IPAfan
Familiar Member
Joined: Jan 1, 2011 16:17:11 GMT -5
Posts: 890
|
Post by IPAfan on Jun 2, 2011 11:23:08 GMT -5
It's a free market.
The bank lent money on an overpriced house to irresponsible people. Your friends can walk away or short sale the house (in California you can just walk away period with no adverse consequences other than to your credit score).
But it's still a free market. You think that another bank is going to be lending money to them to buy a house soon? Nope. The only way they're going to be living in a bigger house is if they rent, because no bank is going to lend them money right now.
Again, the banks knew they were taking the risk. The bank has to approve a short-sale. So I don't see any ethical problem.
EDIT:
BTW I spend a lot of time reading the Bible. Walking away from an obligation doesn't seem like a very biblical idea, but I see "usury" spoken against far more frequently. If your ethics are based on scripture, it's pretty one sided not to say that the banks are unethical.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 2, 2011 14:21:01 GMT -5
While I am not all that familiar with how things are written in the bible, I thought Usury was generally unfair terms, like massive amounts of fees or crazy interest rates. As far as I have heard, the mortgages during the bubble were at market interest rates (5-6%) and had the standard fees (late fees possibly). I don't call that usury. The bigger problem that was said was that people got the loans who shouldn't have qualified. The pressure was on to make homes "available" to everyone-thereby making 80/20 and Interest only loans all the rage. I wouldn't say that's usury on the bank's part, it's more stupidity on the borrower's part. As far as my cousin, she has a fixed rate, ~5% loan with little/nothing down (Part of some incentive program for first time buyers). I don't think the bank took advantage of her. She got good terms, low interest rate, fixed, etc. She just decided she doesn't like the drop in value...
The weird thing about it is that she has been complaining about all the $$ the govt gives away to people (She's very conservative) yet I don't think she realizes that doing something like this is why the govt had to go in and bail the banks out in the first place. (I don't want to get into whether or not the govt should have done that...they did it and used all the defaults as their rationale so it is over and I will attribute their action to that) The whole thing is just odd...
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 2, 2011 14:46:12 GMT -5
If her loan wasn't sub-prime, she isn't the reason the government had to bail out the banks.
|
|
IPAfan
Familiar Member
Joined: Jan 1, 2011 16:17:11 GMT -5
Posts: 890
|
Post by IPAfan on Jun 2, 2011 14:56:31 GMT -5
I just don't understand why banks can take complete advantage of the law, and consumers are condemned for doing the same. My credit score has a value. I'd blow my credit score for a big boost in net worth.
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 2, 2011 15:11:17 GMT -5
The bank didn't read the bible.
|
|
IPAfan
Familiar Member
Joined: Jan 1, 2011 16:17:11 GMT -5
Posts: 890
|
Post by IPAfan on Jun 2, 2011 15:20:42 GMT -5
Exactly
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 2, 2011 18:05:14 GMT -5
I just don't understand why banks can take complete advantage of the law, and consumers are condemned for doing the same. My credit score has a value. I'd blow my credit score for a big boost in net worth. I didn't say what she is thinking about doing is illegal, I said I thought it was unethical. I may be old fashioned but I think a person's word should be worth something. When I borrow money, I expect that I will be paying it back. My word is my bond and I would pay back with only an oral contract (I understand the odds of getting a mortgage on an oral contract are nil but just go with me on this...). I think it says something about someone when they stiff someone and go back on their word because it will result in a financial gain for themselves and they don't care about the financial loss to the other party. I understand that people like to think of banks as huge, evil, faceless organizations but, in my opinion, there are two problems with this. The first is that if they are that evil, why do business with them in the first place? they weren't that evil when you needed the $200k for the house. What makes them that evil now? The second is that banks are actually owned and run by people. When a bank takes a loss, that loss doesn't get absorbed into thin air. The stockholders lose money and the costs of the loss get put onto the other customers. How is that right? I understand that sometimes stuff happens in life and people need a way out. I think that way out should be reserved for legitimately bad stuff (death, illness, etc), not used just because "I don't feel like paying anymore" or "It's not fair that my home value dropped". To me, that kind of thinking isn't very adult and certainly isn't very responsible. When I hear of that happening, I think what other responsibilities would you walk out on because you just don't feel like it or it's not fair what you got?
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 3, 2011 10:28:34 GMT -5
So, you have never, ever once in your life changed your plans because the situation at hand has drastically changed and the results of following through on the original plans would have a detrimental on your life.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 3, 2011 11:05:08 GMT -5
So, you have never, ever once in your life changed your plans because the situation at hand has drastically changed and the results of following through on the original plans would have a detrimental on your life. I have definitely changed my mind before. But whenever I have, I have made sure that the other party would be whole before I took action or I made them whole myself. I am not saying that we shouldn't have ways out if something drastic happens (I have been very lucky and have not been faced with major illness, death, etc) but using the "I am just not making the money I wanted so I am walking..." seems ridiculous to me. My cousin did say that they thought they got a great deal on the house when they bought it because it was 50% off the peak price. Now that they haven't seen their equity rise 20% a year, they are thinking of walking. I think it's fine to walk and buy something else as long as you pay the bank what they owed you back and make them whole. They didn't pick the house or negotiate the price- she did.
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 3, 2011 11:30:31 GMT -5
I agree that she is making a mistake if it is because the value isn't rising, or even because it fell slightly. That isn't financially prudent either. But I don't understand the concept of staying with a tanking investment. It is just throwing good money after bad. I don't understand why you feel your "word" (with people you don't know or care about) is worth losing a quarter of a million dollars.
|
|
Lex Luthor
Initiate Member
Joined: Feb 10, 2011 12:43:26 GMT -5
Posts: 68
|
Post by Lex Luthor on Jun 3, 2011 12:19:59 GMT -5
Audrey - I think this board has probably had the "strategic default" arguments ad-nauseum - extending well into the pre-proboards days. There are those, like yourself, who will never under any circumstance think that someone should "strategically default" when they can afford to make the payments on their house. And their are those who can see that the issue of what happened during the housing boom/bust between the brokers, lenders, investment bankers, irresponsible borrowers, and responsible borrowers is an ethical situation that is more complicated than just saying "under no circumstance is that acceptable". Here is the bottom line for me - it is only the responsible borrowers who are being asked/required to act ethically in regards to what happened during the boom/bust. Yes, we borrowed the money. Yes, I asked for the $240k loan in 2005. And yes, what we did was responsible - fixed rate mortgage - less than 20% of our gross - planned to live in that house for at least 10 years - and in comparison to rents it was only about $100 more per month. Everything I did was responsible. However, I cannot control the behavior of every other player in this situation. It is not the result of my actions that the house I borrowed on ended up 45% underwater. It is the result of the actions of every other player. And yet, the lenders got TARP. The irresponsible/uninformed buyers got the opportunity for loan modifications. If you can afford your mortgage - and made responsible decisions from the beginning - there is nothing you can do about it. I didn't even qualify for loan refinancing under the gov'ts plan because my LTV was >125%....and per the gov't..."anybody with an LTV >125% was speculating". Like I said, how far a borrower is underwater is almost irrelevant. What really drove us to default was the fact that rents in the area we live in came to be about half our mortgage payment as a direct result of the bust. By defaulting we stood to save a significant amount of money - and if we invested the difference and earned 10% per year over the long-run - it was a decision we determined to be worth about $500k to $1M to us - that's a big financial motivator. Below is a copy/paste of answer I gave to someone else in regards to the ethics of our specific decision: I will be the first person to tell you that what I did was unethical and that I definitely feel like I lost *honor* points because of it. I can remember sitting across the table from my spouse about 6-months before we made the final decision to walk and shaking my head and saying “We’re good people, we just don’t do things like this”. And I will also tell you that if I had borrowed the money from my grandmother to purchase the home, I would absolutely not have chosen to default. But no one is keeping an honor scoreboard and I didn’t borrow the money from my grandmother.
You asked “what makes it okay?”. Well, what makes it okay to me is not the clause in the contract that outlines what happens in the case of default. I don’t lose any sleep at night because I understand exactly how that home ended up being 45% underwater. It’s not like I personally set the place on fire, or the entire area was suddenly a prime zone for a terrorist attack, or my neighbors mutated into crazy zombies that nobody wanted to live near. No…the crazy bankers who lent me the money essentially set the house on fire. It’s like if Grandma loaned me that money and then walked around the backside of the house when I wasn’t looking, poured gasoline all over the porch and lit the flame herself, and then had the audacity to come back around to the front of the house and ask me for her payment while the backside was erupting in flames.
There was significant financial gain to me, it was a lawful action, and I felt “justified” in that action. I’m at a place where I’m “okay” with what I did. Believe me, if Grandma set your house on fire, you might suddenly feel like your moral code was a little more flexible.
Staying in that house was a bad financial choice, but ethically correct. Leaving that house was a great financial choice, but ethically wrong. I wish the two were not mutually exclusive decisions, but they were. I put myself and my family above the "greater good" and I don't regret that choice.Here is another thread where we discussed this recently: notmsnmoney.proboards.com/index.cgi?action=display&board=finance&thread=3113&page=1I don't know - they would need to talk to a lawyer - but my thought is that it would depend on whether or not your primary home loan mortgage had officially been turned into an investement property by actually renting it to others. If it's never been rented then it shouldn't be deemed an investment property - unless the loan you took on the property was an NOO loan. Petunia (I hope you're still readin this - I'll send you a PM as well) - I think it's Bonnap who is usually indicating that she thinks the Mortgage Debt Forgiveness Act is not needed for Non-Recourse states. And I wanted to share with you some wording I found on the IRS site that supports that conclusion (though it's unclear if this would apply to short-sales in a non-recourse state): Is Cancellation of Debt income always taxable? Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences. www.irs.gov/individuals/article/0,,id=179414,00.html
|
|
Lex Luthor
Initiate Member
Joined: Feb 10, 2011 12:43:26 GMT -5
Posts: 68
|
Post by Lex Luthor on Jun 3, 2011 12:38:02 GMT -5
What's interesting about this situation with your cousin, is that she would have purchased in 2009 - well after the bust cycle began. And probably as a direct result of the first-time home buyer programs the gov't was pushing. I don't know if "having a bigger house" would be enough justification for me - maybe if I had too many kids running amok in a small place and just couldn't stand it anymore - but I just can't see myself doing that. Moving to a substantially better school system might be enough - IF the current school system was in some way dangerous to my children. (this is a whole other topic - but my opinion is that success in schools is primarily dependent on the parents).
I know there are probably a few people I live next to that purchased in late 2008 that may be near 40% underwater - but ultimately it's irrelevant because their PITI are less than the going rents in the area. If my neighbors want to move for the reasons your cousin listed - they can just rent the house....you could offer that as a solution to her problem.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 3, 2011 15:13:58 GMT -5
What's interesting about this situation with your cousin, is that she would have purchased in 2009 - well after the bust cycle began. And probably as a direct result of the first-time home buyer programs the gov't was pushing. I don't know if "having a bigger house" would be enough justification for me - maybe if I had too many kids running amok in a small place and just couldn't stand it anymore - but I just can't see myself doing that. Moving to a substantially better school system might be enough - IF the current school system was in some way dangerous to my children. (this is a whole other topic - but my opinion is that success in schools is primarily dependent on the parents). I know there are probably a few people I live next to that purchased in late 2008 that may be near 40% underwater - but ultimately it's irrelevant because their PITI are less than the going rents in the area. If my neighbors want to move for the reasons your cousin listed - they can just rent the house....you could offer that as a solution to her problem. Lex, they did buy after the bust started (Way after...like I said, the house was already 50% down from the peak). They don't have any kids yet and the house is 4 bed, 2 bath. They just don't like the fact that they thought when they bought was the bottom of the market and it turns out it wasn't. They could turn it into a rental but they would be losing several hundred a month (plus maintenance) so I don't think that they are willing to do that.
|
|
achelois
Well-Known Member
Joined: Dec 19, 2010 9:55:44 GMT -5
Posts: 1,479
|
Post by achelois on Jun 3, 2011 18:19:39 GMT -5
Your ethics should be worth it to you. You do the ethical thing even if no one ever knows you have done it but you. You do it regardless of other people's actions.
A lot of people--sadly--do not and will not understand. The day money becomes that important to me I hope I get run over by a bus.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 3, 2011 18:33:52 GMT -5
Your ethics should be worth it to you. You do the ethical thing even if no one ever knows you have done it but you. You do it regardless of other people's actions. A lot of people--sadly--do not and will not understand. The day money becomes that important to me I hope I get run over by a bus. That's how I feel. I always thought that integrity meant that you do the right thing even if no one is watching you because it's the right thing. It was just disappointed me to find out a lot of people don't agree with me on that. At any rate, I didn't mean to turn this into a thread about the housing issue... it was just what we were talking about when I wasn't sure how to share my opinion on the ethics of the situation with the person I was talking to. The fact that the situation even came up surprised me, as I thought my cousin and I shared the same views on those kinds of things.
|
|
IPAfan
Familiar Member
Joined: Jan 1, 2011 16:17:11 GMT -5
Posts: 890
|
Post by IPAfan on Jun 4, 2011 9:49:40 GMT -5
Great post Lex. That's exactly my point. If you live in California in a deeply underwater house, you almost owe it to your family to default. In California there are no deficiency judgments because the legislature has anticipated people defaulting from their homes when the market goes to crap. Why stick around and get pummelled when you can immediately improve your NW by 6 figures plus just by removing a huge liability from over your head?
|
|
IPAfan
Familiar Member
Joined: Jan 1, 2011 16:17:11 GMT -5
Posts: 890
|
Post by IPAfan on Jun 4, 2011 9:59:18 GMT -5
To go one step further. California has no default judgments so if you walk away from a house with a purchase money mortgage you ruin your credit, and that's about it. I will strongly consider "speculating" on a house with cheap government money when the time is right. I can put 3.5% down on an FHA loan and mortgage is about the same as rent. So I'm looking at about $8,000 down to leverage a $250,000 asset. The law here is set up so that I can leverage a property enormously, and if it goes against me I can walk away.
Who gets screwed? The FHA? Well I'm sure I'll pay for it in taxes over the next 20 years. Do I care about bank stockholders? Did they care when they were making double digit annual returns on the backs of the poor? Our economy is a zero sum game. Businesses compete with each other.
I notice a lot of people with their own ideas about what is "unethical" that essentially castrate the consumer from competing on a level playing field with big business. You'd think that as individuals we'd need advantages rather than disadvantages to get ahead.
When you buy a house with a low interest fixed rate mortgage, you're taking advantage of subsidized government loans. In fact, you're taking advantage of these loans on MY BACK since I'm a renter and a taxpayer. Yet you don't view that as unethical.
When you invest in an index fund, you profit from all manner of businesses that lend at HIGH rates to the poor, and take advantage in all manner of ways. MANY of these businesses show profits from renegotiating their liabilities (same thing as strategic default). Yet you don't view investing in an index as unethical.
Get off your high horse, and stop looking down your nose at people that simply use the protections that the law affords them. They're not "breaking their word" because the contract includes provisions in event of default. In California there is no default judgment on purchase money mortgages for residential properties. That's all spelled out. It's so ridiculous to start a thread for the sole purpose of pulling the speck out of your neighbor's eye. Why should your family follow your false sense of ethics? Again, you're not breaking your word when the default provisions of the loan are spelled out, and both the bank and borrower agree to the provisions of the loan.
|
|
Lex Luthor
Initiate Member
Joined: Feb 10, 2011 12:43:26 GMT -5
Posts: 68
|
Post by Lex Luthor on Jun 4, 2011 13:04:42 GMT -5
kgb - audrey - achelios -
I have an honest question that I'd like your opinions on - one that I am truly interested in your responses to. I think it will speak to lengths at which you each believe someone in this situation is required to go to in order to honor their obligation to the bank - please try to consider that the bank/lender is in part responsible for the underwater home.
What is often forgotten about an underwater home owner is that the borrower has paid a significant amount of interest on the loan prior to default - since most interest is paid at the beginning of the loan. It can often be the case that a defaulter has caused no loss for the bank/lender - and in fact the bank may have made money from the borrower.
So, four borrowers - borrow $200k for their home purchase. All default. In considering the interest paid plus the amount the bank collected from the sale of the home - at time of default borrower A has paid 125% of the value of the loan (or $250k), borrower B has paid 110% of the value of the loan (or $220k), borrower C has paid 100% of the value of the loan ($200k), and borrower D has paid 90% of the loan (or $180k).
I can see how borrower D would fall under the unethical category by your definitions. But what about borrowers A, B, & C ? The banks didn't lose money - but they didn't make the amount of money they were contracted to either.
Achelios - you once told me about a situation where you worked multiple jobs for a long time to re-pay an older couple who your husband borrowed money from for an investment scheme that didn't work out. Did you just repay the money borrowed - or did you repay the promised return as well?
If the bank is in part at fault (and should therefore bear some reponsibility IMO) - Is it sufficient to repay just the money borrowed? Or does the bank need to actually make money from the transaction as well?
Please give this question careful consideration - I truly am interested in your answers. Thank you.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 5, 2011 12:33:47 GMT -5
Lex, I think that the bank should get whatever the payoff cost is, much like they would get if you sold the home. Do they deserve the full 30 year or 15 year contract amount? No, because he money wasn't borrowed for that long. There are costs, though, for the bank to give you the money. They had to pay interest to the people with savings accounts and other investors while I "used" that money. If I thought that the bank was partially responsible for the situation, I would say that they should not receive the profit (The spread between the savings account rates and my mortgage rate) but I would recognize that the large amount of interst I paid primarily up front was to pay the other people that the money came from.
In the scenario you described, I would imagine that Borrowers A and B are probably good, depending on how long they held the loan. Borrowers C and D did cause the bank to lose money and that isn't right. The borrowers set the market price of the house by agreeeing to buy for that amount. If the didn't like the price of the house or thought it was overvalued, they should have stayed renting. There is no one out there twisting your arm to buy a house. If you don't like the prices, just find a nice place to rent where you do like the prices. If you don't like the purchase or rental prices, move to an area with a lower COL.
Lex, I really appreciate your perspective on this. I followed your post on YM and you always seem very informative and able to see both sides of the equation. I guess my bigger issue is the way that people I know who are doing this/have done this present it. I know several that have lived great lifestyles (high end cars, vacations, clothing, etc) and after riding the housing boom gravy train, complain that it's over and walk from their obligations. I It is sad.
|
|
kgb18
Senior Member
Joined: Dec 18, 2010 8:15:23 GMT -5
Posts: 4,904
|
Post by kgb18 on Jun 5, 2011 17:34:53 GMT -5
Lex, I have less of an issue with the people who paid back what they borrowed. I agree with audrey that the bank should get back at least what they loaned.
I really don't have an issue with people who default out of a financial necessity. I certainly know of people who went through job loss or a serious illness or something beyond their control that eventually left them unable to make their mortgage and defaulted because they had no other choice. I have a bigger issue with someone who buys a house (like someone who bought when the market was bad, knowing things were bad) and then just deciding they don't want the house because it's not worth as much. Not because they have to move or they really can't make their payments, but they just want to bail because of how the market is right now. Buying a home is a gamble. I just believe that you made a promise and you should keep it if possible.
Plus, strategic default right now is short-sighted if a move isn't necessary. Eventually prices will rebound. It's kind of like panicking and selling stocks when there's a dip. Unless you're close to retirement, I don't think it's wise to get out of the market because eventually it will come back.
I also can't imagine being that unattached to your home, which has nothing to do with the financial part, but it still baffles me. DH and I realize that we're going to need a larger home in about two more years. We're lucky that homes in our area have retained their values well throughout this whole housing mess. Even though I realize a bigger home will be better, it still makes me sad. I have an attachment to our house just because it's our home. It's where we've started our family. I wouldn't just up and leave for no reason except a few dollars. If we were going to have more children, I would never leave.
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 6, 2011 13:42:45 GMT -5
So, if congress passed a tax code change that you did not agree with. Let's say they gave a $10k per year tax break because you have short fingernails or something totally ridiculous. Would you then not take that tax benefit, pay the additional $10k, and know that you did what you believed was right, even though it was perfectly legal for you to take the tax break?
|
|
Deleted
Joined: Oct 5, 2024 6:51:04 GMT -5
Posts: 0
|
Post by Deleted on Jun 6, 2011 14:34:54 GMT -5
Lex, That would be me about the non recourse loans. Thanks for listing the quote. A useful website for foreclosures is www.loansafe.org. One can learn about the consequences of default state by state. Both the Feds and CA have passed legislation that I think is not only unwarranted but wrong, thus encouraging strategic default vs necessary default. Petunia and Beer need to do some additional research about what is a non recourse loan in CA. While it's true that a purchase money first (and a second used for purchase like an 80-20) would be considered non recourse any refinance, even if it's a no-cash out refi is a recourse loan. This is not the case in AZ. Equity lines of credit are also considered recourse if they weren't used for the purchase. So in another post I recommended that Petunia seek the advice of a real estate lawyer and a CPA who specializes in real estate law in CA. I don't know if she saw that post. I have empathy for folks who made a bad investment, have thought about the consequences and are willing to pay the price for that decision. To give Lex credit, he didn't just do a "Walk Away"; he went through a short sale which can be very, very difficult. I have a harder time with folks who pulled cash out to finance a lifestyle beyond their means and expect to be bailed out.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 6, 2011 15:39:50 GMT -5
So, if congress passed a tax code change that you did not agree with. Let's say they gave a $10k per year tax break because you have short fingernails or something totally ridiculous. Would you then not take that tax benefit, pay the additional $10k, and know that you did what you believed was right, even though it was perfectly legal for you to take the tax break? Actually, I wouldn't take it. I would not take it on my tax return and contact my representatives to let them know that it was stupid. Without getting too personal, I am going through something similar right now. As some of you know, I was in the military, While in the military, I was injured (on duty..because of my job). I got out before they finished treatment and wanted the VA to finish the treatment until I had recovered. The VA refused to provide medical care until I claimed the injury. If you have claimed an injury and they determine it was caused by your service, you get a monthly check for being "disabled" (the amount depends on how disabled you are). I did not agree with getting $$ for my disability because it was not hindering what I was doing (It causes pain and can stop me from doing stuff but money isn't going to help me other than to help me purchase some pain relievers). I had requested that they just provide medical treatment and they said no. I went round and round with the VA and finally claimed because I needed treatment (Lack of treatment will cause long term damage). Because it took the VA so long to approve the claim, I ended up getting treatment as a civilian (and paying out of pocket). The VA would not provide treatment during that time but did end up paying me a chunk of money for that time as well as continuing to send me $$. I took enough to pay the civilian medical bills (I figure the govt should fix what they broke) and the other checks sit in my drawer. I don't intend to cash them unless I have to pay for additional medical treatment for that injury. Getting money from the govt doesn't help my injury, make it less painful, or help make my life easier. The govt disagrees with me that I shouldn't money every month for being injured. As such, I am working within their system so that the taxpayers only end up paying for what the costs of recovery are for my condition. I have been told the conditions will be permanent (unless I have surgery, which would have more complications than it's worth). I will be getting checks every month for it because of this. Will I cash them? Only to pay medical bills and buy advil. Could I get the advil and medical care at the VA and pocket the money? yes, but I don't believe it's the right thing to do. Maybe it makes me stupid or naive that I don't take everything that is said to be "mine" but that it how I feel. Maybe if I take a little less, someone else who is in more need can get a little more. If that can't happen, maybe everyone can pay less in taxes... I know, I know...I probably have my head in the clouds... Sorry for the long story.
|
|
Deleted
Joined: Oct 5, 2024 6:51:04 GMT -5
Posts: 0
|
Post by Deleted on Jun 6, 2011 16:18:39 GMT -5
"the other checks sit in my drawer."
This is silly. Those checks are going to expire after while and then when you need the $$$ it won't be available.
Create a medical EF and start investing that money since you will need it in the long term. If you feel that badly about the money you can always bequeath the acct back to the government or some other appropriate charity.
|
|
Plain Old Petunia
Senior Member
bloom where you are planted
Joined: Dec 21, 2010 2:09:44 GMT -5
Posts: 4,840
|
Post by Plain Old Petunia on Jun 6, 2011 16:24:26 GMT -5
I did see your posts, Bonnap and Lex. I appreciate so much your taking the time to share your expertise with me. You're right, the refi I did changed things for me. I am OK with taxes (since I owe less now than before the refi), but no longer have a purchase money loan. To date, I have done nothing but fence sit and go "Wow, look at the price of that house!", and that is probably all I am ever going to do. If the market dips even further and I am seriously considering default, I will consult an attorney first. Edit: correcting my bad grammar
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,762
|
Post by thyme4change on Jun 6, 2011 17:03:51 GMT -5
audrey - you and I see the world very differently. I respect your opinion, but I do not agree.
|
|
achelois
Well-Known Member
Joined: Dec 19, 2010 9:55:44 GMT -5
Posts: 1,479
|
Post by achelois on Jun 6, 2011 17:23:51 GMT -5
Lex, When I repaid the money, the hundred thousand was the total amount due. It was a hundred thousand and change--just easier to remember $100k. Easier to post, also. Forgive my lazy inexactness. ;D My ex was a great con man and there was no formal, written agreement. These sweet people gave him money because he was my husband and they thought he was a good man.After all, he promised to pay them back. They were even older than I am and twice as trusting. Hell, even I thought he was a good man. Live and learn, but so long as I am able, I will pay what I owe. I will work extra and/or do without to do it. Maybe I would be financially better off, if I did not--doing what I believe to be right has cost me a lot of money in that and in other ways over the years, but I would do no different if I could do it over.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jun 6, 2011 17:34:20 GMT -5
Thyme, fair enough. Different views are what makes the world (and this board) interesting!
Bonn, I know it's silly to leave the checks there but I haven't really had time to sit down and do all the math on what future care could cost. A big reason that I haven't cashed them and put them into a medical EF is because I now have the medical coverage for the issue that costs nothing (from the VA). The medical care cost money before because it was on the civilian side. In the future, I don't need to use a civilian doctor so my copays should be nothing (the only OOP cost would be pain relievers but I have no problem paying for that on my own..the cost is negligible). Because of this, I was thinking that it really doesn't matter of the checks expire and the taxpayers will still have the $$. I asked if I could keep the medical care and get rid of the $$, I was told "no, they are linked". The whole situation is very frustrating (Primarily because I had to wait to receive care because they are so focused on processing the money part that they won't give you care while you wait. They assume that everyone just wants the $$ when some of us simply want to finish treatment and move on with our lives).
|
|
Lex Luthor
Initiate Member
Joined: Feb 10, 2011 12:43:26 GMT -5
Posts: 68
|
Post by Lex Luthor on Jun 6, 2011 20:23:30 GMT -5
Thank you audrey and kgb. (achelios - I don't really see an answer to my question)
I wanted to ask, because I think there is middle ground to be found among the ethics group and the "default cuz it makes financial sense" group. I am glad to see that you both may find borrowers A & B's actions acceptable given that they have repaid and covered the cost of the loan - that it is in fact not really necessary for the bank to get exactly it's way per the agreed upon contract in order to find an "ethical defaulter".
audrey - as far as what you might say to your cousin. You know her best and you know your relationship best, so you know the boundaries that can be pushed and the ones that shouldn't if you want to maintain your relationship. I would just be honest - tell her you're disappointed if you feel the need. Let her express her point of view. But most importantly - make sure she understands all the consequences involved in a default - credit wise - employment wise. Make sure she understands her options with regard to possibly renting the house. Help her work through the numbers - make sure she's right about being as far underwater as she thinks she is - make sure she can't cover the mortgage with a renter. In other words - provide advice and guidance that will protect her interests, even if she doesn't choose the path you would choose.
|
|
Lex Luthor
Initiate Member
Joined: Feb 10, 2011 12:43:26 GMT -5
Posts: 68
|
Post by Lex Luthor on Jun 6, 2011 20:26:10 GMT -5
Audrey - couldn't you donate that money to a veterans-disability-military charity that you believe in? You have the $ and it's going to waste if you let the checks expire. If you are against receiving it in principal - at least you could do some good with it by donating it to a group, charity, or person who could really use the help.
|
|