Homeowners in Foreclosure Find a Rent-Free Approach • Hacker News Board

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#21

Post by MichaelSalib » Tue, Jun 01, 2010, 6:41 PM UTC

gsmaverick wrote: post #15

sethg wrote: post #13

Earlier quoted context omitted.

For every unwise borrower there is an unwise lender. My sympathies are more with the borrower, since the lender, as the side that supposedly hired people with financial acumen, bears a majority of the responsibility for assessing risk.

In this case the problem lies with the political pressure applied by both Bush and Clinton on Fannie Mae and Freddie Mac to continue giving out more mortgages.

A bigger problem is the homeowners mortgage interest deduction. In terms of its stated policy rational, it is a complete joke, but modification let alone elimination remains political suicide.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#22

Post by patrickgzill » Tue, Jun 01, 2010, 6:41 PM UTC

The banks don't want to foreclose, because they do better with "extend and pretend" ... until the day before the foreclosure they can still carry the worthless loan as an asset at 100% of its original value (if I understand this part of the process correctly).

Who is the greater criminal?

Some old lady living in a crappy $125K house in Florida--or bank execs who in concert with corrupt regulators are hiding billions in bad loans and meanwhile paying themselves 100K bonuses or more?

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#23

Post by tptacek » Tue, Jun 01, 2010, 6:41 PM UTC

sethg wrote: post #13

icefox wrote: post #5

“We could pay the mortgage company way more than the house is worth and starve to death,” This implies that if the house was worth what they were paying that they would still starve to death and really they made a bad choice in buying the house in the first place. "But the couple also refinanced at the height of the market, taking out cash to buy a truck..." sigh...

For every unwise borrower there is an unwise lender. My sympathies are more with the borrower, since the lender, as the side that supposedly hired people with financial acumen, bears a majority of the responsibility for assessing risk.

This simplification presumes that there are only two parties with stakes in a residential mortgage. That's not at all true. There are tens of millions of residential mortgages taken out in good faith and held in good standing, and they will absolutely pay in one way or another for the abuse of the system by either lenders or homeowners.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#24

Post by jasonlotito » Tue, Jun 01, 2010, 6:44 PM UTC

tptacek wrote: post #3

What these people are doing is exactly equivalent to what tendentious tenants do to avoid eviction. We almost uniformly hold those tenants in contempt; they're perpetrating a fraud. The only difference here is that it's banks holding the loans, not independent landlords. I see how you could sympathize with a ruthless defaulting homeowner; after all, what else are they going to do? Are we really asking them to vacate…

A family member of mine is in the same position: they bought a house, and now they can't afford it. I'd love to feel as if the bank should be held accountable, but at the same time, I look at my family members, what he does, how they spend their money, and I can't feel sympathy. They dug their own hole.

And yet, the amount of entitlement coming from them is just insane. They feel as if it's not their fault; they point at everyone except for them. It's the governments fault they aren't getting money. Ignore the fact that they both dropped out of college, bought a house together before marriage, had a child before marriage, and are now on their way toward a second child, while basically unemployed.

I've tried to help. Bought them a computer for school, send them gift certificates so I know the money goes toward the kids. Bought them a washer for their clothes. But when they go out and spend $200 on a tattoo for a birthday gift (not to mention an iPod touch!), I can't help but wonder what they are thinking.

And still, the self-entitlement they reek of is horrible. My wife and I work hard, pay our bills, and still rent. We make more than enough to get a house, but we want to pay off the few outstanding debts we have, and save up money for a nice big down payment before we settle on a house. We look at them, and wonder how they were given a loan, how they could feel like they should get one, when we can't imagine getting one right now.

Maybe the lenders should be held accountable in some regards, but this doesn't excuse the borrowers. The worst part is the kids. With a second a month away, I just can't see how they'll be able to afford everything. I know they are using their credit cards right now, but spending it on stupid crap ($200 for carpeting for the new babies room.. seriously?)

Sorry. Long useless rant. Just had to get it out somewhere.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#25

Post by tptacek » Tue, Jun 01, 2010, 6:44 PM UTC

patrickgzill wrote: post #22

The banks don't want to foreclose, because they do better with "extend and pretend" ... until the day before the foreclosure they can still carry the worthless loan as an asset at 100% of its original value (if I understand this part of the process correctly). Who is the greater criminal? Some old lady living in a crappy $125K house in Florida--or bank execs who in concert with corrupt regulators are hiding billions…

If you remove the word "criminal", which doesn't apply, and replace it with "bad actor", I'm going to go with: "they are both bad actors". Squatting in a $125k house you promised to pay for but now refuse to pay for is still bad.

This is the same lazy argument that runs though any discussion of any abuse of any service anywhere. "Sure, I stole 10,000 credit card numbers --- but the credit card companies are evil organizations that prey on low-income people, and they're the ones that are going to end up paying!"

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#26

Post by [deleted] » Tue, Jun 01, 2010, 6:44 PM UTC

tptacek wrote: post #3

What these people are doing is exactly equivalent to what tendentious tenants do to avoid eviction. We almost uniformly hold those tenants in contempt; they're perpetrating a fraud. The only difference here is that it's banks holding the loans, not independent landlords. I see how you could sympathize with a ruthless defaulting homeowner; after all, what else are they going to do? Are we really asking them to vacate…

[deleted]

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#27

Post by _mattb » Tue, Jun 01, 2010, 6:45 PM UTC

tptacek wrote: post #3

What these people are doing is exactly equivalent to what tendentious tenants do to avoid eviction. We almost uniformly hold those tenants in contempt; they're perpetrating a fraud. The only difference here is that it's banks holding the loans, not independent landlords. I see how you could sympathize with a ruthless defaulting homeowner; after all, what else are they going to do? Are we really asking them to vacate…

I'm guessing their credit will be shot? But I don't really know how that system works. Would they ever be approved for a loan again?

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#28

Post by MichaelSalib » Tue, Jun 01, 2010, 6:45 PM UTC

tptacek wrote: post #19

stellar678 wrote: post #17

Earlier quoted context omitted.

I find it interesting that debt is always couched in moral terms for individuals, but business terms for corporations. Somehow it's immoral for individuals to work a system for their advantage, but it's standard operating procedure for a business.

That's a straw man argument, isn't it? The fact that some pundit somewhere drew a line between Morgan Stanley's contracts and Joe Smith's contracts doesn't mean we have to be held to a different standard on Hacker News. Or, more directly: it's immmoral for businesses to violate contracts too. What's the rest of your argument?

The fact that some pundit somewhere drew a line between...

As Felix Salmon points out ( http://blogs.reuters.com/felix-salmon/2009/11/30/the-worlds-... ), we're not talking about some random pundit. We're talking about the President of the United States, the Secretary of the Treasury, and a long list of authoritative figures in civil life.

Or, more directly: it's immmoral for businesses to violate contracts too. What's the rest of your argument?

Given finite resources for law enforcement, we should prioritize investigation and prosecutions so that a small number of random losers who made a bad moral choice that probably harmed no one get investigated/prosecuted after the rich and powerful people who decided to abandon their own underwriting standards and helped destroy the economy.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#29

Post by tptacek » Tue, Jun 01, 2010, 6:46 PM UTC

MichaelSalib wrote: post #18

tptacek wrote: post #3

What these people are doing is exactly equivalent to what tendentious tenants do to avoid eviction. We almost uniformly hold those tenants in contempt; they're perpetrating a fraud. The only difference here is that it's banks holding the loans, not independent landlords. I see how you could sympathize with a ruthless defaulting homeowner; after all, what else are they going to do? Are we really asking them to vacate…

what they're doing is morally indefensible I don't generally classify actions as morally indefensible or not; 1 bit of information seems awfully limiting. So while this seems somewhat immoral to me, it doesn't strike me as a major moral fault, which is what I think of when people bandy about the phrase "morally indefensible." any costs to the bank their behavior incurs is largely going to be borne by good-faith mortg…

Apparently we agree about pretty much everything: (a) yes it's bad to renege on a debt, (b) it's probably not worth freaking out over.

I pretty much boil down to: "stop bragging about exploiting the system." I'm guessing you agree with that too!

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#30

Post by tptacek » Tue, Jun 01, 2010, 6:47 PM UTC

MichaelSalib wrote: post #28

tptacek wrote: post #19

Earlier quoted context omitted.

That's a straw man argument, isn't it? The fact that some pundit somewhere drew a line between Morgan Stanley's contracts and Joe Smith's contracts doesn't mean we have to be held to a different standard on Hacker News. Or, more directly: it's immmoral for businesses to violate contracts too. What's the rest of your argument?

The fact that some pundit somewhere drew a line between... As Felix Salmon points out ( http://blogs.reuters.com/felix-salmon/2009/11/30/the-worlds-... ), we're not talking about some random pundit. We're talking about the President of the United States, the Secretary of the Treasury, and a long list of authoritative figures in civil life. Or, more directly: it's immmoral for businesses to violate contracts too. What…

Substitute "President Barack Obama" for "some pundit somewhere" and I don't think my argument changes or loses any force. But, I agree: we shouldn't be creating a task force to go after these people.