HITLER!!!
bchadwick Wrote: ------------------------------------------------------- > Spierce, great post. I was going to write about > how the unwritten expectations that people honor > the spirit of their agreements helps keep capital > costs low and can therefore make for a productive > society, but cut it out because I found myself > picking on one particular nationality too much. > I’m glad you filled in that point so well. Exactly. As far as people using business cases to justify walking away, sure, Merill walked away from some buildings in CA. However, they had an obligation to SHAREHOLDERS to do that, when you consider those same shareholders are ones that would be taking the hit if they owned the bonds that financed the buildings, it’s technically a wash. However, with a personal mortgage, or even a non-public CRE sole proprietorship, you’re asking society to bear the burden for your own bad decisions. Shareholders do not benefit from you walking away, as the only shareholder in your life (or your sole proprietorship) is you. The comparison between “business decisions” is not an equal comparison at all. In fact, it’s one that is a very poor comparison once you consider the asymetrical nature of the decision.
“However, with a personal mortgage, or even a non-public CRE sole proprietorship, you’re asking society to bear the burden for your own bad decisions.” Actually, you’re hurting the financial institution that lent you the money. I don’t understand your argument.
Hello Mister Walrus Wrote: ------------------------------------------------------- > “However, with a personal mortgage, or even a > non-public CRE sole proprietorship, you’re asking > society to bear the burden for your own bad > decisions.” > > Actually, you’re hurting the financial institution > that lent you the money. I don’t understand your > argument. Who lent the FI the money? Who gave the FI the equity that absorbs the loss? If the FI has no capital and the FDIC has to step in, who bears that burden? The DIF, but where does the DIF get the money? Did the FI securitize the mortgage? If so, who owns the mortgage? People act like the banks are only private institutions owned by uber-wealthy people in some nefarious scheme to screw Joe Six Pack. Many forget that the vast majority of stocks are owned by institutions, in mutual funds and such. You’re not screwing anybody but yourself and the rest of society.
spierce Wrote: ------------------------------------------------------- > Hello Mister Walrus Wrote: > -------------------------------------------------- > ----- > > “However, with a personal mortgage, or even a > > non-public CRE sole proprietorship, you’re > asking > > society to bear the burden for your own bad > > decisions.” > > > > Actually, you’re hurting the financial > institution > > that lent you the money. I don’t understand > your > > argument. > > Who lent the FI the money? Who gave the FI the > equity that absorbs the loss? If the FI has no > capital and the FDIC has to step in, who bears > that burden? The DIF, but where does the DIF get > the money? Did the FI securitize the mortgage? > If so, who owns the mortgage? > > People act like the banks are only private > institutions owned by uber-wealthy people in some > nefarious scheme to screw Joe Six Pack. Many > forget that the vast majority of stocks are owned > by institutions, in mutual funds and such. > > You’re not screwing anybody but yourself and the > rest of society. Yes but who approved the loan? Who is the CCO of the bank? Are they putting enough money away into loan loss reserves instead of paying out bonuses? These are all issues that the Boad of Directors elects officers to manage appropriately. A properly underwritten and approved loan will have a low likelihood of default under any condition. And it is the responsibility of Credit Administration to test the market and see which areas they need to lower exposure or exit. Poor management is the fault of the Board who elected the officers, who were elected by the shareholders. Principal Agent theory.
I short sold my house last year. The lenders (1st and 2nd) took it in the shorts $125,000. I live in a non-recourse state, so no deficiency judgment. Basically, 200 points off the credit score (830 down to 630) and I’m already back up over 700. Because of our household’s high income, we’re qualified for a new mortgage at 25 bp over the minimum rate. The way I see it, the bank understands that they’re making a loan in a non-recourse state and should charge a rate that is commensurate with that risk. If they don’t, not my fault. Commercial real estate owners are handing back keys daily and I’m supposed to be the good guy… f**k no! They’re doing what’s best for their shareholders. Well, my shareholders are my family, and I did what was right for them. BTW, now renting a MUCH larger house in a better neighborhood for 1/2 my prior mortgage. Life’s good!
bchadwick Wrote: ------------------------------------------------------- > Most people don’t have much integrity, and so the > idea that anything legally permitted is morally > acceptable is pretty common. Fortunately, after a > while, these people ultimately get abandoned by > those with integrity and have to live with each > other, which is it’s own kind of hell. Best statement I’ve seen in a while.
anonymous007 Wrote: ------------------------------------------------------- > I short sold my house last year. The lenders (1st > and 2nd) took it in the shorts $125,000. I live in > a non-recourse state, so no deficiency judgment. > Basically, 200 points off the credit score (830 > down to 630) and I’m already back up over 700. > Because of our household’s high income, we’re > qualified for a new mortgage at 25 bp over the > minimum rate. > > The way I see it, the bank understands that > they’re making a loan in a non-recourse state and > should charge a rate that is commensurate with > that risk. If they don’t, not my fault. > Commercial real estate owners are handing back > keys daily and I’m supposed to be the good guy… > f**k no! They’re doing what’s best for their > shareholders. Well, my shareholders are my family, > and I did what was right for them. > > BTW, now renting a MUCH larger house in a better > neighborhood for 1/2 my prior mortgage. Life’s > good! Good for you man. If more people did that, banks will finally agree to do real loan modifications by reducing the principal to true market value and the RE market will recover eventually.
@adavydov7 I don’t usually post on this site but I do find the conversations interesting, I am sure I am about to get blasted but I would like for adavydov7 (and don’t take this personal) to explain how you can agree with people walking away from a house but have such a distate for social welfare recipients. Here is how I see this. From the argument it looks as if you are saying buying a house is an investment and you should leave the investment if it is not worth it, correct. What about people on welfare, they have done the same thing, basically they have weighed the benefits of an investment in hard work and found an alternative. Why go to school, work hard, and then have only a minimal chance of obtaining the life that you want to lead. Who wants to spend 30 - 40 thousand dollars on an education, or all the hard work it takes to elevate yourself out of your socioeconomic status when welfare requires none of the hard work but provides a precise payoff at the end. I understand why you don’t agree with government spending on this issue as it promotes this kind of thinking but I don’t understand how someone who decides to be lazy and not make the investment of time, hard work and money to try and better their situation is any different than the thinking with strategic default.
Doesnt he blast more the system that puts the incentive in place to have welfare recipients do those things?
Perhaps so. If that is the case I remove my argument entirely.
Perhaps so. If that is the case I remove my argument entirely.
djpetway Wrote: ------------------------------------------------------- > Perhaps so. If that is the case I remove my > argument entirely. Don’t chicken out dude. Take the upcoming adavydov’s beating like a man, lol.
get ready for a barrage of !!!
dj, do you still want me to explain? Kevin touched on one of the reasons for this. The other reason you may want to consider is the fact that the contract on a home is between you and the bank, both (presumably) rational optimizing actors (optimizing profits, happiness or whatever else), so in my view you and the bank both have rights and options granted you regarding what is within your right (i.e. you can stop making payments, note the conditions under which you stop making these payments are completely left up to you as you knoe the consequence, bank can subsequently foreclose on your home). On the other hand welfare recipients function under the social contract and we as the investors (i.e. the wealthier folks, or net payers into the system) have no ability to walk away from certain investments that are made on our behalf by the government. I never said the folks with 8 kids sitting on welfare and getting bundles of food stamps aren’t acting rationally, I am saying we are by perpetuating this lifestyle by continuing to plow money into lost causes that are leeching off of the system. Hence, as a net payer I would like to have the option to walk away from some of these losing programs. I don’t mind being taxed if that money is going to be used efficiently but I have no hope of ever seeing our government do anything that is in the actual interest of this nation or its inhabitants. Not even a single exclamation mark. I knew I could do it
@ptc i don’t chicken out but if i make a wrong assumption i want argue something just to see who has the biggest balls @ad… but in the end taxpayers are still on the hook in the form of higher int rates, reduced credit, lower job prospects as business also hace reduced credit which means more people need the social welfare net which we have to pay for. Now i dont believe in welfare as much as the next person although i do believe in some level of unemployment benefits for those who are really looking for work.
@ptc i don’t chicken out but if i make a wrong assumption i want argue something just to see who has the biggest balls @ad… but in the end taxpayers are still on the hook in the form of higher int rates, reduced credit, lower job prospects as business also hace reduced credit which means more people need the social welfare net which we have to pay for. Now i dont believe in welfare as much as the next person although i do believe in some level of unemployment benefits for those who are really looking for work.
bchadwick Wrote: ------------------------------------------------------- Were I to argue to someone that > we should not strangle babies and film it for the > internet simply because it might be fun to watch > them struggle as they expire, I am sure I would > come across as holier than thou to the other side. > I still happen to think that killing babies for > fun is an immoral act. It’s funny to hear a liberal say this…
adavydov7 Wrote: ------------------------------------------------------- > dj, do you still want me to explain? Kevin touched > on one of the reasons for this. The other reason > you may want to consider is the fact that the > contract on a home is between you and the bank, > both (presumably) rational optimizing actors > (optimizing profits, happiness or whatever else), > so in my view you and the bank both have rights > and options granted you regarding what is within > your right (i.e. you can stop making payments, > note the conditions under which you stop making > these payments are completely left up to you as > you knoe the consequence, bank can subsequently > foreclose on your home). On the other hand welfare > recipients function under the social contract and > we as the investors (i.e. the wealthier folks, or > net payers into the system) have no ability to > walk away from certain investments that are made > on our behalf by the government. I never said the > folks with 8 kids sitting on welfare and getting > bundles of food stamps aren’t acting rationally, I > am saying we are by perpetuating this lifestyle by > continuing to plow money into lost causes that are > leeching off of the system. Hence, as a net payer > I would like to have the option to walk away from > some of these losing programs. I don’t mind being > taxed if that money is going to be used > efficiently but I have no hope of ever seeing our > government do anything that is in the actual > interest of this nation or its inhabitants. Not > even a single exclamation mark. I knew I could do > it But you’re assuming the “leeches” do not provide you any benefit at all. This is a very false assumption. 1. Crime. Leeches will most likely become criminals if they have no recourse. Thus, your nice life will eventually become a self-centered and fearful hell whereby you’re constantly worried about being robbed. This will cost you money to counter, more police, better security, but even then, it won’t stop 100% of random chance. Thus, you will get robbed by the masses of unemployed and hopeless leeches that will eventually decay to a subhuman form. 2. Work. Many leeches do work and provide the lower work products society needs to function. Thus, they need healthcare and aid to provide that work. Otherwise you need more leeches if you don’t provide a modicum of those expenses, they’ll die quickly. Then you have a 3rd world country problem, more children. 3. Civil unnrest. Eventually the leeches will realize that this situation is “unfair”, the “haves” will always have more and keep increasing their share at the expense of the “have-nots”. Since this entropy will eventually reduce the “haves” to a smaller % of the population and the larger % will be younger, and largely uneducated, hopeless, and “subhuman”, they’ll riot. You’ll counter with police, they’ll counter with war. You’ll counter with armies and mercenaries, they’ll counter with massive waves of people. You’ll lose either way. You might win the battle against them, but you’ve lost the war of your society. So, realistically, you have no option but to pay social services for the “leeches”. In fact, it accrues to your benefit to keep them complacent.