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UpsideDown
Guest
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 Posted: Thu Mar 04, 2010 4:05 pm GMT Post subject: SOS - I am upside down and I want out |
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And I know I'm not alone.
I'm in a Townhouse in Weymouth which I have a 280g mortgage on but is now only worth 230g's. What can I do other than take a bath for 50g's or live in this inadequately small condo while my family expands?
I'm seriously tempted to just walk away from the mortgage and let my credit take the hit, but what other recourse would my lender have against me?
Can anyone offer me guidance? |
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Brian C
Joined: 13 Feb 2009
Posts: 98
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| Posted: Thu Mar 04, 2010 4:35 pm GMT Post subject: |
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Looked at renting it out? With mortgage, taxes, condo fees, etc. you might be losing a little every month but your not going to write a $50k check.
How long would it take you to lose $50k if you rented it out? |
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UpsideDown
Guest
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| Posted: Thu Mar 04, 2010 4:50 pm GMT Post subject: |
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| Brian C wrote: | | Looked at renting it out? With mortgage, taxes, condo fees, etc. you might be losing a little every month but your not going to write a $50k check. How long would it take you to lose $50k if you rented it out? |
Renting may be difficult due to the Condo Assoc. restrictions and also some language in our mortgage docs that may indicate that renting it out would switch the property status to " income property" as opposed to a "residence", potentially causing the lender to call in the note or shift the I.R.. We are looking in to all this, but we are not optimistic.
I'm not sure why losing another 50g's is relevant - but to answer the question IF we can rent it out, I'll lose about 1g a month. (That is I'll still have to pay 1g to cover the monthly mortgage.) |
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john p
Joined: 10 Mar 2006
Posts: 1820
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| Posted: Thu Mar 04, 2010 5:05 pm GMT Post subject: |
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For starters, I don't know anything about your situation so I'm just going to throw a wild pitch and fram you in a way just to make a point. Bottom line is you may have been treated unfairly in this whole economic situation but sometimes two wrongs don't make a right...
I think you end up with a bad credit score for like a few years, so if you can rent for a few years and wait for another chance that's up to you. Many, look at things from a plainly business perspective and make that call; if you can live with yourself with that, it's up to you, you're just another guy that some responsible person has to bail out.
What my wife and I did in 2006 was find a house that we could see ourselves wanting to live in for ten years because we knew there was a posibility of us being upside down. We also didn't overextend to put ourselves in that much risk and decided on maintaining a healthy emergency fund to weather any storms. We waited and rented until all of this was possible.
I think the difference between you and us was that you chose to enjoy a better quality of life in owning your own condo versus renting for the starter chapter which also gave you a chance to catch a potential uplift in prices, but now that things didn't work out you want someone else to pick up the tab. It isn't fair for the person who is patient and lives in a crappy apartment and saves to have to give you a do over. Hey, you've got Obama in there and he's fighting for people like you and tucking it to people like me so these are the spoils for you and you can enjoy them I guess.
I think the lesson is in the evaluation of renting versus buying. I would't consider buying anything that you weren't comfortable living in for a while. Further, we decided to buy more house than we needed because we thought it would be cheaper in the long run to avoid transaction costs of buying a starter place and then within a few years wanting to sell and buy something different. The potential of carrying two mortgages, being upside down, and paying 10% of realtor fees (2 transactions) wasn't what we wanted. We never factored in playing the irresposible get out of jail card. |
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CL
Guest
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| Posted: Thu Mar 04, 2010 5:25 pm GMT Post subject: |
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I will advise against walking away. Like CA, MA is a recourse state meaning the bank can come after you for your asset other than your home. So does not really make sense for you to walk, unless you are already bankrupt and no asset for bank to come after. Even then, the debt may not completely go away and may come back when you have asset.
My advice for your course of action is to stay put, save more, spend less and de-clutter. People in metro city (New York, London, Tokyo, etc) learn to enjoy life in extremely small space and I don't see why Bostonian cannot. Your family is expanding but it's hard to imagine it physically out-grows your condo. It's all a matter of perspective and compromise. |
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GenXer
Joined: 20 Feb 2009
Posts: 703
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| Posted: Thu Mar 04, 2010 5:40 pm GMT Post subject: |
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| How big is the townhouse and what are you looking to expand into? |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Thu Mar 04, 2010 5:43 pm GMT Post subject: |
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Could you make the existing space work by renting additional space elsewhere? For example, by moving some stuff to a self storage facility?
- admin |
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UpdideDown
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| Posted: Thu Mar 04, 2010 6:42 pm GMT Post subject: |
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| Thanks CL - that recourse info is the type of useful practical info I am looking for. |
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john p
Joined: 10 Mar 2006
Posts: 1820
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| Posted: Thu Mar 04, 2010 8:44 pm GMT Post subject: |
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Updidedown said:
| Quote: | | Thanks CL - that recourse info is the type of useful practical info I am looking for. |
Dude, you're like the complete bottom rung in the stages of Moral Development" How can I avoid punishment? or fear of punishment alone is the motivational factor in moral reasoning.
http://en.wikipedia.org/wiki/Kohlberg%27s_stages_of_moral_development
from above:
| Quote: | Level 1 (Pre-Conventional)
1. Obedience and punishment orientation
(How can I avoid punishment?)
2. Self-interest orientation
(What's in it for me?)
Level 2 (Conventional)
3. Interpersonal accord and conformity
(Social norms)
(The good boy/good girl attitude)
4. Authority and social-order maintaining orientation
(Law and order morality)
Level 3 (Post-Conventional)
5. Social contract orientation
6. Universal ethical principles
(Principled conscience) |
Don't worry, you're not alone.
John F. Kennedy asked Americans "Ask not what your country can do for you, ask what you can do for your country". That great political party has rotted to the core and it is run by poverty pimps that are cashing in on your weak constitution. You're in the majority, so you've got that going for you. |
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Chee
Guest
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| Posted: Thu Mar 04, 2010 9:29 pm GMT Post subject: Re: SOS - I am upside down and I want out |
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How about a short sale?
I heard the lender often accepts a short sale if the loss is less than 20%. If you have a second mortgage, it is going to be hard though. |
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UsideDown
Guest
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| Posted: Thu Mar 04, 2010 9:31 pm GMT Post subject: |
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Since you'll be bailing me out - do you just want to write me the check directly and cut out the middle...,"dude"?
| john p wrote: | Updidedown said:
| Quote: | | Thanks CL - that recourse info is the type of useful practical info I am looking for. |
Dude, you're like the complete bottom rung in the stages of Moral Development" How can I avoid punishment? or fear of punishment alone is the motivational factor in moral reasoning.
http://en.wikipedia.org/wiki/Kohlberg%27s_stages_of_moral_development
from above:
| Quote: | Level 1 (Pre-Conventional)
1. Obedience and punishment orientation
(How can I avoid punishment?)
2. Self-interest orientation
(What's in it for me?)
Level 2 (Conventional)
3. Interpersonal accord and conformity
(Social norms)
(The good boy/good girl attitude)
4. Authority and social-order maintaining orientation
(Law and order morality)
Level 3 (Post-Conventional)
5. Social contract orientation
6. Universal ethical principles
(Principled conscience) |
Don't worry, you're not alone.
John F. Kennedy asked Americans "Ask not what your country can do for you, ask what you can do for your country". That great political party has rotted to the core and it is run by poverty pimps that are cashing in on your weak constitution. You're in the majority, so you've got that going for you. |
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john p
Joined: 10 Mar 2006
Posts: 1820
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| Posted: Thu Mar 04, 2010 10:10 pm GMT Post subject: |
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Honestly, it would be cheaper to just send people who get bailed out a check.
The article below is titled "Stimulus Math: $533,000 Per Job Saved or Created?"
http://www.cbsnews.com/blogs/2009/10/16/business/econwatch/entry5390970.shtml
Do you prefer "Dude" or "Deadbeat" or "Lightweight"? If you want to get treated with respect, act honorably and honor your commitment.
Look up the term "Self-Created Hardship". |
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Upsidedown
Guest
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| Posted: Fri Mar 05, 2010 12:11 am GMT Post subject: |
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Is there an admin on this site that can pull the plug on this self-righteous judgemental angry doofus who really has absolutely no idea about who I am or why I am in this situation?
Move on johnp.
I was told I would find intelligent people to answer my questions on this blog - not a peanut gallery.
| john p wrote: | Honestly, it would be cheaper to just send people who get bailed out a check.
The article below is titled "Stimulus Math: $533,000 Per Job Saved or Created?"
http://www.cbsnews.com/blogs/2009/10/16/business/econwatch/entry5390970.shtml
Do you prefer "Dude" or "Deadbeat" or "Lightweight"? If you want to get treated with respect, act honorably and honor your commitment.
Look up the term "Self-Created Hardship". |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Fri Mar 05, 2010 12:40 am GMT Post subject: |
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| Upsidedown wrote: | | Is there an admin on this site that can pull the plug on this self-righteous judgemental angry doofus who really has absolutely no idea about who I am or why I am in this situation? |
There is an admin, but I'm not here to gag people. John P. has been a valuable contributor on these forums and I appreciate his input, even when I disagree with him.
- admin |
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mpr
Joined: 06 Jun 2009
Posts: 344
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| Posted: Fri Mar 05, 2010 1:39 am GMT Post subject: |
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| john p wrote: |
Dude, you're like the complete bottom rung in the stages of Moral Development" How can I avoid punishment? or fear of punishment alone is the motivational factor in moral reasoning.
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I always find the moral overlay in the US on these kinds of things fascinating.
The thing which is the most amazing is that corporations persuade
consumers that they should "do the right thing" while being completely
amoral actors themselves, not just with respect to each other, but
also with respect to their own customers. I mean it would be different
if there was a strong social contract where everyone treated each other
with some basic decency, but there's no such thing here. If you dont
read the fine print bad luck for you.
If Upsidedown walks away, whoever takes the hit will have
bought/guaranteed the bond the mortgage backs. The conditions were
in the fine print, so sucks for them - there were plenty of well paid
people during the whole process who could have insisted on tighter
lending standards. (I realize that, unfortunately, if its a Fannie/Freddie
guaranteed loan then "them" is now "us").
Anyway, I cant really take these moral arguments seriously.
(No doubt this will confirm johnp's view of me as a liberal degenerate  ).
Upsidedown, if I understand correctly, you feel like you need to move
because the place is now too small for your family. If i were doing this,
I would try to find an atty who specializes in this area. MA is a recourse
state, but you want to know what this means in practice. He/she should
also be able to guide you through the process.
I'm sure that there must be books on this too, so I would check amazon.
If you do go this route, try to arrange a rental before you stop making
payments, as it will be harder once your credit is dinged.
I would say that you should consider that this is likely to be a stressful
and unpleasant process, so I wouldn't do this over 50k unless you really need to move, not just because your place is under water. I do think
having a clear, amoral point of view will help. If you're discussing
a short sale with the bank your attitude should be "'dude' its just business". |
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