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Homeowners in Foreclosure Find a Rent-Free Approach

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Re: Homeowners in Foreclosure Find a Rent-Free Approach

#41

Earlier quoted context omitted.

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 poin…

...had a child before marriage... I agree with a lot of your comment, but this bit seemed very oddly out of place. What would be wrong with having a child before getting married? It's not something I chose to do, but most of the other things you mentioned have fairly predictable negative financial consequences, whereas I can't think of anything for this one.

Sorry, I should have said that they had an unplanned child that caused her to drop out of school. It also provided additional financial burden. A child before marriage isn't the issue; it's how they dealt with it. Consider that they didn't use any real birth control other than the hope and pray method. The second child was essentially for the same reason.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#42
post #34

Earlier quoted context omitted.

I forgot that many people on HN can't distinguish between normative and positive claims, so let me clarify: I don't think this behavior is terribly ethical, but I do think it can produce more efficient economic outcomes. There are many of unethical acts that improve economic efficiency.

I agree with you that the likely effect of them turning in the keys to their houses is that those houses will be vacant probably for the better part of a year, which will damage other good-faith occupants of neighboring houses and produce no economic good for either the lender or the buyer. I think the only thing I could really wish for here is a system that captures some of the funds that these people are spending o…

a system that captures some of the funds that these people are spending on trucks or business schemes and, in exchange for some long-term plan to keep them in their houses, get them to start paying back into their commitments

There have been several proposals that would accomplish this, including Dean Baker's Own to Rent ( http://tpmcafe.talkingpointsmemo.com/2007/08/19/own_to_rent_... ); I believe all of these proposals have been vociferously opposed by the finance industry. One reason is that it would probably force banks to mark down the values of their assets to something more realistic. I believe these proposals would be very popular though with the general public....

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#43
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 poin…

I completely, 100%, understand and sympathize. I've been in a similar situation for a while.

I love my parents. And not all of their current situation is entirely, directly, their fault, but a lot of it is. They recently had a windfall, of sorts, a few months back. I was hoping that, considering the foreclosure threats, the destroyed credit, the really tough situation they've been in, they would finally see to it that the money was put to effective use.

But, no. Instead, they settled a few bills, yes, but several thousands went to my brother, so that he could get a shiny new car that he couldn't afford. My brother works hard, and I love him too. But, he couldn't afford it. He didn't need exactly that one. There were lots of perfectly reliable options for $1,000 or less.

Predictably, he's already behind on paying them back. Then tax time came, and that windfall suddenly added up to a huge payment back to the government -- money they, again, didn't have. Now they're selling one of the vehicles they have a loan on, at a loss, because they can't afford the monthly payments anymore. They'll still have to pay the difference, probably for around a year, and they'll be out of a vehicle in the meantime.

None of this stopped my dad from picking up a really great deal on an antique car, though.

It's maddening. It's definitely starting to put a rift in our relationship. I've tried helping, a lot. I made their car payments for a while (and in return got to drive it while mine was broken down, yet again). I've been paying their cell phone bills for around a year now, at least.

Meanwhile, I've bootstrapped my own business, with no savings. I work on my truck constantly. My girlfriend and I live in a small place; we get by, but it's been very difficult sometimes. Gradually though, we're getting ahead, and without much in the way of help. Mostly, we work at it constantly, and try to make smart decisions money-wise.

But my parents, and now my brother, do seem to feel very entitled. They would probably object to that, but if you listen to them, you hear things like, "I've worked hard all my life, I deserve this." Well, no. They worked hard all their life, but they squandered everything they ever made. Now their time has run out and they don't have any options left -- but still, it's someone else's fault that they're being forced to give up all this stuff.

I think it's the Boomer Generation Problem: they were told, "work hard, and you can have whatever you want", and so many people believed it. It was supposed to encourage them to do something meaningful with themselves, but instead it encouraged them to compete with eachother over ever more extravagant displays of wealth -- all of which kept actually making them poorer.

It's very sad, and I fear that not enough of my generation has really begun to realize this yet.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#44
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 poin…

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

1. Don't apologize. No need.

2. Not useless.

3. I have similar stories. I imagine others here do too. But I was too chicken to share mine. Glad you had the guts to be honest and say what you're thinking. Please keep doing that.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#45

Earlier quoted context omitted.

People who stay in their homes prevent squatters from moving in... Squatters living in a home owned by a bank prevent squatters from moving in?

There are different varieties of squatters. Drug addicted transients are not equivalent to small business owners with roots in the local community who happen to have an emotional attachment to that particular house. Given the choice of squatters, I'd prefer to have squatters with a non-zero income.

I don't know what the probability of "drug addicted transients" moving into a foreclosed suburban house is, but I do know that people aren't going to be strongly incentivized to keep up maintenance on a house they will be vacating soon.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#46

Earlier quoted context omitted.

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 poin…

I completely, 100%, understand and sympathize. I've been in a similar situation for a while. I love my parents. And not all of their current situation is entirely, directly, their fault, but a lot of it is. They recently had a windfall, of sorts, a few months back. I was hoping that, considering the foreclosure threats, the destroyed credit, the really tough situation they've been in, they would finally see to it tha…

Nice post, up until "I think it's the Boomer Generation Problem".

Boomer here who got his first credit card at age 27, never bought a house without at least 20% down, never had a car payment, and never failed to pay a bill on time. Just like most people I know, regardless of age.

This is not a matter of age or generation, but of character.

No need to ruin a great post with a silly conclusion.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#47
Imagine I decided to move into a foreclosed home and live there rent free until the banks could legally force me out? What is that called? It's stealing. Every month these people live in these houses they are stealing from the banks. Yes, the banks are at fault for creating the opportunity to get robbed but that doesn't justify the actions of these squatters.

Would you say that a rapist is justified in raping someone because they acted in a sexually lewd manner?

The "they had it coming" argument just doesn't hold water.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#48
post #14

“They’re all crooks." Let me see if I got this right... You borrowed money. Now you choose not to make the monthly payment that you have already agreed to pay. And spend that money on other stuff. And you call them the crooks?

Even if banks and courts did have the manpower to evict these people faster, the deeper problem, as you pointed out, is this backwards logic and gross rationalizing.

To try to address this, I think a campaign of linking fiscal responsibility to patriotism might be helpful. I suspect that many of these people would identify with being patriotic. Each mortgage payment these people make or at least each step these people take to work with the bank is a step in the right direction for our country. The actions of these people will inevitably hurt the rest of us in the long run.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#49
post #45

Earlier quoted context omitted.

There are different varieties of squatters. Drug addicted transients are not equivalent to small business owners with roots in the local community who happen to have an emotional attachment to that particular house. Given the choice of squatters, I'd prefer to have squatters with a non-zero income.

I don't know what the probability of "drug addicted transients" moving into a foreclosed suburban house is, but I do know that people aren't going to be strongly incentivized to keep up maintenance on a house they will be vacating soon.

Judging by http://www.theatlantic.com/magazine/print/2008/03/the-next-s... I'd say the probability is nonzero. And I'm pretty sure the owners described in the article will perform some critical maintenance like making sure vermin don't infest the house and fixing leaks because no one, not even a renter, wants to live in a place water rains down on them in their living room or where they have to dodge raccoons.

Again, there are degrees of maintenance. They won't be incentivized to put in a new deck or repaint the whole house, but a lot of the value destruction associated with foreclosure has to do with simpler things: animals taking residence, water damage, thieves stealing the wiring/plumbing and ruining the walls in the process, etc.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#50
post #19

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?

* Or, more directly: it's immmoral for businesses to violate contracts too.*

I applaud you for this statement, but GP is correct that many do not share this belief.

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