Nearly 1 in 4 Nevadans who were foreclosed on could've made payments

[Gowen]

Nearly 1 in 4 Nevadans who were foreclosed on could've made payments but chose to walk away

Twenty-three percent of those foreclosed upon in Nevada could've made their payments but chose to make a "strategic default," according to a report released this week by the Nevada Association of Realtors. Men and those 65 or older were most likely to walk away.

http://www.rgj.com/section/blogs12?plckController=Blog&plckBlogPage=BlogViewPost&U=8a686c58-d08c-47e8-8216-d67b1e581e99&plckPostId=Blog:8a686c58-d08c-47e8-8216-d67b1e581e99Post:22067727-9d6c-45d7-9115-f75eec70d913&plckScript=blogScript&plckElementId=blogDest

Words fail me.

[AZRedhawk44]

I have 3 coworkers who did this.

Employed.  Decent income.  Could make the payments while the house was "worth" what they thought it was worth.  Just opted to foreclose "because it wasn't worth it."

[MillCreek]

The linked article did not say, but I wonder how many of those 'strategic defaults' were on loans that were far underwater.

[De Selby]

Banks do this sort of thing routinely- it's offensive that they expect us to be angry at consumers doing he same.

[roo_ster]

Banks do this sort of thing routinely- it's offensive that they expect us to be angry at consumers doing he same.

If it gets to be a habit with consumers, the rest of us who don;t walk away will pay more.

[De Selby]

If it gets to be a habit with consumers, the rest of us who don;t walk away will pay more.

As if we don't pay for the loss when banks do it? 

The banks shouldn't have loaned the money if they couldn't handle the defaults.  Their multi million dollar execs are supposed to know more than everyone else about how to do that. 

[GigaBuist]

The linked article did not say, but I wonder how many of those 'strategic defaults' were on loans that were far underwater.

It'd say all of them, save for maybe a few instances that aren't statistically significant.

If you can make the payments there's no point in defaulting unless you're underwater. The only people defaulting on a loan for an asset that was actually worth more than they owed on it would have to be exceptionally inept at handling finances or doing math.  Like, Democrat bad at math.

*looks at Harry Reid's last election results*

Nevermind.  Original question is still valid.

[Northwoods]

Banks do this sort of thing routinely- it's offensive that they expect us to be angry at consumers doing he same.

Oh, not this *expletive deleted*it again.

[Fly320s]

The linked article did not say, but I wonder how many of those 'strategic defaults' were on loans that were far underwater.

Shouldn't make a difference. The owners agreed to the loan terms regardless of the house value. There was never a guarantee that the house value would increase.

Which brings me to my next point: Houses are not investments, despite what the real estate marketers tell you. Houses are merely a place to live. There is a possibility that the house value will increase, but people who rely on that happening as a long-term investment need to go back to school.

[zxcvbob]

Shouldn't make a difference. The owners agreed to the loan terms regardless of the house value. There was never a guarantee that the house value would increase.

The lender also agreed to the loan terms; that includes the security.

Which brings me to my next point: Houses are not investments, despite what the real estate marketers tell you. Houses are merely a place to live. There is a possibility that the house value will increase, but people who rely on that happening as a long-term investment need to go back to school.

I don't disagree with this point at all.

[TommyGunn]

As if we don't pay for the loss when banks do it? 

The banks shouldn't have loaned the money if they couldn't handle the defaults.  Their multi million dollar execs are supposed to know more than everyone else about how to do that. 

True, but thanks to the Community Reinvestment Act under Carter and Clinton's expansion of it, many banks had their "arms twisted" to do that; A.G. Janet Reno herself put a fire under their butts to do it as well. 
The "sins of the past" coming home to roost.

[cassandra and sara's daddy]

and yet cra default rates are not outa line with "regular" and high end loans.  curious that.  how do you rationalize that?

[De Selby]

True, but thanks to the Community Reinvestment Act under Carter and Clinton's expansion of it, many banks had their "arms twisted" to do that; A.G. Janet Reno herself put a fire under their butts to do it as well. 
The "sins of the past" coming home to roost.

I see absolutely no way that these people's business decisions have anything to do with the CRA.

[cassandra and sara's daddy]

the house i live in was owned by a realtor. one of 6 houses he owned and defaulted on last time the market went sour. making what i consider odd choices is nothin new. and predates cra

[BridgeRunner]

Which brings me to my next point: Houses are not investments, despite what the real estate marketers tell you. Houses are merely a place to live. There is a possibility that the house value will increase, but people who rely on that happening as a long-term investment need to go back to school.

And they are, in record numbers.  On Pell Grants and Stafford loans.  Economic refuge...A whole bunch of my unemployed colleagues are now working on LLM degrees.

[TommyGunn]

I see absolutely no way that these people's business decisions have anything to do with the CRA.

OF COURSE not.  THAT would mean you would actually have to consider that maybe someone's precious government actually had a role in the financial mess we're in!!!!!!!

[cassandra and sara's daddy]

http://www.federalreserve.gov/BoardDocs/Surveys/CRAloansurvey/cratext.pdf

[TommyGunn]

http://www.federalreserve.gov/BoardDocs/Surveys/CRAloansurvey/cratext.pdf

Thanks ....at 99 pages long is it really too much to ask for a short synopsis or a simple conclusion rather than just a "link dump."

I got like fifteen minutes before I have to get off this &&&# computer .....

[cassandra and sara's daddy]

so much crap in that i hadn't got through it all myself yet sorry  its seems its neither fish or fowl and the truth is somewhere in the middle. 

http://www.windsofchange.net/archives/looks_like_cra_didnt_cause_it_after_all.html

    We looked at CRA pools and the [post-default] returns on them is higher than the equivalent return on conventional pools.

In a nutshell, they blame the crisis on three things:

*A massively overleveraged financial sector (with FHLMC as the worst culprit);

*Horrible underwriting at every level from loan origination to S & P;

*'Toxic' loan products which - combined with poor underwriting - allowed unqualified borrowers to take out loans they never could have been expected to repay.

Those loans were immediately securitized into the highly overleveraged financial institutions - instead of being held by the originating institutions which would have had skin in the game as to real loan quality - and when they unsurprisingly blew up, the negative leverage effects killed the institutions. This was, of course, made worse by the array of poorly designed (but fee rich!) risk-managing tools that made up much of the secondary markets

[Headless Thompson Gunner]

Banks do this sort of thing routinely- it's offensive that they expect us to be angry at consumers doing he same.

Businesses do indeed default.  And when they do, they suffer largely the same consequences as when individuals do.  Their creditors pursue them for the money they took, their reputation suffers considerably, and they find their ability to do business constrained.

We look down on individuals who default voluntarily just as we look down on businesses that default by choice.  There's nothing offensive about this.

[cassandra and sara's daddy]

And when they do, they suffer largely the same consequences as when individuals do

no

[Tallpine]

Which brings me to my next point: Houses are not investments, despite what the real estate marketers tell you. Houses are merely a place to live. There is a possibility that the house value will increase, but people who rely on that happening as a long-term investment need to go back to school.

Unless the house is on a fair sized chunk of land. 

They're still making houses, but they're not making any more land.

My land alone is now worth almost as much as I paid for the land and buildings. 


(the bad economy has actually increased the number of people wanting to escape to MT)

[Fly320s]

They're still making houses, but they're not making any more land.

They are in Hawaii. 

My land alone is now worth almost as much as I paid for the land and buildings.

Sure, but what is the value of an equal size piece of land in Detroit or Las Vegas? Location is everything, but I find it difficult to predict where the housing trends will be in 20 years.

[Tallpine]

what is the value of an equal size piece of land in Detroit or Las Vegas?

I dunno ... what is the value of 40 acres in Detroit or LV 

[zahc]

Dunno about Detroit, but when I was thinking going to the University of Toledo, you could buy a 1/8 acre with 3 bedroom house right across from the campus for like 30k. Of course, while I was visiting the campus 2 cops got shot on that same street, but I doubt that's related to property values.