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Stumblethe economy:
Walking away from a mortgage comes with risks
Walking away from a mortgage you can afford won’t be the end of the story
Friday, Sept. 3, 2010 | 2 a.m.
Steve Bottfeld
Dennis Smith
Sun Coverage
Sun archives
- Analysts disagree on falling house prices (8-6-2010)
- From building boom to recessionary bust, local real estate market was a wild ride that went south (6-11-2010)
- Tax credit’s effect peters out, pointing to a lull in housing sales (5-13-2010)
- Bank foreclosures, delinquent mortgages continue to rise (5-12-2010)
- Tax credit’s end fails to help Las Vegas home sales (5-10-2010)
- Housing market awaits impact of tax credit’s expiration (5-7-2010)
- Las Vegas has more than its share of troubled properties (5-7-2010)
- Las Vegas posts nation’s highest metropolitan foreclosure rate (4-28-2010)
- Report: Decline in Las Vegas home prices slows (4-27-2010)
The news is bad enough that three homeowners out of four in the Las Vegas Valley owe more on their houses than they’re worth.
And there’s no comfort in the prediction that the local real estate market won’t recover for years.
For those two reasons, hushed discussions can be heard around the office water cooler, between spouses over dinner and at offices of lawyers and financial planners:
We can afford the mortgage payments, but the home value is far below the outstanding mortgage balance. So should we walk away from our home and stop pouring good money after bad? Just cry uncle and let the bank have it? Stop paying the mortgage, pay a lot less rent for a home just as nice, take the credit hit, start over and move beyond the American dream-turned-nightmare?
Real estate experts say they expect to see more so-called strategic foreclosures in coming months.
But it comes at a risk.
Lenders holding the first mortgage have up to six months from the foreclosure to track you down and take you to court for running away from your mortgage. Holders of second mortgages have up to six years to pursue the defaulting homeowner.
Many underwater homeowners think there is a safe alternative in pursuing short sales, in which banks agree to allow the home to be sold at a price less than what is owed on the mortgage. But there is a huge asterisk: Unless the lender agrees in the sales contract to not go after the bailing homeowner for the unpaid principal, it has up to six years to try to recoup its loss from the beleaguered seller. The lender might not want to hold on to the mortgage for that long — and choose to sell it at a discounted price to a collection agency, which can come knocking years later.
Foreclosures outnumber short sales, and most foreclosed homeowners had little choice because of changes in their economic condition, including, most obviously, a loss of job or reduced hours.
But many homeowners are still working and fully able to pay their mortgage — but don’t see the economic sense in doing so.
Seventeen to 25 percent of Las Vegas’ underwater homeowners have considered, or would consider, walking away from their homes as a strategic financial decision even though they can afford to pay their mortgages, according to two studies — one by the University of Chicago and the other by the University of Arizona.
The potential for an increased number of strategic foreclosures is obvious in the numbers:
CoreLogic, a business information and analysis firm, reported that 21 percent of Las Vegas mortgage loans in June were 90 days or more delinquent, up from 13 percent in January 2009, setting up the possibility that foreclosures will increase and with that, the number of strategic defaults.
The Federal Reserve says strategic defaults are typically triggered when the amount owed on a home exceeds its value by 62 percent — suggesting that Nevada is at greater risk than most states at such defaults.
Rick Sharga, an executive vice president with RealtyTrac, a California firm that tracks foreclosures nationwide, said conditions are especially ripe in the Las Vegas marketplace for a higher-than-average number of people choosing strategic defaults, given the significant loss of real estate value over the past two years.
In Las Vegas, which leads the nation in foreclosures, housing has lost 60 percent of its value since the market peaked in 2006.
“The real question about Vegas is how much damage is left to be done,” Sharga said. “You have been No. 1 in the country for two years, and if there aren’t that many homes left to be foreclosed on, maybe people walking away won’t be so bad.”
Tisha Black Chernine, a Las Vegas real estate attorney with Black & LoBello, said she expects strategic defaults to be the third wave of the foreclosure crisis that started in 2007 when homeowners with adjustable-rate mortgages saw monthly payments rise to the point they could no longer afford them. The second wave came when people lost jobs or income, making it difficult to afford their homes.
Strategic defaults may be minimized if banks show more willingness to reduce homeowners’ principals by a substantial amount or approve short sales.
But unless lenders are willing to negotiate with underwater homeowners, the sellers continue to face risks.
“People should be a lot more concerned about that than they are,” Black Chernine said. Under a change in state law, lenders of homes bought since October can’t come after homeowners, she said.
Nevada law, before its change in 2009, allowed lenders holding the first mortgage to come after homeowners who bought homes before October for the balance due on their loan up to six months after the home is foreclosed upon, Black Chernine said. Many of the large banks haven’t come after borrowers because of the volume of foreclosures, but the smaller community banks have done so, she said.
This sign in the northwest Las Vegas Valley is one indication Nevada's foreclosure rate leads the nation. A UNLV economist says the Las Vegas economy could be weak through 2010.
Homeowners with second mortgages face greater risks: State law allows those lenders to seek payment for the deficiency for up to six years because, unlike the first lender, they don’t have possession of the property to recoup some of their losses, Black Chernine said. She envisions a scenario in which lenders holding those second mortgages sell them to collection companies, which may seek to collect in the future.
“There is a lot of residual value in those loans,” Black Chernine said. “I don’t think people could realize what can happen to them.”
Most strategic defaults are occurring on million-dollar properties that have fallen in value by a third or more, said Steve Bottfeld, executive vice president of Marketing Solutions and an analyst of the Las Vegas housing market.
“Strategic defaults are for people who have money and not people who are broke,” he said.
Homeowners who allow homes to go to foreclosure take a hit on their credit report for up to seven years, but many experts said that with so many facing the problem across the country, banks will be more lenient and could extend credit in two to four years so they don’t lose so much potential business, especially if customers make a down payment. Otherwise, becoming creditworthy could take up to five years.
Underwater homeowners typically try in earnest to work something out with their lenders — and walk away only after their lenders have refused to offer them a meaningful loan modification, said Brent White, a law professor at the University of Arizona.
“This is often necessary because most lenders simply won’t talk to underwater homeowners about a loan modification as long as they are current on their payments,” White said. “Of course, for strategic default to work as a negotiating strategy, you have to be willing to take the credit hit and to ultimately walk away if necessary. Most underwater homeowners are shamed and scared by their lenders, the government and the media into never taking this step.”
Lenders could limit the tide of strategic foreclosures by reducing mortgage payments to amounts more in line with the cost of rent for a similar home, White said.
White disagrees with those who argue that homeowners have signed contracts and would be morally wrong to walk away from a home that they can still afford to pay on.
White said homeowners — whether wealthy or middle class — should act in their best interest, just as banks act in their self-interest. The world will not end, nor will the economy collapse, if more homeowners strategically default.
To the contrary, homeowners freed from their negative equity might begin to spend again, helping to spur the economy toward recovery. And once the housing market hits bottom, homes can start to appreciate again, White said.
“Some economists say that putting the burden of the housing collapse on the backs of homeowners is economically inefficient, and that it would be beneficial for the economy and the housing market if more people defaulted,” White said.
Dennis Smith, president of Las Vegas-based Home Builders Research, said he would consider a strategic foreclosure, given the steep drop in values and unwillingness of banks to sufficiently modify loans, especially because the stigma attached to foreclosures is lessening.
“People have to do what is in their best interest and welfare,” Smith said. “I can’t say it is wrong. Would I do it if it involved my family? Heck yes, I would do it. You have to do what is best for you and your family. This is only a five- or seven-year hit on your credit.”
Discussion: 8 comments so far…
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What the article fails to discuss is the possibility to write off (strip off) a second mortgage in chapter 13 bankruptcy if the property value has fallen below what is owed on the first mortgage. Property owners can arrive at a reasonable estimate of their property through their lender's house valuation calculator, or a web service such as www.zillow.com.
If they think the current value is below what is owed on the first mortgage, they should contact an attorney.
This is not an offer of legal advice, but advice to seek out a legal offer.
Lastly, to hell with the stigma the banking industry marketing is pushing on homeowners, the taxpayers already saved the banks for making bad mortgage loans when they gave the banks billions in bailouts. Homeowners shouldn't let shame compel them to save the banks again. Unlike the way many taxpayers vote, they should make their financial decisions in their own best interest.
Atleast there in no snow & sun shines 364 days of the year..Big FREAKIN DEAL...
I rather the security of a home & community. If its the east coast than so be it.
things are getting worse, this will last 20 years
Comment removed by moderator. same message as on other stories...
What percentage of Vegas homeowners have seconds or helocs?
Note they say strategic foreclosures are usually people the have money and more expensive homes, debunking the phony talking point for Hannity and some of the talk radio clowns that: "the CRA forced lenders to loan to people that couldn't afford their homes..."
A) Lenders wanted to make loans: low income, middle income, upper income. In fact, lower income buyers cared less about rates or fees, making lenders happy to extend loans to them because they made higher profits.
B) Only one of the largest 8 banks bailed out was subject to the CRA. Plus CRA had little to do with AIG, GM or Goldman Saks.
C) As this article implies, the bulk of problem loans are to middle to higher income people, not a "low income ghetto" loan to an immigrant, poor person, or minority.
The CRA crap is just a way the talk radio crowd could try to blame poor people for the misdeeds of corporations.
The days of high inflation in home values are probably over.
Why should the value of a home increase anyway. The structure is deteriorating, labor costs are stable along with the price of most building materials. The land might be appreciating depending on scarcity.
I wonder if Boulder City, with its growth cap, is doing better in so far as home price stability and foreclosures?
@mred: Is the right wing still blathering about the CRA and black people? What a bunch of racists. It was shown over a year ago it had nothing to do with the housing meltdown in several papers from economic experts. The biggest reason is the one you don't directly list:
Most of the huge loan-to-income ratio loans were written by mortgage *brokers* who aren't a bank and therefore aren't subject to CRA. I went to a bank and mortgage originator in 2004 for pre-approval. I brought along employment and income verification letters. I got approved for about $350K from each. I went to two mortgage brokers and both of them approved me for loans above $550,000! With the same documentation as I had went to the bank with! When I told one guy that I was looking to stay around $350,000 he looked at me funny, like *I* was the crazy one in that room.
Who do you think helped people get in over their head?
As an employer, I do background checks on all potential employees. If I discover a strategic default during the background, I simply don't hire the person. My company is too important to place it's future success in the hands of an individual who does not accept responsibility and repay back their obligations. Their word is worth nothing to me.
I now have 200% financing...
When someone does a strategic default, it hurts the property values of all the homes surrounding that property, as the re-sale of the defaulted property will normally be far less than if the property had not gone into foreclosure. Strategic defaults just don't penalize the banks. They penalize the responsible homeowners that pay their bills and lengthens the period of time it will take before the market stabilizes.
The period of time that a foreclosure stays on a credit report should be extended to 15 years. Otherwise, we'll be repeating the same crazy cycle in another decade or so.
@Blake
That is one of the pitfalls that people don't consider...how can this affect me later on..strategic default, strategic default. There are so many other things to consider before defaulting on a loan you can afford to pay. Plus, just the stigma of having a default attached to your name.
Vegas really took a beating and you have to feel for the ones that bought at the peak....but..
I would love to know how many of these underwater people took home equity lines of credit to fund a lifestyle of new cars, vacations, plastic surgery, tattoos and just about anything else they could buy. The sympathy for them is much less. If you took equity to pay for medical issues, take care of a sick relative or some other emergency spending I can understand. Not for frivolous spending.
As a title insurance professional and VP in the escrow business here, I do have to really lay the blame of this on the wholesale lenders, the reps were out selling programs that paid the brokers and bankers to just bring in bodies, they did not care and did not want to know if what the LO had them write on the paper was true because they were going to own the loan for 60 to 90 days and then it was someone else's problem.
As for a strategic default, I am all for it, big businesses do it they walk on bad deals all the time with almost no consequences why should a person not do the same ?
Credit reports, ha what a joke, I know a couple of guys that for a fee can really remove anything in about 60 days and make sure it never comes back (Please don't message me to ask for their number I won't give it to you).
RE grew to fast and without oversight, this is what you get when governments let businesses run like a "Girls Gone Wild" video, and now we suffer with th rebound effect so far the other way that someone with a non traditional income stream can't even get a loan.
Folks If you are way down WALK WALK WALK if the grab you after the fact for a shortfall on the loan, Chapter 7 credit is over rated.
funny story ; the poor people have to deal with that pesky morality. I suppose it's a given that the rich are more or less thieves. I'm not underwater but I'm out of work and running out of money. We should be able to write down our loans like the TARP recipients.
Credit may be over rated to some but personal responsibility for your own actions should not be over looked.
When you walk away you are not only hurting you but others in your area and those that have to pick up the tab for your lack of living up to your own obligations.
Why am I not surprised that a VP in the escrow business would make these type of statements. Proves he is part of the problem and not part of the solution.
1. Settle with your second mortgage holder for about 5-10% maybe 20% of the amount and get them to send you a letter saying they won't come after you in the next 6 years. (you have to raise some cash for this, may not work for everyone)
2. As for the first mortgage: do as Mr. Smith said in the article: do what is best for you and your family wink-wink-nudge-nudge...
I second Blake.
The country is ass backwards on housing almost everywhere, just more apparent here in Vegas. Who cares, if you plan on keeping your house for 5-10 years, it will go back up, maybe not to the levels you bought it at, but to some level.
Media and gullible people are so fear-mongering in America.
Look. You have to do what is in your best interest. THe contract between a buyer and the bank is--the bank lends the buyer money to live in the home. if owner then doesn't pay the mortgage, the buyer can not live in the home. It's worked in the favor of the banks all this time. for ex., a homeowner who has paid for 20 years on his home falls on hard times, misses the mortgage, and the bank forecloses, there was no leniency, and the homeowner lost all the money he's put in for the past 20 years and then bank got a nice home that's gone up in value. Well, it's the same contract today, only now the bank is on the short end of the deal. THe contract is, you don't pay the mortgage you don't get to live in the house. And that is what's happening, owners aren't paying and have to move and the bank gets the house back.
There is plenty of individual blame to go around, but the banks took HUGE risks and now have to suffer the consequences.
It's a little too late to say short selling or foreclosing hurts your neighbors (especially for those of you who took out additional loans to have fancy landscaping and nice pools, etc. while the value of your home was tanking). There isn't another option. If you bought your home within the last 10 years, more than likely, it's not a matter of IF you shortsale or foreclose, but WHEN. Unless you plan on living in your home for 20-30 years, you will be underwater when you go to sale. At that point it's probably selling the home at what you paid for it, and you've just paid 20 years of interest and lost of hundreds of thousands of dollars. In business, you make an investment and it goes bad and you know it's just going to get worse, then you get out of it. You cut your losses (in this case, down payment, work on the home, window coverings, etc) and move on.
If you are underwater, do what you need to do to make you and your family whole. Do it now, before continuing to lose a lot of money, cause it's not a matter of IF, it's just a matter of WHEN.
why not purchase items from the federal goverment that got them the money - major car companys that got bailed out? Guess they dont care about us folks. When a person goes into forclosure - bankrupt - these people have no debt.. but it does take 7 yrs to get if off. Alot of homes have leins on them - u figure if you dont pay your house you probably wont pay your credit cards.
How long would one be in jeopardy if they've done a refi as compared to original loan? Also would doing a bk prevent them from coming after you? Thanks.
I would agree that many don't realize the implications of their actions (it's all about me). If their actions destroy the neighborhood, hurt values further, who pays the HOA fees?, etc.
A little more personal responsibility would go a long way.
"Look. You have to do what is in your best interest."
Ya know. I guess that point can be made. The problem I have is what brought that person to that point? Over leveraging yourself? Taking out massive home equity lines to fund a lifestyle too rich for you. It's not so cut and dry "do what's in your best interest"....because YOU didn't do what's in your best interest to get to this point? There are a lot of "strategic defaults" going on out there where people employed ZERO "strategic planning" for the future. So just saying "do what's in your best interest" is problematic because a lot of these people have no clue "what is in their best interest" that got them to this point.
TomD.
I agree with your point that way too many people, especially here it seems, don't plan for the future and don't make wise decisions. And for those people, they'll probably just end right back up in a bad situation.
I guess my comments were more directed at people who did everything right...bought a home they could afford, got a fixed, 30 yr loan, had a good down payment, made every mortgage, and then the world crashed because of really bad decisions by individuals and banks, and now the home is worth 40% of the purchase price. There is just no recovering from that.
For that type of situation, your best interest isn't to keep throwing good money down the drain. Personal and corporate responsiblity would have prevented this disaster of a situation. Unfortunately, now it is what it is and each of us has to decide what is best. I wish everyone a lot of luck making it through a very difficult few years to come. Maybe there will be a silver lining and young people today will learn important lessons while watching this situation play out.
@THS65
I understand your point. I agree there were many that got burned thru no fault of their own. For those I understand the logic of a strategic default. I would only hope they evaluate that decision VERY wisely..
My issue is mainly with those that over extended themselves, bought too big, financed way too much, took out lines of credit on equity and spent like a drunk sailor. There are FAR too many of those people out there who can't manage a checkbook...yet somehow now know everything about strategic defaults, short sales, eviction timelines, etc..
Interesting article, which could also explain why banks aren't foreclosing on everyone out there. I know of some people that haven't paid their mortgage in 18 months. This could be because once the banks foreclose they only have 6 months to come after the borrower and they don't have the resources to do that in that time frame. So they let people stay in the house until such time they can come after them. The bottom line is no one cares more about you, than you. It's been that way since man could stand upright.
How about a law (that Sunsets) that says foreclosures can't be put on your credit report ?
Siromega, good points. The talk radio talking point is: "the banks loaned money to people who couldn't afford it..blah blah.." As you point out "people who couldn't afford it" are code words for minorities, working people, immigrants etc.
Does someone force payday loan stores and pawn shops to locate in working class areas?
There was was an article in a Mortgage Broker Publication back in the 90's titled: "Harvesting the Bounty of Low Income Home Loans"
They wanted to be there because the money was there and the middle and upper income borrowers already got loans and refinance loans.
Corporations do what's in their best interest and strategically default when it makes business sense. They walk away from obligations and assets all the time when the numbers work to their advantage. Why should an individual be any different? Because corporations and the media have convinced individuals that it's morally wrong to not meet their obligations? So changing retirement benefits on retirees when a company "can't afford it" because it would prevent them from living up to the earnings expectations of Wall Street isn't the same as not meeting their obligations?
Was it ok for the Fertittas and Station Casinos to walk away from those millions of dollars in obligations? But the casinos create jobs, you say. Well, so does every consumer when they make a purchase. Those purchases create demand that a company then satisfies by hiring someone to make the item or provide the service the consumer is buying. Demand creates jobs, not tax breaks. You can give a business a total tax break and not tax them at all but if no one is buying their goods or services, no one has a job.
Banks and mortgage companies assess risk when determining how much and at what interest rates to loan funds. Seems to me they made some bad decisions and it's time to pay the piper.
Obama dn Bush fixed Wall street. Now they need to fix Main street. We're neck deep in this mess. We've got 3 houses here that are all underwater. So far we're current and their rented. But this situation isn't going to change for a lonnnnnnnnnng time.
the sun just had an article about mountains edge building 238 NEW homes and this comes up about people being irresponsible about honoring their contracts regarding home purchases. WTF?
"The econ was taken down with this, the beggar classers getting into houses they SHOULD NEVER HAVE BEEN IN."
I ask which side of these transactions were educated and trained in providing/obtaining loans? Which side hade the complete power to approve or deny the loan based on their years of training and education? Which side was more greedy?
Are you telling me that the beggars and CRA officers held a gun to the heads of bankers to make these loans? Hogwash. The bankers took the risk and they lost. The housing collapse was directly caused by greedy financial institutions that threw their play-book and training out the window.
Next your going to tell me that it was the poor that caused the egg-recall because they bought the tainted eggs.
Funny thing is if you had a home with a mortgage and lots of equity and fell behind, the bank will take your house and your equity. The banks don't mind doing that, is just business.
Now a person is upside down and doesn't pay, the bank looses, that's a business decision on the homeowners end. Now people want to label that individual a deadbeat, but if it's the banks doing, it's no big deal.
Here's what I say to the banks
it's no fun when the rabbit has the gun!!!!
A rich person stratigically walks away from a house, it's stratigic, a poorer person does it, he's a deadbeat.
I'm a conservitive, and it takes two to tango. Yes, the banks didn't put a gun to peoples head to buy, and no one put a gun to the lenders head to write the loan.
If I bought a prized bull for $10,000.00 and Lighting struck it and killed it........would I Open it's mouth and keep putting feed down it???
gbigs I knew I could count on you to make a fool of yourself here,again. It is refreshing to know only left wingers go to foreclosure.
I noticed you speak of the old days when "people stood by thier loan no matter what" and your ridiculous rant about the Democtats abusing the 'fed'.
Do you suppose the banking industry had any resonsibility in making these loans they knew the borrower could not pay back? I doubt you can think that far ahead.
Now you need to google 'Neil Bush and Siverado Savings and Loan' and you will learn how Reagan and Bush single handed did away with the savings and loan system of the eighties along with the biggest robbery in history, along with some interesting facts you right wing nut jobs want to forget, especially old fools like you.
All of this preceeds deregulation of the banking system which was started by Phil Gramm (foreclosure Phil) and Richard Lugar.
I have said it before and I will say it again you are one stupid,illinformed,loud mouthed nit wit.Please google the information above and educate yourself. It is not a left wing,Democrat site. It is just the facts with references.
Thanks George Bush for ruining the greatest economy in the world.It is amusing how you were on television promising Americans the economy was in great shape just three weeks before it went to hell.
Well, I am reading these comments and I really wanted to share something from personal knowledge. Not about the "strategic foreclosure" because our house is paid off. Along the lines of bankruptcy and credit rating.. I have personal experience in THAT..
We had 17 creditors, all doctors and hospitals, with a dollar amount owed of over $70,000. Each of those offices wanted a minimum of 10% payment per month and were hounding us and threatening collections when we could not pay the over $7000 per month! Yep, that's right.. if we paid each of them 10% it would have been that much a month! So, with heavy hearts, we decided to file a Chapter 13 bankruptcy. Now, that means that we agreed to pay 100% of the debt, just to the trustee of the court, no chance of going to collection, and giving us 72 months to do it. We could more easily afford the $1200 per month then the other option. We finally paid off the court, $91,800 in total in 2002 after 72 payments, always on time and with a cashier's check. FINALLY!! Well, here it is almost 9 years later and (gasp) our credit still STINKS!!!
We tried to buy a car on credit in 2007...NOPE
We saved and paid cash instead.
We tried to buy a motorcycle in 2009...NOPE
We saved and paid cash instead.
We tried to buy a truck in 2010...NOPE
We are saving to pay cash instead.
We thought about buying a $750,000 home in 2008 and... YEP we got approved for $600,000!!! We decided against the purchase because of the way things were going in Las Vegas! (That same house sold for $384,000 in April of 2010)
Our bank has approved us for 2 Visa cards, which we keep way under 1/3 owed on them. Use them rarely and pay them off within 90 days max. This is how we learned that we could build our credit rating, or we probably would not even have these 2 cards.
Still, our credit rating is only GOOD. So, all the people who say it doesn't HURT your credit..it lasts ALOT longer than 5 to 7 years, and it is pure hell to get over it if you want a decent credit rating. Employers check your credit these days, who can afford NOT to care about their credit score?
I have an idea I have been trying to put forth to revise the current Real Estate "COMP" method (as taught in Real Estate Schools), and used by Realtors, when determining a valid SELLING PRICE to list a home.
My idea would be to ELIMINATE the use of FORECLOSED HOMES as "COMPS" (comparable homes) in the Competitive Market Analysis (CMA), process. This is necessary because the value and features of a foreclosed home is not equitable as a COMP - nor is it what is taught to Realtors - and the(former) value of a other occupied or listed homes is not properly reflected.
The prescribed Real Estate criteria for preparing a CMA, and establishing a SELLING PRICE for a listing, is to use:
1. Comparable homes CURRENTLY on the market
2. Comparable homes who listings EXPIRED (unsold)
3. Comparable homes that were SOLD (show listing and SALE prices)
(Source: any Real Estate Handbook.)
FORECLOSED HOMES have NOT BEEN SOLD, and meet NONE of this criteria.
I propose that Real Estate rules be changed to EXCLUDE FORECLOSED HOMES from a CMA, so a more accurate valuation of occupied and listed (comparable) homes will be used to meet the CMA criteria - and foreclosed homes will not be allowed to drag down the value (and equity) of the other homes in a neighborhood. This will also have the effect of MAINTAINING THE VALUE of (currently occupied or listed) homes.
I have been told that we cannot ignore foreclosed homes in the CMA process. Well, the CMA process does NOT REQUIRE that we use foreclosed homes in the valuation process. In addition, eliminating foreclosed homes from a CMA would also allow occupied or listed homes to RISE IN VALUE according to "normal" market demands.
Further, BANKS and other lenders holding mortgages could sell foreclosed homes to INVESTORS (at an under-market price), or other buyers. As for investors, after fixing up the homes for re-sale, they would make a nice PROFIT - because the VALUE of the newly purchased (foreclosed) home would eventually RISE, as market-demand increases.
BOTTOM-LINE: All homes would be able to be sold faster, people could change jobs and move easier, the housing market would RETAIN THE VALUE that it should, and mortgate holders (BANKS) would have a higher Return-On-Investment.
The economy would improve too. Sales would be more frequent, construction would be revived, partners in the building industry would have improved sales, etc.
FINAL COMMENT: we have bailed out banks, changed laws to do so, and regulated Wall Street (whose special "products" became culpable in our economic meltdown) - so WHY NOT change a real estate rule to benefit the people who own homes?
IF THERE ARE ANY TAKERS ON THIS IDEA - REAL ESTATE BROKERS, BANKERS, OR OTHERWISE - please offer this idea to your state Real Estate Office, or Association of Realtors, that have the power to enact or influence such an idea.
Lets get out of this malaise and move America forward!
I tend to agree. I think these defaults can stay with you for a lifetime. In the Internet based world, anyone can find out your life history.
There is just too much rationalization from people defaulting.
"it's the banks fault"
"I didn't know what I was signing"
And on and on
I guess in their mind blaming someone else for their problem takes the emotional/moral issue off of them and puts it on someone else.
Anyone who walks on a home loan, for any reason, should not be allowed to buy another house until theit past loan is PAID OFF!
While my neighbors laughed in my face 5 years ago as they bought newer, bigger places in higher priced areas, we stayed in our little, affordable house in the old neighborhood and kept our older vehicles longer. Even after losing my job, we have managed to keep up on the payments. Yes, we are a little upside down right now, due to substantial declines in value, but with each payment, we are $400 (principle) closer to paying it off. Many of those who moved up have since walked out.
I am sick of hearing all of those who got in over their heads crying the blues because they made a bad decidion. We didn't "move up" because we didn't want the additional debt. It's called personal responsibility, something lacking in more and more people (on both sides of the political aisle).
Nobody is offering ANY relief to those of us who are RESPONSIBLE and pay our bills. When I took a 401k withdrawl (after a layoff) in order to pay my bills, I didn't get any tax break on the 10% early withdrawl penalty because I LOST MY JOB. We just paid it and went on. I think if they are handing out principle reductions to those who were irresponsible and borrowed more than they could afford, they should also reward those of us in the low to medium salary range who pay our obligations on time, no matter how hard it is. Instead, we get letters from credit card companies saying "we're raising your rate because too many others are not paying". We will pay our bills the right way, and hold our heads higher than the deadbeats who ran from their obligations (houses, car loans, credit cards, etc. Yes I said "deadbeats". I may have some sympathy if it is a medical bill or if you were clearly ripped off, but merely taking too big of a loan is not being "ripped off".
You could all learn from maukflauk's story (right above this post), they did the honorable thing, paid it all off, and are still paying the price for it. I respect them a lot.
By Bakersfield and By maukflauk -
You two sound like responsible people. I would hope that many other American home owners would be of like mind, and action.
However, we know that this is not reality - especially with the number-crunchers suggesting that, due to economic situations of individual homeowners around the country, 1.6 million more foreclosures are (potentially) on the chopping block.
It is in the interest of saving the value of our homes that are NOT in danger of foreclosure - and promoting the healing of our financial losses in homeownership equity - that I wrote the piece (find it, slightly above) as an idea to GET OUT OF FORECLOSURE DAMNATION.
Thanks for your comments. Good food for thought.
Inkwell,
While your idea sounds good, simply put, If a house is on the market for say, $250k, and a foreclosure across the street is listed at $120k, nobody in his right mind is even going to consider the higher priced house unless the foreclosure is totally trashed (and then, who would pay full price if an eyesore is right outside the front door). Therefore, the price on the more expensive house will need to be dropped, maybe not all the way to $120k, but dropped, in order to get any buyer's interest. Every house on the market needs to be considered in setting prices. Unfortunately, it's the whole market, not 2 different markets. A buyer will pay more for a non-foreclosure, but it still has to be reasonably comparable in price, taking the cost of fix-up into consideration.
housing has lost 60 percent of its value since the market peaked in 2006.
It would be correct to say it has lost 60% of it's inflated value not true value.
@Bakersfield We did the same thing. Actually looked at houses in the "nicer" and "newer" neighborhoods. When we drive by those places now, they are like ghost towns with hardly any inhabitants. Thank God for my little house, in an older neighborhood, full of middle aged people just getting by!
I think that if you lose your job and have to use your 401K to live, (and can prove it was not spent of frivolity)the government should cut some slack on the tax penalty. Will they? Oh hell no!!! And it would probably take an act of Congress before you could "prove" you NEEDED that money to live!
All I can say, I hope things are looking up for EVERYONE soon.
By Bakersfield -
I understand your rationale as to how a foreclosure could be viewed as a cheaper, and better buy, than the same house across the street - which is asking, maybe, $100 grand more.
However, my idea is not set in stone, and needs to be hashed out by people more knowledgeable than me who know about such matters. I was a real estate agen for three years, but that does not make me an expert in this area. But I do plan to continue to present this idea, however it comes out, to get some ACTION to try and help homeowners buy and sell - without having to take a proverbial "bath."
Perhaps I am a bit naive in thinking that people that have held onto their homes - and not walked away - deserve some "credit" for having done so.
I appreciate your thoughts on the subject, and will work to come up with something viable - so I can at least find someone in a position to do something, who will listen to this idea; and perhaps come up with their own variation.
Thank you for your insight. After reading your comment, I would change my proposal to ALLOW THE DIFFERENCE IN THE VALUE, OR SALES PRICE, BETWEEN THE TWO HOMES (foreclosed and occupied) to be viewed as a COST OF DOING BUSINESS - and therefore, made eligible (like interest, or a "business-startup" cost) to be taken as a TAX DEDUCTION WRITE-OFF - all, or a designated percentage of the diffedence over a period of, say, 3 years.
I guess that would be tantamount to a BAILOUT for homeowners - but would be in the interest of enabling sales in the real estate market - and improving the US economy. THAT, I believe, would seem to make it legitimate. All we need is for the IRS to go along with it. And as opposed to the Congress' proclivity for handing out money - this would not be a handout, but a hand-up, and would not cost anyone any money; instead, I believe it would, in the long run, make money through sales, which would support the economy and the government's need for increased tax revenues.
This idea could be seen as SIMILAR in nature, to the Green Energy REBATES being offered by the state and federal governments - which range from a tax deduction for converting our homes - to the cost relief that CityCenter is getting as a Green project. Of course, the money involved as a result of a real estate sale would, no doubt, be much higher.
I have not had time to think this revision out yet, but I believe it could be a win-win for everybody.
Just another thought... I don't give up easy.
Those under water homes will more and likely have deferred maintenance on them for the future on account of owners feeling like they are losing money so the upgrades will be few and far between,
In Alabama you can't use a recently purchased foreclosed home in the CMA because it doesn't symbolize market value.
If I were looking to buy in the near future in Las Vegas then I would look at POST 2010 CONSTRUCTION there is where you will go to find a reasonably priced home.
@ casinokid -
YOU SAID: "In Alabama you can't use a recently purchased foreclosed home in the CMA because it doesn't symbolize market value."
This sounds like Alabama has already initiated exactly what I am proposing in my prior post.
Can you give me a web site, or other reference, for more information on this Alabama CMA restriction, and how it came about?
Thanks.
i agree with Blake and sevenhills. i too enjoy sitting up here on my high-horse and judging the less fortunate. it's so easy to bash all the people struggling with money when we are so perfect, but god forbid we ever fall on hard times. maybe then we would change our judgmental and pretentious tune.
Blake I beg to differ with you. As an employer myself I would never refuse to employ a good person with a clean security backgroung check who happens to have poor credit. How do you know the reason they have bad credit? Good people who have had excellent credit scores lose them everyday due to illness, illness in their families, taking care of a relative, unemployment, etc. I also know of many people in upper management positions who have bad credit for these reasons. It is illegal in many states now to use a credit report to make hiring decisions and hopefully soon will be illegal in ALL states.
cracker is EXACTLY right.
WHAT THE UNDERLYING STORY IS, THOUGH, IS THAT *GOVERNMENT* DESPERATELY NEEDS TO GET OUT OF THE HOUSING BUSINESS....FOREVER.
Fannie Mae and Freddie Mac PURPOSEFULLY started the ball rolling by lowered their underwriting standards at the behest of the BILL CLINTON administration, then that real 'gem' of a guy ALAN GREENSPAN kept the ball rolling by PURPOSEFULLY keeping interest rates ridiculously low, and the private CREDIT RATING agencies kept the pedal to the metal by LYING about the credit-ratings of the CDO's (collateralized debt obligations) used to keep the cash-pile flowing in from drooling 'investors'.
All of them knew EXACTLY what they were doing and anyone who thinks otherwise is dilusional.
The real estate, loan, banking, construction and developer thugs at the bottom of this 'real estate loan ponzi scheme' were out to make a greedy million bucks off of any old 'moronic chump' they could get to sign up for this stinking housing garbage.
And when it is all said and done, all the LOSER BANKS AND INVESTMENT HOUSES ran crying like little girls who had their doll taken away to uncle sugar for a few hundred BILLION DOLLARS to make their little boo-boo go away.
UNCLE SUGAR then kissed the little-girl-BANKS-AND-INVESTMENT-HOUSES' boo-boo, WITH *YOUR* TAX MONEY, and made the boo-boo go away.
And you say you feel 'BAD' about no personal responsibility about WHAT???? No one else, who's salary your might be paying, ever did.
Keep writing those TAX CHECKS, baby............
Inkwell,
Believe me, I like your ideas in marketing "regular" sales as opposed to "distress" sales (foreclosures, REO's, short sales, etc.). In Bakersfield, Ca. the market is similar to the Las Vegas market. I have followed both (due to my job working for developers and builders) for the past 20 years. When I was working in Las Vegas in the 1990's, I was in a meeting where a developer was trying to come up with a slogan for a new development in NLV near Craig Road. After all of the usual "Building Your Dreams" and "Come home to (name of development)", one executive joked "How about we say Building tomorrow's slums today". We all had a good laugh, and then a typical "dream" slogan was chosen. All 300 houses were built and sold in the next 6 or 8 months (in the $100k range). I think, looking back, the "slum" comment was more applicable.
The best thing the price run up did in my neighborhood (In Bakersfield) was to cause some owners of rentals (section 8) to take a profit and sell to owner/occupants which really improved my area. No doubt the foreclosure situation may reverse that, but so far, so good.
Meanwhile, We'll just keep trying yo get by and make the best of it.
Ok hows this? I buy an affordable Townhouse in NLV in 2005 for 200K thinking it will be a good home for 4 to 5 years then I can sell and buy something better when my raises kick in.( I didnt want a profit when I sold just wanted equity). Of course didnt see bad times coming. Value goes up to 260K in 6 months then goes south. A few years later try to sell.....no luck. Units turn into HUD with ghetto people moving in. Crime goes up, car break ins occur Meth Pipe found in front of unit next to mine. Three low income Apartment units go up within 10 to 12 miles. Try to sell again....no go. I love my townhouse and is very afforable. Family on otherside of town gets sick....daily drives to Henderson rack up miles and stress....try to sell no deal. I think maybe I can rent and buy a new house. Get approved for 350K in Henderson.....credit score sitting at 770 plus. Still noone wants to rent a 1300 sq. foot town house for $1200 when one can buy a house much bigger for much less. Finally stress becomes too much. Buy house in Anthem for 260K very nice zero crime 'hood. Move out of Townhouse same day still try to rent no luck. Finally decide to let the townhouse go. Actually paying 400 bucks more a month for my new house (Which I love in this quiet 'hood. Why should I have to stay in a crappy neighborhood that is on the downside and even NLV cops say their calls for service has gone up in. Yes It maybe the wrong thing to do, but would the banks lend me a hand, hook a brother up...no. So thats my take on the subject. Yes my credit has gone down the tubes, but I am happy and secure and doing just fine. Oh and same unit just sold for 62K....thats the same price of the cars that some people reading this drive.
It's so easy to tell who listens to the political talk show propaganda shills. One has only to look at gbigs and now wizardofoz. If you go right to the heart of the problem, the mortgage brokers, banks, and subprime lenders, they will all say the same thing. Wall Street was begging them to make any kind of loan so they could buy and securitize them and sell to suckers around the globe. Even after loans started failing within months of signing Wall Street was still begging for more. According to the lenders Fannie and Freddie were late to the party and only lowered their standards late in the game.
In my many years on the planet I have studied much history. I don't know everything, far from it, but there are some areas I know a lot about. I have had occaisions to surf upon Glen Beck and been appalled by his distortion and outright lying about historic events. I also keep up on many of the current events and have been appalled by his distortion of those also. Then he connects the dots of his distortions so his faithful know all about myriad of conspiracies affoot out there. Bottom line is how much has this crackpot and others of his ilk, Republican and Democrat, distort history and events of things I am not familiar with. Yet we have so many who get their news and views from political commentators and believe it lock stock and barrel. How about Sarah Palin and the "death panels" that were going to end your life when you got too old.
I used to watch Rush Limbaugh years ago. I can honestly say he never lied to people on his own. He would quote liars and when the ballon went up his backside was covered. Rush is a savvy and smart man. He knew what he told you was a lie but since he was just quoting someone else he was more than willing to do it for his cause.
The-Socratic-Inkwell
I will try to find something to that effect I was merely repeating what I am taught in Real Estate class I am in the early stages of getting my Realtors lic.
You also can not use other asking priced homes you can only use a recently sold home purchase price.
I am in a realtor school and they showed us a youtube video that addresses the fannie mae and freddie mac deal you can search it at youtube "home ownership George bush" it explains a lot.
I think the banks have the power to turn around this housing crisis by offering one of three different solutions to homeowners:
1.) Allow homeowners to "Short-sell" their house to themselves. This is the same as short-selling to a stranger and most likely will result in more revenue than from a foreclosure.
2.) Allow homeowners to refinance their current mortgage with the current 30-year fixed rates of 4.48%. Most responsible homeowners who took out 30-year fixed rates at the height of the market are locked into 6-plus% rates. Those considering strategic defaults are smart enough to figure out that 1.5 percentage points equals a lot of money over 30 years in interest. Currently, one has to have 20% equity in the property. As someone who lost the $300,000 (which was 30% down on $1,000,000) I put on my property in 2005, I have no hope of refinancing my 6% fixed rate unless I win the lottery.
3.) Allow homeowners a one-time principal reduction to the current market-value of the home with a clause that ensures the bank will recoup the difference between the current mortgage and the reduced mortgage that is made in a subsequent sale (minus any commissions for the sale of the property). This allows homeowners to pay a mortgage on the current value right now, and the freedom to sell the property if needed. But allows the banks the ability to collect the most value from the property during a sale, something that won't happen if a homeowner just forecloses.
Many people like me are just waiting it out and may at some point in the next few years decide to default. We all want to honor our commitments, but we were not disclosed the bad lending practices of the banks at the time of signing loan docs. We relied on the appraisal we paid for prior to signing our loan docs. We assumed that all borrowers were vetted in the same manner with strict lending standards and the banks ensured the borrower could repay the loan. We were victims of fraud and our contracts should not be considered valid. That being said, I think most of us would like to have some reasonable options provided to us by the banks. Soon, those of us who have integrity and honor, will begin to realize that we are not ever going to be above water in our lifetime, and stand up for ourselves. Not to harm others, but to begin the healing process for our own individual financial situation. The banks could soften the inevitable blow or they can continue to ignore the potential strategic defaulters just waiting in the wings and make it worse for everyone in the long run.
I've been doing Chapter 13 bankruptcies for ten (10) ten years, both for my law firm and now where I work.
To heck with all the goody two shoes on here who decry people who choose to file a Chapter 13 bankruptcy and "strip" their 2nd mortgage. Or who are too good and blame people for filing a Chapter 7 bankruptcy and walking away from their house. my advice - DO IT, AND DO IT NOW !! Every single post on here that talks about the benefits of it is completely correct.
If you are "thinking" about doing a loan modification on your 1st mortgage, and you also have a 2nd mortgage, I would honestly say don't even bother with the hassle. Loan modifications CAN take a long time (although sometimes they can be quick - 1 to 2 months - at times also). Instead, if your house is worth (current value) LESS than the 1st mortgage (standing alone), you can very easily file a Chapter 13 bankruptcy and give yourself your OWN "loan modification" by essentially tell your 2nd mortgage company to get bent. Yes, it's really that easy.
Your attorney will set you up on a 5 year payment plan. You can speed up your payments on your "total sum" of money that you have to pay over 5 years, so it potentially could be less than 5 years. But usually, you will have to go at least 3 years to get the "strip the 2nd mortgage" benefit.
Most of your unsecured debt (credit cards, medical bills, and - lo and behold - your 2nd mortgage, once it is "stripped") will get cents on the dollar, if anything - so in that way, it functions almost identical to a Chapter 7 bankruptcy.
Yes, it will affect your credit. But keep in mind, Vegas is such a cash driven town. I don't believe the prior posts that talked about how they could not obtain financing 7 years after they got a discharge (a completion) of their Chapter 13 plan. That, in all likelihood, was probably because of their present income situation. Everyone knows that if you walk into a deal with 20-30% down, that speaks a lot right there. Even people with stellar credit have to do that now anyway, so keep that in mind.
Virtually everyone I've filed a Chapter 13 for, ESPECIALLY in the last few years, I would say has improved a lot psychologically - from my dealings with them. They are more happy, come somewhat out of their shell, and definitely see the light at the end of the tunnel. It's not a "quick fix," because of the 3-5 year requirements, but definitely provides short- and medium-term relief that will give you some much-needed oxygen and will give you time to live your life again.
To anyone who is hesitating about filing or still believes there is a major life long stigma with filing a bankruptcy (as some of these lender trolls on here would have you believe), take that anchor that is chained to your anchor and quickly throw it in the arms of all the naysayers on here. There the ones who really need it anyway.
My two cents.
Also, additional comments that I could not fit on the last post ::
The post here that discussed all this extra work about getting an appraisal...BS, don't need to, for most situations. I would recommend simply going on to the Clark County Assessor web site (on your own) and looking for recent sales on your street (or within a few streets or your area) for similar sized properties. Not too hard to do if you are familiar with this site. If the value of your house (as measured against recent comparable sales of similar-sized houses close to you) is CLOSE to your 1st mortgage - then you might need an appraisal. However, most of them you can merely eyeball and it quickly becomes apparent that in all reality, your house is probably worth 30K, 50K, 100K, or even LESS than the 1st deed of trust on your property. If this is the case, YOU WON'T NEED AN APPRAISAL - the mortgage company would be very unlikely to contest your attempt to strip the 2nd mortgage in bankruptcy court.
Look at it this way - the stigma of filing a bankruptcy (for the time being) is almost gone. We had a record number of bankruptcies filed in Nevada in 2009. The pace this year is even slightly higher than last year, and if it keeps up at the same exact pace, will be even higher than 2009. I'm not suggesting every going balls out and immediately file, but if your financial situation is affecting your mental situation, family life, love life, etc. - going this route (BK) will PROBABLY make things better in all aspects.
And to all the lender trolls on here (including the one who wrote this article) - I HAVE NEVER seen a 1st mortgage holder sue a recently foreclosed homeowner. If it is your primary house, this article is WRONG. If the house is a rental house or a commercial property, then yes, the lender holding the 1st mortgage could potentially go after you within six months of foreclosing. But personally, I've never seen it - and I've worked on about 300-400 Chapter 13's in my ten (10) years. Only about 20-30 of these, however, had rental properties or commercial properties.
wackyvegas, It's just sad that in 2005, a townhouse in NLV was considered "affordable" at 200k. There are some of those a few miles from me that went the same route. Now selling for 50-60k (or less) and being used as cheap rental units. Since buying by house, I have watched my SFR neighborhood decline and come back. When the prices ran up in 2005-2006, most of the trash moved out as rental owners sold to take profit. When a cop moved in, the rest of the trash disappeared, literally overnight. Prices have recently dropped substantially, but so far, the people in the houses are for the most part, good neighbors. Those townhouse developments in "cheap" areas will never come back in this lifetime.
@ casinokid -
Thanks for your the info and your effort.
I want to offer my thanks and appreciation to those who posted the commentaries this afternoon and evening, that provided a wealth of discussion, and information, concerning housing, sales, the market, and associated financial issues.
You have provided some much needed discourse and thoughts on these issues to readers (at least, to me).
Thanks, again. Good night.
No one talks about the other part of letting a house go into default by choice. Renting. I was renting and paying on time every month, when my landlord got engaged to a gold digging girl, who wanted a nice wedding. Well, they decided to stop paying the mortgage, and used our rent money to pay for their wedding!
So not only did we have to move, but we had to change addresses everywhere, pay double-deposit (due to our bad credit), and didn't get our security deposit back from the landlord. Not to mention the price of moving.
So basically we get screwed out of over $5k in rent and deposits, and there is NO legal recourse for us.
On the bright side, we did get to move to a better neighborhood, and a bigger house for the same price we rented from before.
I think that landlords that are renting out houses and let the house go into foreclosure need to be put in jail! The renter was basically paying the mortgage for you, so don't worry about the value of the house now, hold on to it until the economy gets better.
How long would one be in jeopardy if they've done a refi as compared to original loan? Also would doing a bk prevent them from coming after you? Thanks.
So let me see if I have this right.
Even though I got a qualified loan, with a down payment & credit check, emplyoment verification etc.
Then the housing prices dropped by over 50% because of speculators & sub prime loans etc.
I should keep making payments on my house.
Even though I have had my work hours cut in half.
So that I am coming up short for my mortgage payment.
So I should empty my savings account. Max out my credit cards & borrow everything from my 401k. In order to keep making the house payment to the bank. Because I am morally bound to do that!
Then when all that is gone. The bank comes in and forecloses on me anyway, without blinking.
Or should I maybe quit making mortgage payments. Pay off my credit card debt. Build up some savings & wait for the bank to foreclose on me.
Ar which time. I can afford to rent a place to live???????
Either way. The bank takes the house back!
Plus my credit get's wacked!
So which is better. Plan A or Plan B
OK so it's not probable that real estate values will double or triple in the next 3-5 years. But they might increase by 50% or so. Even if underwater, you might be all right in a couple of years. And your own home is mucho more comfortable than renting half the space, sharing parking spots with every yahoo out there, and the noise of renting.
Go ahead, walk away from your obligations. Karma will eventually get you, and that has nothing to do with corporations, because people who do these things are the kind of people who are always scheming, never taking a direct path, and generally cannot be trusted.
I just watched a October 2009 CNBC TV interview with Steve Wynn as he commented on the economy, and how to fix it. One big point was that the gov't should provide TAX CREDITS to businesses to encourage hiring people (with health care). He believes that action alone would have the effect of hiring 3-4 million people within 60 days.
youtube video:
http://www.cnbc.com/id/15840232?play=1&a...
(There are also a couple more interviews with Steve Wynn at this web site on the same topic of the economy.)
Actually, I think he is right. I also believe that hiring people (giving them JOBS) - Mr. Wynn's #1 priority before health care, stimulus packages, etc. - will help the HOUSING MARKET by enabling people to pay their mortgages, pay their bills, feed their families, and buy and sell homes - in short, boost the economy. Having jobs will stimulate demand for housing, cause equity to rise faster, and reduce the vast number of foreclosures that are occurring now. But businesses must first have cause to hire people.
Such a "boost" in the economy by hiring people, would show a positive direction and a feeling of security for the business community (as Mr. Wynn says) - who will THEN HAVE CONFIDENCE in where our economy is headed. Thus, busines owners/corporations would be willing to invest in business opportunities, promote expansion, and get the economy moving again.
I guess that is what a "free market" is all about.
Mr Wynn continues: such TAX CREDITS would be inducements that to foster LIQUIDITY in the economy, which would give people money to spend, and, in turn, cause the housing market to rise in value as demand increases.
It seems to me that this is bases on Economics 101, but the folks in Washington, DC, have - so far, failed to grasp the fundamentals of this concept as to how wealth is created (or at this moment, how the economy is saved from collapse).
In the video, Mr. Wynn says the wealth of the nation, and its quality of living, COMES FROM THE PEOPLE, who being able to work at a job, also spend money; NOT FROM GOVT. Further, he says that the US economic engine will not restart until people have those jobs.
Perhaps we should lobby Congress to pass legislation to provide such TAX CREDITS, that Mr. Wynn (and the other person in the interview) would like to see happen.
Right on Steve Wynn!
If you have anything with the name "Chase Bank" attached to it, be prepared to lose it. They would rather get you out fast and re-sell it, even though the recieved the entire pay off for it from the insurance company. Isnt that nice. Any "Chase" employee should be ashamed of what they are forced to do. What we need is a whistle-blower from "Chase" to step up! Come on...where are ya?
The banks got bailed out by the Fed to the tune of around $800 Billion for MBSs they can only sell for 14 cents on the dollar! The Fed gave the banks Treasuries, which they are sitting on and collecting interest, until the Fed decides "how to run-off" their toxic waste mortgages they are allowing these very banks to MARK AT PAR ON THEIR BALANCE SHEET. And you feel sorry for these guys as an underwater homeowner? They still get their bonuses, in the BILLIONS, you know, those investment banks like Goldman Sacks-you, who packaged up and sold those mortgages, many of which were written with FRAUD, because the Justice Dept has looked into many of them. Not all, but many, such as mortgage brokers writing in a borrower's income.
You wonder why builders are BUILDING NEW HOMES? Next to the banking lobby, before you feel sorry for home builders, they have the biggest lobby and they managed one of the biggest bailouts in history also. They were given a FIVE YEAR tax-loss carryback, allowing them to write off as a charge the losses on their land holdings, this went back to 2003(thru 2008), allowing them to get TAX CREDITS FOR ALL INCOME TAX PAID IN BOOM YEARS 2003-4!
So, first they let all their bare land go back to the bank, now they are buying it back at steep
discounts, compliments of Uncle Sam.
Why not build and add to the bloated inventory when you get the land free?
Could this be why there haven't been BKs and mergers within the building industry?
And how about that Lennar and other builders putting a perpetual transfer fee on every house they sold, and burying it in the documentation (here in CA)? Yea, feel sorry for those home builders!
It's a business decision, most of you won't break even in 10 years. There will never be another house price artificial inflationary bubble, and it will never be replaced by higher enough wages.
Over $3 Trillion was taken out as home-equity withdrawals between 2003-2008, that WAS the consumer economy, it WASN'T WAGES.
The Federal Reserve replaced about $1.5 Trillion, and you see the result, after it went to corrupt lobbying constituents.
TAX CREDITS? No employer in their right mind is going to hire when there's NO END DEMAND because they get a tax credit one-time. Besides, it would be GAMED! Employers will do layoffs of higher wage workers, rehire, then lay them off too. There's a million ways employers can screw workers and find subsidies unless you make many restrictions on it.
Wynn probably has that figured out already!
@ uddeboda - I don't usually respond to negative comments about the future of Las Vegas. However, since I have been here for over 30 years - and I know what kind of draw it has, and why - I feel obliged to offer a defense to your suggestion of the demise of Las Vegas.
Las Vegas has its problems - lower tourist volumes (18 million vs. 33 million 2-3 years ago), and less money being spent by fewer people. But the BUSINESS MODEL is STILL sound, and the tourist attractions STILL exist. The excitement it has always offered is the reason for its huge draw. The hotels will just have to pay more attention to dollars vs. value now, to get people to return.
Getting more people to visit Las Vegas will only occur when the economy gets in full-swing again - possibly in 2-3 years when employment is up. But Las Vegas is NOT finished as a tourist destination center. It is just down like every other city in the US. But what MADE Las Vegas GREAT, IS STILL HERE.
Casinos did not go "out of vogue," or price themselves out of business, or make a bad business decision that caused their loss of income. Yet, people are STILL coming - just in fewer numbers for the moment. And, while still cautious with money, over 80% of adult Americans are still working.
There is nothing like Las Vegas on the planet. It is billed as the "Entertainment Capital of the World" for good reason; and it always will be for the foreseeable future. People come here for the gambling, shows, entertainment, restaurants, conventions, and sunshine - all to enjoy the action and glamour that Las Vegas radiates. The lights, hotel designs, entertainment venues, food offerings, etc., dazzel people. The city generates so much actual brilliance that when viewed from a satellite - Las Vegas shows up as the brightest spot in the US.
And Las Vegas is constantly upgrading everything; re-doing hotel and casino interiors, opening new restaurants, new shows, and new offerings - so as to remain the best there is. Las Vegas has 19 of the world's largest and most fabulous hotels. There is no place else, where you can do so much, and see so much - for FREE; all on 4 miles of the Las Vegas Strip, and downtown.
There is even FREE COVERED parking at EVERY CASINO and Shopping Mall. And you can see mind-blowing construction marvels and pool designs, go anyplace you like, and do many things - 24 hours a day - and all FREE.
You can even watch people gamble, for free. Obviously, the casinos would like you to participate - so they offer FREE lessons about gaming.
To build such an empire of entertainment over, today - would be financially impossible. Thus, I believe Las Vegas will remain very marketable, and has a bright future. In the days to come, Las Vegas will still excite people and draw them like a magnet - just as it has always done for over 60 years.
I have Boycotted Chase, Citi, BOA, Wells Fargo, Etc. I do my banking business strictly with my local credit union and local bank.
The future for Las Vegas is indeed bright and losing some of it's population is not a bad thing.