Law Professor: Walking Away From Mortgages Is The Only Way to Get Banks to Negotiate

[Amerigo Vespucci]

Run time: 01:10 https://www.youtube.com/watch?v=sB_po_mKN4Q   Posted on YouTube: January 29, 2008 By YouTube Member: Views on YouTube: 0   Posted on DU: November 30, 2009 By DU Member: Amerigo Vespucci Views on DU: 1551

 

Law Professor: Walking Away From Mortgages Is The Only Way to Get Banks to Negotiate
By Susie Madrak Monday Nov 30, 2009 6:00am

http://crooksandliars.com/susie-madrak/law-professor-walking-away-mortgages

I've been saying this all along to people: The only real obstacles are in your head. There's no reason in the world to keep throwing good money after bad.

And he's right. Banks won't negotiate with borrowers until more people start to do this:

Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don't feel guilty about it. Don't think you're doing something morally wrong.

That's the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis."

White argues that far more of the estimated 15 million American homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Doing so, he suggests, could save some of them hundreds of thousands of dollars that they "have no reasonable prospect of recouping" in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume.

"Homeowners should be walking away in droves," according to White. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits." Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, "one can have a good credit rating again - meaning above 660 - within two years after a foreclosure."

[Better Today]

1. More people start to do this,. . . is th key. I've been trying for weeks to

get people whose loans have been bought by these huge banks to start demanding the paperwork be properly filed even if they aren't underwater or near financial end and to give them 90 days to comply or payments will be withheld till proper county level filings have been completed. If everyone buries them with requirements to do things properly, they won't have time to go after those that are in fact near default, because how could they tell the difference in the initial phases.

But for that same mentality that is described above, we all seem to want to please our banks even as we outrage against them in these forums. Doesn't make any sense to me. But without a huge public response that halts the banks in their tracks and makes them obey the rules we are supposed to obey. . . we as a society are doomed to be slaves to these money-grabbers.

[sabrina 1]

3. That's a very good idea, to demand the paperwork

that proves they are actually the holders of the mortgage note. As it becomes more clear that in the greedy rush to make money, many mortgages were transferred without the proper paper trail, even people who are not in financial trouble now, could run into a problem when they do try to sell their homes later on.

Several court decisions have made it clear that more and more judges are beginning to make these banks produce proof that they have the right to foreclose.

Buying a fore-closed home is now very risky as more and more people could challenge the legality of the fore-closure later on.

From what I have learned, any mortgage that was passed from one lender to another, and especially if any of those lenders were listed with MERS, may have been securitized. If so, then there are investors who also may have claims and in some cases recently, have begun to step forward.

The bundling of mortgages has created a huge mess that could have ramifications for years to come and it was all for greed.

Yet, there doesn't seem to be any effort to find and hold responsible, those who caused this disaster in the first place.

[Better Today]

10. Well I think so and it also forces them to hire a ton of workers to unwrap, unload, and file

all the paperwork they have but have never unboxed in hopes of never having to.

[girl gone mad]

8. Yes, but unfortunately so many are duped into living under a set of moral principles..

that simply doesn't relate to the modern world. They see themselves as obligated to be servants to the financial caste, despite the fact that their overlords in finance walk away from every non-performing investment vehicle without pause.

[Better Today]

14. My suggestion doesn't require a drop in morals because you'd just be demanding

that the bank hold up their responsibilities before payments continue. In the meantime, the payments (for those who can)should be put in special savings account or even a legit escrow account at the local title company. That way if they try to take you to court, you can show that your intent to pay is legit, just that you needed proof you were paying the right entity.

[sabrina 1]

17. Yes, and it was the corruption in the mortgage

industry which caused the inflated cost of homes and then the collapse of the whole house of cards leaving honest people who bought homes at the inflated prices, to deal with the losses.

It is hard for honest people to follow the advice of this professor. But since banks won't even modify loans to make things easier for people and as you say, have walked away in many cases from their own failures, seems like the old rules no longer apply.

For example, if a bank will not modify a loan to match the value of the house, I could see someone walking away, then showing up at the auction of their own house, and buying it back for far less. That would be one way to get the loan modified and I'm surprised it hasn't started happening yet.

We are on our own now, the government has bailed out the crooks and left ordinary people to fend for themselves. Getting creative to protect their own investments seems like the right thing to do in the climate we are now living in.

[icee2]

2. Walk away from your car note too. It's worth less than you owe nt

[sabrina 1]

5. How does a car loan compare to what is happening

in the mortgage crisis?

[icee2]

7. Your car is worth less than you owe on it - just like your house is. nt

[sabrina 1]

11. Most products you buy are worth less

than you paid for them once you use them.

That doesn't answer my question. What about your car loan compares to what happened in the mortgage business? What corruption has been unearthed in the car loan business that is even remotely similar to what cause the devaluation of people's homes? Flip non-substantive responses don't answer that question.

[icee2]

15. Izzat so? Then walk the line, baby. Effum.

"Most products you buy are worth less..."

[girl gone mad]

13. That's considered acceptable depreciation.

Houses (and other buildings) also depreciate over time. They require maintenance and remodeling, and rely on constant general inflation to sustain much of their value. It's usually only the land value that appreciates substantially.

Due to the bubble, many people have lost hundreds of thousands of dollars in equity and have little hope of seeing a return to peak valuations. Thus, your analogy is weak.

[icee2]

16. The SOLUTION is what I'm talking about. WALK away. nt

[girl gone mad]

18. You're just posting random gibberish, as far as I can tell.

Everybody knows cars rapidly decline in value, Enzo Ferraris and 69 Corvettes aside.

Housing was sold to most as a safe investment that "never goes down" in price. Very few people understood that a home can lose 60% of its value. A lot of people signed mortgage contracts they didn't understand because they wanted to be a part of the "ownership society".

Most people can make their car payment. It's fixed and generally reasonable. If they can't make the payment, the dealership repossesses the car. It happens every day, all over America.

[ShamelessHussy]

21. apples and oranges

[icee2]

4. Got a student loan? Take a hike. The "education" you got is...

worth much less than the cost of that damn loan. Walk baby.

[girl gone mad]

6. Not possible for most, but..

I did hear second hand of someone transferring the balance of his student loan debt onto credit cards and then declaring bankruptcy.

[sabrina 1]

9. You mean, act like Wall St. Make promises

you cannot keep, then when you cannot pay up, force the tax-payers to pay your outstanding bills? Why not? Isn't that the way the system works now. Zero regulations, your personal bottom line (corporations are persons too) is all that counts and if you are smart enough, or connected enough to make someone else pay, you're a Master of the Universe! Isn't this the American way now?

[icee2]

12. Correct. Best of all, now you don't even have to be a Republican...

which is, I realize, implicit in your post.

[sabrina 1]

19. Actually I wasn't thinking of Republicans, just greedy people in

general. But, since you brought it up, it was mostly Republicans who wanted an unregulated Capitalist system and who made the claim that the 'market would solve everything'. Otoh, Democrats helped them achieve their goals as was evident when only seven Senate Dems voted against rescinding the Glass/Steagal Act a Democratic president signed the bill that removed all those regulations.

But now, the people are left to deal with the mess and corruption that this system has left them with. So, imho, if they can find a way to protect their most important investments, which is usually their homes, it is their right to do so under the same rules we were told were so perfect. And if that means emulating those who created the rules, what is wrong about that? It's a different world they created, where morality and individuals are not important and if you do not play by their rules, you will end up homeless.

So, I'm for forcing them to make things easier for the people they cheated if they won't do it voluntarily. They have billions of tax payer dollars and the people have been left with very little. They owe the people now and if walking away from loans they refuse to modify is one way of doing it, then so be it. It's the monster they created, let them deal with it.

[izquierdista]

20. Well, that's one way

To remedy the concentration of wealth in the country.