Live data from Hacker News

Homeowners in Foreclosure Find a Rent-Free Approach

nytimes.com

51–60 of 64 posts

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#51
post #46

Earlier quoted context omitted.

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.

You're probably right. I would expect there to be exceptions, but after doing a little digging, I'm not finding anything to support the belief that a specific age range of individuals is suffering statistically higher foreclosure rates.

I got to that conclusion after a couple too many anecdotes, but there're no numbers to back it up.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#52
post #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 peopl…

I think a campaign of linking fiscal responsibility to patriotism might be helpful.

Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot.

My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said anything about BoA or GS being "unpatriotic". The double standard would appall many people I think.

The actions of these people will inevitably hurt the rest of us in the long run.

Are you certain that's true? Maybe the only way to convince banks that they should not completely abandon their own underwriting standards would be for them to suffer some more agony by having a few borrowers dick them around. Certainly, if they just moved out today, the homes they lived in as well as their neighbors would lose value, which would in turn hurt "the rest of us in the long run".

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#53
post #48

Earlier quoted context omitted.

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 peopl…

I think a campaign of linking fiscal responsibility to patriotism might be helpful. Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot. My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said a…

In both World Wars the US had nationwide "rationing" and volunteer recycling programs. This was all done in the name of patriotism.

~ Those unoccupied homes would simply burn down sooner rather than later and the neighborhood would be better off. Remove the blight and re-use the land for something else.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#54
post #48

Earlier quoted context omitted.

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 peopl…

I think a campaign of linking fiscal responsibility to patriotism might be helpful. Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot. My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said a…

Why does increasing the supply of available homes (and thereby lowering prices) hurt the rest of us?

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#55
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?

Maybe both parties are crooks? This is not a zero sum game...they can both be crooks at the same time.

And unfortunately, the real "victims" in this episode are people who act responsibly by paying their mortgages and taxes while receiving very little interest on their savings.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#56
The Chinese sees the housing crisis from a different point of view: The US cheated China out of billions by selling them bonds backed up by inflated real estate, money saved up by hardworking Chinese. It's a completely different take on the situation.

Someone had to provide the money in the first place. That someone sure as hell wasn't the banks, the banks were intermediaries. Often times that someone was a Chinese or German institution chasing higher interest rates with no clear understanding of what was being sold to them.

Who benefited from the transaction? Whoever sold the home. A lot of foreign money came into the US and stayed in the US.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#57
post #46

Earlier quoted context omitted.

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.

You're probably right. I would expect there to be exceptions, but after doing a little digging, I'm not finding anything to support the belief that a specific age range of individuals is suffering statistically higher foreclosure rates. I got to that conclusion after a couple too many anecdotes, but there're no numbers to back it up.

You know, as much as I hate to be a bigot (and, as a minority in this country, believe me, stereotypes _hurt_), I have to agree with your generational assessments. Furthermore, I think it's both the boomers and the "echo boomers" (born 1980 to 1995) that are perpetrating this easy money fallacy.

Though alot of people will say it started well before, I'll say it seriously accelerated starting with George W. Bush, and I'll tell you why. Even though W graduated from Yale and Harvard (and had a father who did the same and who was a paratrooper and CIA director then VP then Prez), he was still looked at as kind of the lovable fuck-up, the "guy you'd wanna have beers with", i.e., an everyman. Very little elitism in his manner or his folksy talk with put-on Southern accent (even though he was born and raised in Connecticut). Everything he did was done "by the gut," given little more than "hope and faith" before decisions were made. It seemed easy. The way he damned the terrorists before making a golf swing, the time he simply waved his hand and made stem cell research disappear in a fog of amoral haze, the way he magically made trillions "appear" for the Nation's tax cuts and stimulus checks, the way he funded wars without accounting for them in the general budget.

It seemed like magical, heady times. We didn't even understand it, but we loved it. Even though 9/11 came and went under his administration, we didn't feel the true weight of it, because it was all put on credit.

That's ALL we knew. Credit was the magic salve for all problems. Suze Orman even told everyone that the only way to build credit was to have credit cards (which, in hindsight is complete BS as evinced by tons of people like myself, who has a ~740 score having never had a credit card in my 35 years of life, and currently paying both a mortgage and a car loan, both at between 4-4.5% interest with 10% down).

Most of us just didn't care. We were asking increasingly crazier and crazier questions like "about to file bk [bankruptcy], lien on house... would I qualify for a lease on a Hummer H3?" (I kid you not, that was on a messageboard that I was forwarded the link by a friend; unbelievable). But alot of people had similar situations. Suddenly people were driving cars that cost more than 2x their annual salary, and buying a home that was more than 10x the same and not even noticing that it wasn't completely outrageous to do so.

When it all came CRASHING down on them and the banks came to collect after their drunken-sailor grace periods, everyone was already tapped out, rolling debt from credit cards and loans onto new cards and things like that that seem kinda commonplace now even though it's simply mindboggling if looked upon on an individual person-by-person basis.

I've seen this with the boomer generation, I've seen this with their kids (the echoes or Y generation), but it just mostly kinda skipped Generation X, the 30-somethings. Don't ask me why, I'm not a close study of generational attitudes, but I do know what may have triggered it. For the boomers, it was W's spending ways; for Gen-Y, it was watching their boomer parents as well as Paris Hilton, Lindsay Lohan, et al. spend like it would never end. And, they tried to keep up with their cultural peers.

Hey, just a theory :D

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#58

Earlier quoted context omitted.

I think a campaign of linking fiscal responsibility to patriotism might be helpful. Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot. My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said a…

Why does increasing the supply of available homes (and thereby lowering prices) hurt the rest of us?

If the former owners in question leave the houses they're occupying, then they'll go live somewhere else. Which wouldn't change the supply of available homes. It might lower prices, but I'm not sure why you would consider that a problem in and of itself: at the margin, that helps renters and hurts owners. Our society goes to great lengths to transfer cash from renters to owners, so a tiny change in the opposite direction doesn't strike me as a huge problem. Given current rent to own ratios, such reductions are needed to bring the system into balance anyway.

And leaving the current home they're in vacant will reduce its value. Specifically, vacant foreclosed properties suffer all sorts of problems that reduce their value: animals infest the properties, thieves steal the wiring and plumbing (which destroys the walls), leaks spring and since no one notices, water damage accumulates quickly, etc. Plus, neighboring homes will lose value as well: no one wants to live next to a vacant structure that has sustained major water damage or is being used as a base of operations by criminals or vagrants. Keeping people in those homes prevents most of these value-destroying problems from happening. When good assets are trashed, our whole society is made poorer.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#59

Earlier quoted context omitted.

Why does increasing the supply of available homes (and thereby lowering prices) hurt the rest of us?

If the former owners in question leave the houses they're occupying, then they'll go live somewhere else. Which wouldn't change the supply of available homes. It might lower prices, but I'm not sure why you would consider that a problem in and of itself: at the margin, that helps renters and hurts owners. Our society goes to great lengths to transfer cash from renters to owners, so a tiny change in the opposite direc…

If the former owner downsizes, moving from a large home to a small one, the supply of housing goes up. And I don't consider lowering prices to be a problem.

Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. The new owners would be more likely engage in maintenance of the home (why fix the roof of a house you are going to be kicked out of) and the new owners will be people of better moral standing. Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet.

It's possible that the downsides to leaving outweigh the upsides, but it's by no means certain. There are both upsides and downsides, and it's very far from obvious which way the balance goes.

Re: Homeowners in Foreclosure Find a Rent-Free Approach

#60

Earlier quoted context omitted.

If the former owners in question leave the houses they're occupying, then they'll go live somewhere else. Which wouldn't change the supply of available homes. It might lower prices, but I'm not sure why you would consider that a problem in and of itself: at the margin, that helps renters and hurts owners. Our society goes to great lengths to transfer cash from renters to owners, so a tiny change in the opposite direc…

If the former owner downsizes, moving from a large home to a small one, the supply of housing goes up. And I don't consider lowering prices to be a problem. Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. The new owners would be more likely engage in maintenance of the home (why fix the roof of a house you are going to be kicked out of) and the new owners will be…

Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner.

In many parts of their country, there is a large excess of supply, so it is unlikely that a quick sale is possible. Which means that the house will likely sit on the market for 6-12 months.

In some areas, banks are walking away from properties they foreclosed upon, legally abandoning them. The responsibility for maintaining or demolishing the property then reverts back to the original mortgage holder, who often gets no notice and believed that they had nothing to do with the property since it was foreclosed. Under such circumstances, I think it can make sense for people to refuse to move out: if the house will continue to be an open ended obligation for you, you might as well at least get a place to live out of it. See this article for more information: http://www.cleveland.com/news/index.ssf/2009/07/bank_walkawa...

why fix the roof of a house you are going to be kicked out of

Two reasons. (1) Because you don't like rain water poring over your head while sleeping in bed. No one wants to live in a house where rain water is poring on them. No one wants to live in a house where mold and mildew have taken root from pooling water. And no one wants to share a house with raccoons. (2) Homeowners often develop irrational attachments to the home that they "own"; that is why many people buy homes when doing so makes no economic sense. These irrational attachments may incentivize people to maintain homes when rational calculation suggests they should not. Remember, being a "good" homeowner is a key concept of many people's self-image. Doing things like fixing leaks and tending the yard may continue to matter to them even after they've decided that they're not paying another cent.

Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet.

I don't believe this claim is true. Can you cite anything justifying it? In many areas, foreclosure takes a long time because servicers and courts are overwhelmed with volume; this state of affairs benefits banks who can postpone marking their assets properly.

I don't consider lowering prices to be a problem.

Sorry; I misread your comment. Given how little evidence we have that this phenomena affects a significant number of people, I don't find claims that this will materially change market prices to be credible.

Post reply on HN