptcy trustee in my creditors’ hearing last week apologized for being a little punchy; he had 100 people to see just that day. And I didn’t notice anybody in the waiting room having any fun or getting in a fancy car on their way out. It was pretty bleak.

There’s one thing no one has touched on yet–at least in my area, a high proportion of companies check your credit rating when you apply for a job, and it can have an impact on whether you get that job or not. Car insurance is also harder to obtain with a poor credit rating. Walking away from your bills is not without its impact on the life of the person who defaults. That being said, we all have to live our own lives as we see fit.

I doubt it. Obama said he is fine if he’s a one term president. Sounds like Bush’s who the fuck cares moment when asked about how history will judge his Iraq war: (shrugging) ‘History, we don’t know. We’ll all be dead.’

You’re right, there are some serious repercussions. I switched my car insurance to California (stayed with the same company) and it only went up a little bit; I suspect that since I have been their customer for 10 or 15 years they did not run a credit check. I’m self-employed and have worked for the same people forever too, so at least for now, I don’t have to worry about that aspect either.

Before long, nobody will be able to qualify for anything based on their credit scores, and that part of this fucked up system will have to recalibrate as well.