"WALK AWAY FROM YOUR MORTGAGE." people are told

[Zander]

Bye the way, the bank refuses to modify the contract.

With that in mind, I favor his walking away. What do you think?

Personally since the bank is being so insensitive I have told him to **** the bank. He is considering it. Personally, I would throw a brick through the window of the bank but he won't.

Are you advising him to file personal bankruptcy as well? Because that will be the result of walking away.

Maybe not. California and a few other states have 'non-recourse' real estate loans. That means that the property is the only surety that the bank has. The bank cannot go after your other assets in the event you default on the note. There are some vagaries and loopholes of course, but generally speaking if you walk away from a mortgage you do not need to file bankruptcy.

 

[American Horse]

He should do what he thinks is right. He can walk away, we have non-recourse loans in California. But to blame the bank is just silly.

Blaming the banks is directing blame towards the wrong entity. These borrowrs should focus blame on "mortgage brokers", and at themselves for being such poor shoppers in the first place, for a variety of reasons.

Almost anyone - except those who couldn't get a loan anywhere because of a record of bad credit - could get a mortgage loan without any fee at all except for normal closing costs (appraisal, legal, recording fees, title insurance) at a good fixed rate for about any term from 15 to 30 years.

The brokers (still) add on handsomely for a service of questionable value for what local banks do very well and for virtually no charge at all. Writing loans is something banks see as just a cost of doing business, so there is not charge to customers.

These brokers got anywhere from between 3 to 12 thousand bucks per loan, a substantial charge added into the loan from the beginning, and then walked away, usually after having done nothing that contributed to the deal except to complicate the closings and the lives of the borrower while they screw around getting the best situation for themselves.

Many times a loan is closed with the seller waiting overnight for their funds to arrive because the mortgage bank wants to examine all documents before paying up; the seller not having had a choice in the matter.

People are too smart for their own good. They are so convinced of their own cleverness that they have and will continue to go to these so called mortgage brokers. Part of this foolishness is propogated by the internet, and the fact that they get hooked up with a broker online, preferring to avoid personal contact.

The case of someone being underwater at 50% valuation is a rare case. More usual is a marginal amount of perhaps 15% which will be easily regained during the mortgage's term of payment.

 

[Barb]

Its about time.

The corps get off scott free and with bonuses for the assholes who did this to us and the little guy gets screwed for life?

Yeah!! Those people were forced to sign mortgage papers!! Evil dirty corporations.....

There were a lot of people with perfectly respectable credit, more than worthy of fixed rates, pushed into those sub-prime mortgages and told not to worry about the rise in interest after a year because all they had to do was refinance. What they weren't told was that if the value of the home fell, they would have to pay the difference before they refinanced. Most people got caught out there because the values DID fall, and they didn't have the extra lying around to make it up. The lending houses (and they don't deserve to be called banks) bet on these shortfalls. They had the initial down payment, the interest paid on the loan, and figured they could turn it all over into a NEW loan once the first dupes defaulted. DAY um! Thars GOLD in them thar hills! And now that that scam went bust, the grifters held a gun to the head of the US economy and demanded ransom. The "best and the brightest" of two administrations paid that ransom. So...if the banks outsmarted themselves (to a point, if failure is big enough it becomes socialized. not so profit), and the government paid them off, how do you blame the poor schmo who was sold the American Dream? Once upon a time banks were somewhat responsible. Kinda like the medical community. People one was taught to trust as an authority on certain matters. Instead, they made off like fat rats, and our grand children's grandchildren will be paying the interest on this mess.

 

[The Rabbi]

Bye the way, the bank refuses to modify the contract.

With that in mind, I favor his walking away. What do you think?

Personally since the bank is being so insensitive I have told him to **** the bank. He is considering it. Personally, I would throw a brick through the window of the bank but he won't.

Are you advising him to file personal bankruptcy as well? Because that will be the result of walking away.

Maybe not. California and a few other states have 'non-recourse' real estate loans. That means that the property is the only surety that the bank has. The bank cannot go after your other assets in the event you default on the note. There are some vagaries and loopholes of course, but generally speaking if you walk away from a mortgage you do not need to file bankruptcy.

I have never seen a residential non-recourse loan. Nor is there provision for such a thing in standard FNMA documents, which is like 90% of all residential loans made. Every residential loan I have ever seen consists of a promissory note, with a promise to pay, and a deed of trust offering the property as collateral. But those are two separate documents.
In commercial loans I have heard of non recourse but they are sort of rare unless the loan is for the Sears Tower or something.

 

[Zander]

Are you advising him to file personal bankruptcy as well? Because that will be the result of walking away.

Maybe not. California and a few other states have 'non-recourse' real estate loans. That means that the property is the only surety that the bank has. The bank cannot go after your other assets in the event you default on the note. There are some vagaries and loopholes of course, but generally speaking if you walk away from a mortgage you do not need to file bankruptcy.

I have never seen a residential non-recourse loan. Nor is there provision for such a thing in standard FNMA documents, which is like 90% of all residential loans made. Every residential loan I have ever seen consists of a promissory note, with a promise to pay, and a deed of trust offering the property as collateral. But those are two separate documents.
In commercial loans I have heard of non recourse but they are sort of rare unless the loan is for the Sears Tower or something.

It is not just California - all of the following are Anti-Deficiency / Non-Recourse States
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington