Are you foolish to pay your mortgage?

[rabot10]

Re: Are you foolish to pay your mortgage?

It's all based on the money creation system of the United States (that most people do not get).

We all know how banks create money out of thin air, most people just dont realize exactly what theyre doing or how theyre doing it.

Take a pool of 10 mortgages, each with a one time fixed interest rate (this is to demonstrate what Im talking about, the same rules obviously apply with compound interest as well):

100,000 + 5% = 105,000 that has to be paid back
150,000 + 6% = 159,000
200,000 + 3.5% = 207,000
175,000 + 4% = 182,000
125,000 + 7% = 133,750

Now, in the FIAT money creation ponzi scheme, the banks wont actually have this money. They will create this out of thin air. But the key is that they only create the principal and do not create the interest. In a small enough system (say all the loans at one particular bank), it is a mathematical impossibility for every loan holder to pay off every mortgage plus interest based off of the original dollar amounts created in the loans. In the example above the banks only created $750,000, but the combined obligation with interest that has to be paid back by all of the borrowers is $786,750. The remaining $36,750 simply does not exist, because it was never created. In the US, 100% of all money is created by extending loans, as that is the only way that money "enters" into the system.

What this does is it requires a small percentage of people in this loan pool to be forced into default, because there simply isnt enough money to go around to pay everything off. It's kind of like a game of musical chairs where there is only 1 chair left, but 2 people remaining. When you signed your mortgage contract, there is not a single clause in there anywhere that says you could be forced into default (because it's a mathematical inevitability for a percentage of the participants as proven above). Since this language was not in the contract, it makes the contract no longer valid because contractual performance is no longer guaranteed. It becomes fraud.

ASH and others have stated "money circulates" and that's how the "impossibility" is actually "possible", but I disagree. Money does not circulate when it comes to banking transactions. It's either being created (by extending a loan), or it's being destroyed (by paying off a loan). There *is* no circulation in a banking transaction. All other money transactions that circulate outside of banking are irrelevant to the overall equation. It's kind of like integration in calculus where you add the "+C" to the end because you really dont care what that value is because it doesnt affect the overall outcome.

I get it. Trust me lol. Just don't get your post.

[tombat1913]

Re: Are you foolish to pay your mortgage?

The single smartest financial decision I've made is my itulip subscription, a very close number 2 was walking away from my condo in San Diego (a decision resulting from the subscription).

[jk]

Re: Are you foolish to pay your mortgage?

The question (as I see it) is whether someone has a moral obligation to fulfill a signed contract. Many people are walking away from their mortgages even though they could pay them. In non-recourse states apparently this has gotten to be a big thing.

what does "fulfill" mean in your use above? the contract includes provisions covering default. thus default "fulfills" it as much as other actions covered therein.

the banks bet that housing prices would never go down. that was the basis of the rmbs's and their various securitizations. see the early interview ej did with jim finkel[?] who bought and sold the things. see the statements of various employees of the rating services. they all decided to behave as if the price of houses never went down. that was, imo, stupid, although it was gloriously rewarded in the short term, and made many people rich. this is the other side of their stupid bet.

[ricket]

Re: Are you foolish to pay your mortgage?

I get it. Trust me lol. Just don't get your post.

If you get it, then how do you not get my post??

:confused:

Re-read it a few times until you get it. I promise it will sink in. And then a lightbulb will go off. And then your rage will absolutely DESTROY that lightbulb in anger.

[World Traveler]

Re: Are you foolish to pay your mortgage?

I know someone who moved to Houston from Fla. 4 years ago, but owns a home in Naples, Fla (for 12 years or so). She does have some equity in house, but mortage payment is killing her - she can't save money she needs for retirement (age 57) and she can't sell house or even get decent rent for it, since Naples is over-built and in very bad shape.

She was hesitating over the "morality" of walking away from a responsibility by letting it go into foreclosure. I told her to treat it like a business decision, do whatever will cause her less pain and bring more benefit.

She knows the pluses of walking away, ability to save $2000 per month for retirement.

I told the minuses I knew of include a hit to credit record and fact that if she changed jobs, many companies do credit checks now. Plus of course, it would be difficult to get new credit for a while.

What have iTulipers discovered to be the downside associated with having walked away and let house or condo go into foreclosure? I'm asking, so I can pass along to her. Thanks!

[cjppjc]

Re: Are you foolish to pay your mortgage?

I know someone who moved to Houston from Fla. 4 years ago, but owns a home in Naples, Fla (for 12 years or so). She does have some equity in house, but mortage payment is killing her - she can't save money she needs for retirement (age 57) and she can't sell house or even get decent rent for it, since Naples is over-built and in very bad shape.

She was hesitating over the "morality" of walking away from a responsibility by letting it go into foreclosure. I told her to treat it like a business decision, do whatever will cause her less pain and bring more benefit.

She knows the pluses of walking away, ability to save $2000 per month for retirement.

I told the minuses I knew of include a hit to credit record and fact that if she changed jobs, many companies do credit checks now. Plus of course, it would be difficult to get new credit for a while.

What have iTulipers discovered to be the downside associated with having walked away and let house or condo go into foreclosure? I'm asking, so I can pass along to her. Thanks!

I don't think Florida is a non recourse state. Maybe since just about everybody here thinks walking away is a good idea, someone should list all the non recourse states. It does make a difference in how your life after forclosure will be.

[cjppjc]

Re: Are you foolish to pay your mortgage?

I know someone who moved to Houston from Fla. 4 years ago, but owns a home in Naples, Fla (for 12 years or so). She does have some equity in house, but mortage payment is killing her - she can't save money she needs for retirement (age 57) and she can't sell house or even get decent rent for it, since Naples is over-built and in very bad shape.

She was hesitating over the "morality" of walking away from a responsibility by letting it go into foreclosure. I told her to treat it like a business decision, do whatever will cause her less pain and bring more benefit.

She knows the pluses of walking away, ability to save $2000 per month for retirement.

I told the minuses I knew of include a hit to credit record and fact that if she changed jobs, many companies do credit checks now. Plus of course, it would be difficult to get new credit for a while.

What have iTulipers discovered to be the downside associated with having walked away and let house or condo go into foreclosure? I'm asking, so I can pass along to her. Thanks!

I had previously stated in other threads over the past few months not to worry, that banks would not go after owners on the shortage. I have since learned there are firms that are buying the distressed paper at huge discounts. These firms will try to collect.

[MulaMan]

Re: Are you foolish to pay your mortgage?

Yes, the home owner has a moral obligation to thier neigbors and community.

The home owner when there is a mortgage is called a mortgage bank.

So there is no problem walking away morally because you ARE NOT the home owner, you are simply renting the home from the bank.

[sadsack]

Re: Are you foolish to pay your mortgage?

A few years ago, I had to bone up on the FCRA (Fair Credit Reporting Act), FDCPA (Fair Debt Collection Pratices Act), TILA (Truth in Lending Act), etc.

Apropos to walking away - if a 3rd party OTHER THAN THE ORIGINAL CREDITOR attempts to collect on the debt, the FDCPA applies in addition to the FCRA. Even in recourse states, the SOLC (Statute of Limitations for Collections) for written contract debt is IIRC from as little as 5 years up to 10 years, varying by state.

Knowledge of one's rights under FDCPA and FCRA can keep these bastages at bay for many years. Debt collectors and "junk debt buyers" in general absolutely cannot help breaking the law in their "zealous" attemps to grab their pound of flesh. They depend on J6P's pathetic ignorance of the law.

In the case of an OC (Original Creditor), then the FDCPA does not apply, but the FCRA and TILA still do.

There used to be a great site (AoC) that discussed these items. It's successor site is still pretty good. Finding those sites marked my departure from the MSM propaganda trough towards, eventually, iTulip.

PS: I've omitted the URL to AoC's successor site because they don't seem to reciprocate linkbacks.

[ThePythonicCow]

Re: Are you foolish to pay your mortgage?

PS: I've omitted the URL to AoC's successor site because they don't seem to reciprocate linkbacks.

A google search for "AoC credit archive" finds an archive of what is I presume the AoC site to which you refer, located on what might be the successor site to which you refer.

[sadsack]

Re: Are you foolish to pay your mortgage?

A google search for "AoC credit archive" finds an archive of what is I presume the AoC site to which you refer, located on what might be the successor site to which you refer.

Yes, that's a partial archive of AoC, but no, that's not the sucessor site.

I don't mean to be too cloak and dagger, but this is a public forum, and the site was quite the lighting rod back in the day. I'll PM you instead.

[Rajiv]

If Morgan Stanley Walks Away, Why Shouldn't You?

Well If Morgan Stanley Walks Away, Why Shouldn't You? Firm Walks Away From 5 Properties

To the extent that Morgan Stanley is leading by example, the securities colossus is sending an unlikely message to underwater homeowners: Walk away.

The Wall Street firm is itself walking away from five San Francisco office buildings it purchased as part of a landmark $2.43 billion deal near the height of the real estate boom. But don't call it a foreclosure or a default -- not when this kind of money is involved. A spokeswoman interviewed by Bloomberg News called it "a negotiated transfer to our lenders."

The buildings were bought in 2007 by a fund managed by the firm and supplied with cash from Morgan Stanley and investors. They may be worth half the price Morgan Stanley paid just two years ago, according to Bloomberg.

Businesses and corporations walk away from mortgages all the time, says Brent T. White, a law professor at the University of Arizona. But homeowners don't -- largely due to feelings of moral obligation and guilt.
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[cjppjc]

Re: If Morgan Stanley Walks Away, Why Shouldn't You?

Well If Morgan Stanley Walks Away, Why Shouldn't You? Firm Walks Away From 5 Properties

Great post.

[charliebrown]

Re: Are you foolish to pay your mortgage?

i understand what you're saying, but I don't think the banking system is closed. With the advent of the fed and fiat money, can't they buy anything they want at any price with an infinite check book? If they want to buy cow pies for $100, they print the money and it goes to the seller of the pies. Now some time later the fed sells the pie back into the market for $1. $99 dollars in the economy that will never die. Do you think they will be able to sell 1.3T of MBS back into the system for the same price they paid?

Back to the thread:
I do believe that just like everything else mortgages should be recourse loans. The last loan I took out, I was showered with HUD documents showing exactly how much I was going to pay each month both now and when the mortgage adjusts. Also I hired a lawyer to review the docs. Its only $300, and when your're signing a document to borrow 200K that is pages and pages of legalize it's money well spent.


If we had higher down payment requirements, things might take care of themselves. people will whine that there aren't enough people who can come up with 10% down. That's because houses cost to much. Let them fall to market, enough with the gvt. prop up.

Ahh maybe a hybrid approach, 10% down or a recourse loan? You pick. Technically this is what principle insurance is for, but there is no counter party big enough for a systematic melt down.


Is it different to not pay back the neighbor you borrowed $20.00 bucks from, or not pay your mortgage and default to a big corporation/bank? Also I would like to point out that your mortgage may have been bought by fannie, turned into bonds and is now sitting in your mother's brokerage portfolio. So everyone says forgive the mortgage of these poor people but some else on the other side of the loan is going to get hurt, and it's not always a fat cat.
Although in total I did not support the bail out of fannie and freddie, these bonds are just about in everyone's savings accounts check out the holding of your money market account . I only support the bail-out to have it result in an orderly wind down. This is NOT occuring! fannie and freddie are growing. I have never heard the word wind down / reorginazation etc. occur have you?

Additionally, I paid off my mortgage. From 2001 - 2004?? when interest rates where in the toilet, I had a 6% note, and was making 1% - 2% in CD's. slowly paid down the note until 2005?? when rates started coming back up. Then I once again paid the minimum until the note was paid off.
Now I feel like a chump, because maybe I could have gotten some kind of gvt hand out. Or I could have walked away. Now I just have an overpriced house and am a sitting duck for the prop tax man.

You know I save 10% of my pay check like my mommy and daddy told me to do. and if I get sued or the g-man has a bone to pick with me, they can come and clean out my bank account, the tax man has access too. But if I spend all of my money on whirrly gigs, vacations, liquor etc. I get a pass. Is this by design? When do savers get some protection? After all don't we need them for a stable economy. It's all a house of mirrors I tell you!

[jk]

Re: Are you foolish to pay your mortgage?

i understand what you're saying, but I don't think the banking system is closed. With the advent of the fed and fiat money, can't they buy anything they want at any price with an infinite check book? If they want to buy cow pies for $100, they print the money and it goes to the seller of the pies. Now some time later the fed sells the pie back into the market for $1. $99 dollars in the economy that will never die. Do you think they will be able to sell 1.3T of MBS back into the system for the same price they paid?

Back to the thread:
I do believe that just like everything else mortgages should be recourse loans. The last loan I took out, I was showered with HUD documents showing exactly how much I was going to pay each month both now and when the mortgage adjusts. Also I hired a lawyer to review the docs. Its only $300, and when your're signing a document to borrow 200K that is pages and pages of legalize it's money well spent.


If we had higher down payment requirements, things might take care of themselves. people will whine that there aren't enough people who can come up with 10% down. That's because houses cost to much. Let them fall to market, enough with the gvt. prop up.

Ahh maybe a hybrid approach, 10% down or a recourse loan? You pick. Technically this is what principle insurance is for, but there is no counter party big enough for a systematic melt down.


Is it different to not pay back the neighbor you borrowed $20.00 bucks from, or not pay your mortgage and default to a big corporation/bank? Also I would like to point out that your mortgage may have been bought by fannie, turned into bonds and is now sitting in your mother's brokerage portfolio. So everyone says forgive the mortgage of these poor people but some else on the other side of the loan is going to get hurt, and it's not always a fat cat.
Although in total I did not support the bail out of fannie and freddie, these bonds are just about in everyone's savings accounts check out the holding of your money market account . I only support the bail-out to have it result in an orderly wind down. This is NOT occuring! fannie and freddie are growing. I have never heard the word wind down / reorginazation etc. occur have you?

Additionally, I paid off my mortgage. From 2001 - 2004?? when interest rates where in the toilet, I had a 6% note, and was making 1% - 2% in CD's. slowly paid down the note until 2005?? when rates started coming back up. Then I once again paid the minimum until the note was paid off.
Now I feel like a chump, because maybe I could have gotten some kind of gvt hand out. Or I could have walked away. Now I just have an overpriced house and am a sitting duck for the prop tax man.

You know I save 10% of my pay check like my mommy and daddy told me to do. and if I get sued or the g-man has a bone to pick with me, they can come and clean out my bank account, the tax man has access too. But if I spend all of my money on whirrly gigs, vacations, liquor etc. I get a pass. Is this by design? When do savers get some protection? After all don't we need them for a stable economy. It's all a house of mirrors I tell you!

did you pick your screen name and avatar with this post in mind?

btw- it's a good time to refi, lock in long term money and wait for inflation to evaporate your debt.