patrick.net

Whoa. Had no idea so many comments would come along. I certainly can see anger of folks who are simply not business savvy. But here is an interesting and horribly illogical point that Klarek keeps making:

If I had overextended and bought a mansion with a low income, and then had to foreclose because I couldn't afford the mansion - it'd be okay - it's a regular foreclosure. No deadbeat there.

But because I earn a nice income, work my ass off 80 hours a week and bought a smaller place I could actually afford - I am a deadbeat.

Awesome.

To me, this is a financial decision and sure I am glad I didn't refinance, though I could have.

Someone mentioned that the bank can sue me for fraud if I buy a house and then foreclose on the condo. Not true. There is absolutely nothing a bank can do in such situation.

We decided to keep saving money and will likely strategically foreclose by mi next year. By that point we will have 30% down to put on a nice house, in say, Cambrian or Almaden Valley (a nice house should be ~750K at that point).

Thanks all for your advice.

I'd be an idiot if I continued to but money into this black hole of a condo.

Dajanara are you sure the bank can't sue??? You Walk away said it's fraud if you buy something new and then foreclose on the old property. Where did you hear your info? You might also want to look into a deed in lieu. My husband and I are going to pursue this option, less havock on your credit score but you don't live in your home for free. It's more like a short sale but you are trying to negotiate with the bank. It's basically telling the bank if you don't negotiate with me I will foreclose.

dajanara says

I certainly can see anger of folks who are simply not business savvy.

dajanara says

We decided to keep saving money and will likely strategically foreclose by mi next year.

So, this is the way you see people telling you negative way? The mom crying out loud for baby's safety can wait till next year? That's awesome.

This is so classic. There was no urgency or sincerity from the beginning. As business savvy woman as you are, hope your business turn out be fine at the end.

I'm curious where she's getting 270k market value for her 3/2 condo

downtown san jose
1 br for 320k
http://www.redfin.com/CA/San-Jose/175-W-Saint-James-St-95110/unit-304/home/17289332

1br for 400k
http://www.redfin.com/CA/San-Jose/360-S-Market-St-95113/unit-2K/home/28580919

2br for 415k
http://www.redfin.com/CA/San-Jose/415-N-2nd-St-95112/unit-346/home/770366

dajanara says

Whoa. Had no idea so many comments would come along. I certainly can see anger of folks who are simply not business savvy.

Coming from a peak bubble failed flipper, that's pretty funny. Being business savvy is doing the few minutes of diligence BEFORE you overpaid for that place and made the biggest purchase of your life. Trying to pull a mulligan under the pretense that you're not a deadbeat and merely being smart is pathetic.

tatupu70 says

You’re mad because some people are walking away from their house and you can’t/aren’t.

Am I mad at bank robbers because I'm not robbing a bank?

Am I mad at BP because I'm not polluting our oceans?

Am I mad at Al Qaeda because I'm not killing civilians?

No, and I'm in no way jealous of somebody that's choosing to be a deadbeat. I can find things to be immoral and wrong and somehow not want to do them myself. This concept might be foreign to you, but rest assured I'm not the only one that thinks this way.

Condohelp,

I am absolutely sure. We met with two lawyers who specialize in real estate. Unless you refinanced, bank cannot go after you in California. If you buy another property, then foreclose on the first one, they cannot go after the new property. I suggest you meet with a lawyer. We paid a couple of hundred bucks to have a piece of mind.

Klarek, you're boring me.

Nomograph, you'd be surprised how eager banks are to lend to people who have 30% down. If you owe 2K in mortgage for first property and 4K for new property, banks will be happy with a steady income of 20K a month. Just throwing numbers out there. They were practically begging us for another mortgage, which was surprising. I also thought in the beginning that we woudn't qualify.

Thanks for your help, everyone. Off to redfin.com to find me a sweet home.

Just curious - when you outgrow that place will you bail on it too? Or if the new neighbors aren't up to snuff? Will it have a home gym and granite countertops? It seems to me that you had all the answers you wanted and were trolling here.

First you said that the area was dangerous and people threw furniture out the windows and cooked meth. And that you made a poor choice by buying a place too small. Then you said that you were going to stick around because

dajanara says

We decided to keep saving money and will likely strategically foreclose by mi next year. By that point we will have 30% down to put on a nice house, in say, Cambrian or Almaden Valley (a nice house should be ~750K at that point).

Now you're "off to redfin.com to find a sweet home." Sounds like you make shitloads of money, or so you say - so you can do this into perpetuity.

Ellie,

I am rooting for lots of walkaways, to crash real estate values around here more, so housing can be affordable. Also, the reduced property tax revenues will force the issue about reforming prop-13. I will also lose equity in my home but I think that making housing more affordable for my community is more important than having lots of equity.

That said, I understand your point. You and E-man are catching on to The Ethics and Values that Have Become Dominant of Silicon Valley.

It used to be called Valley of the Hearts' Delight, in reference to the mild climate, natural beauty, pictureseque high value agriculture that dominated the region, particularly picturesque in spring blossom time. Mild climate, mild people, one hour from world class SF, and 40 minutes from the beaches.

When it become Silicon Valley it got overrun folks who came here from all over the USA and all over the world and brought their values with them. Sometimes they share their values on forums like this one.

sybrib:
Real estate values are dropping without walkaways. The housing bubble done popped and the entire country is in turmoil. Foreclosures are at an all-time high. I don't think that people who "strategically default" are making a difference as much as people who've lost their asses have.

The OP was all over the place on her post - place too dangerous, too small, not befitting of someone of her socio-economic status. Okay - but why post it here? She had all the answers and wasn't interested in people's opinions. And now she's gleefully off to redfin.com to buy a new place. Good for her - but she's a glowing example of why people shouldn't be allowed to waltz away with no ramifications.

Nomo and E-man, don't use your good judgement for this person.

She being young, business savvy, clever and detemined enough to not listen, I am sure she can find out a trick or two to deal with it. I can imagine some ways, but I won't tell. :)

Good for her - turning tricks seems to fit into her current neighborhood.

I couldn't resist...

Gee, you are so ill-wishing and jealous. Your negativity will eat you alive.

Actually, I'm doing just fine, no matter what ill-will you wish me. You trolled here - what do you expect?

...and I'm not jealous of you. I live in a nice neighborhood, am nowhere close to upside-down on my house, and have a job that I enjoy and am good at. But thanks for playing!

They might not have the same restrictions, but they probably are more conservative than in the old days. I'm willing to bet that with enough money down, banks will lend subprime. But if a buyer is upside-down on a property already, I imagine that they're gonna err on the side of caution.

If dajanara can get a loan, good for her. if she believes that walking away from her first place is okay, good for her. but her logic is all over the place and she wasn't happy when people on a real estate forum that predicted the housing crash disagreed with her choice to walk away. I wish her the best - but I wonder what her current neighbors think of her. She obviously believes that they are beneath her:

dajanara says

In my building the assholes are moving in paying 50% of what I paid. They are putting myself and my 6-month old baby in immediate danger. The other day someone threw a vacuum cleaner from the 4th floor balcony. I could have gotten killed.
There is meth being cooked on the 2nd floor.

dajanara says

The place was nice then (this is a 300+ condo complex) with young professionals such as oursleves. Since then, 50% of original owners either defaulted becasue they had to or becasue they chose to. People are moving in now paying half of what we paid and some of these new folks are unsavory. The truth is that it’s getting shadier every day. The place is big enough so these shady characters are here and there, but more and more come to my attention every day.

dajanara says

initially we were going to rent this place out for some loss (we can rent for 2k a month to probably some meth dealer)

But then she says:

dajanara says

To me, this is a financial decision...

No, it's not. You are living where you perceive others to be beneath you and the place is too small. The issue is that you are pissed because you asked opinions, and you got them. Don't take it personally - we don't know you and we're all really nice people.

For all you know, some of us could be your neighbors now.

Ellie,

"But why post it here?"

Goes back to my remark,

"When it become Silicon Valley it got overrun folks who came here from all over the USA and all over the world and brought their values with them. Sometimes they share their values on forums like this one."

"Share" probably doesn't convey the thought. There's a lot of "well I'm in Silicon Valley now, I'm smarter than all those folks I left behind when I came here." Some of us are natives here, and the more we hear this, the stupider we feel like for staying, getting run over by all those Hip, Cool and Beautiful Smart people who came here from all over the USA and all over the world.

For many, like the giant old native oak trees that are weakened by over-watering that folks do to the non-native landscape stuff they plant over root systems, causing the trees to die or collapse, well at some point having roots here is not compelling enough to stay.

sybrib says

well at some point having roots here is not compelling enough to stay.

I live in a small town outside a big town that would fit into a corner of your city - and other than a few years here & there I've been here most of my life. Many people have moved into the area in the past 10 years. I was at work, speaking with a patient's family member, and the woman visably relaxed when I pointed out that I went to school with her husband (we ditched 4th period together a couple of times - choir).

People move here because of the small town feel - and then bitch when they have to drive a few hundred miles in either direction to shop at many chain stores or restaurants. So I get it.

sybrib says

getting run over by all those Hip, Cool and Beautiful Smart people who came here from all over the USA and all over the world.

boy, do I get it.

Chinese banks?

Well that global liquidity pool chasing yield has gone full circle!

Bring back every penny of those expatriated dollars en masse, folks can walk away again and debts are cleared.

When these kinds of things happened in Latin America a century ago, European nations sent gunboats to collect the debts, that's where the expression "gunboat diplomacy" came from. Sometimes the U.S. gov't invoked the Monroe Doctrine to run interference & prevent carnage. As we drift more toward Banana Republicanism, good thing we have a strong military.

dajanara says

Klarek, you’re boring me.

Then ignore me.

You're at a crossroad here. Your only options were being a deadbeat now or later. No option given about renting the place out. You can afford it. You don't want to take responsibility for your actions. If you SD, your place will be bought by some loser that throws appliances at children. But you don't care of course, it's all about what you can score now. I'm sure you want those of us that make way less than you do to applaud being a contributor to our societal and economic ails, but I am just telling you that you're a deadbeat. That's all.

dajanara says

Off to redfin.com to find me a sweet home.

If you buy and bail, the banks come and wipe you out. Go for it though, maybe you'll actually learn how to pay for your purchases like the rest of society. It is great seeing some comeuppance for pond scum.

seaside says

She being young, business savvy, clever and detemined enough to not listen, I am sure she can find out a trick or two to deal with it. I can imagine some ways, but I won’t tell.

Maybe you should re-read her posts, you're giving her too much credit. Buying at the peak of the bubble for a short term flip and profit = she's a fucking moron. The banks will eat her alive and the govt won't stop them. They caught on to this thievery years ago. She'll be enjoying many decades of diminished income for her selfishness, and I'm sure she'll blame everybody but herself.

dajanara says

Gee, you are so ill-wishing and jealous. Your negativity will eat you alive.

Yeah, our negativity. I'm really jealous that I knew better than buying at the market peak. I'm also envious at your opportunity to fuck over taxpayers and your neighbors. I hope you enjoy years of fighting off the inevitable deficiency judgments coming your way, deadbeat flipper.

Nomograph says

Aside from klarek (who is behaving like a jerk), we simply stated the obvious facts

I don't take that personally, but I too state the obvious facts. My style might be raw, but it's reflective of the due contempt towards those whose selfishness is unbridled.

klarek says

Yeah, our negativity. I’m really jealous that I knew better than buying at the market peak. I’m also envious at your opportunity to fuck over taxpayers and your neighbors. I hope you enjoy years of fighting off the inevitable deficiency judgments coming your way, deadbeat flipper.

That's where you lose me. The only one she is screwing over is the bank.

"Raw style" pretty much equals being an asshole. Because, you know, it just does.

tatupu70 says

klarek says

Yeah, our negativity. I’m really jealous that I knew better than buying at the market peak. I’m also envious at your opportunity to fuck over taxpayers and your neighbors. I hope you enjoy years of fighting off the inevitable deficiency judgments coming your way, deadbeat flipper.

That’s where you lose me. The only one she is screwing over is the bank.

Actually by foreclosing she is helping everyone else buy an affordable house! The more foreclosures and short sales that hit the market will help bring down prices for everyone. It's a win situation if you were priced out before, but of course a lose situation if you are a home owner. I personally think she isn't doing anything to really hurt anyone. She is helping the market correct itself.

Screw the bank leads to screwing the depositors.

thomas.wong1986 says

Screw the bank leads to screwing the depositors.

How do you figure? Not unless EVERY bank made risky loans--which is clearly not the case.

dajanara says

Thanks for your help, everyone. Off to redfin.com to find me a sweet home.

Why are you going to redfin now when you aren't buying until mid next year? You are the Swiss cheese of storytellers.

About 140 banks failed in 2009.
Over 100 banks failed during past 7 months alone in 2010.
Keep'em getting screwed. LOL.

tatupu70 says

That’s where you lose me. The only one she is screwing over is the bank.

If the government is spending tons of money trying to stop foreclosures, and hundreds of thousands of people like her are intentionally defaulting when they can afford their houses, then we the taxpayers are getting screwed. If TARP or FDIC money is needed when the bank fails, then we get double-screwed.

Condohelp says

Actually by foreclosing she is helping everyone else buy an affordable house!

Well I wouldn't say she's "helping everyone", just the person that ends up buying the condo at an affordable price. I have no problem with the market correcting as quickly and severely as possible. That will lead to fewer people underwater and becoming deadbeats down the road. But we could save a lot of money and have way cheaper houses if we stop subsidizing the bubble buyers' mortgages.

tatupu70 says

How do you figure? Not unless EVERY bank made risky loans–which is clearly not the case.

A single bank wouldn't need to make any risky loans to become victim of strategic default.

mthom says

Why are you going to redfin now when you aren’t buying until mid next year? You are the Swiss cheese of storytellers.

She says and believes whatever she needs to justify her selfish behavior. She was utterly clueless when she bought her current place, and doesn't even keep her time frames consistent for her "next" house. Just another rich retard flipping houses and wanting someone else to pay the bill when she fails. She'll have quite a reckoning when the day comes that deficiency judgments start coming through her mailbox. I'm sure the last thing she'd ever admit was that she did it all to herself.

klarek says

If the government is spending tons of money trying to stop foreclosures, and hundreds of thousands of people like her are intentionally defaulting when they can afford their houses, then we the taxpayers are getting screwed. If TARP or FDIC money is needed when the bank fails, then we get double-screwed.

The government already spent tons of money. It's done. Her strategic default won't cost the taxpayers any more money. FDIC is not taxpayer money.

klarek says

A single bank wouldn’t need to make any risky loans to become victim of strategic default.

No, but they plan their portfolio to account for such risk. And they require down payments and charge interest rates that are high enough to allow for some strategic defaults while remaining profitable. Or at least they should have--if they didn't, then it's their bad...

tatupu70 says

But we’re not talking about people buying junk. We’re talking about people buying houses. And even so, the banks are responsible for determining whether or not someone is a good creidt risk before lending out their money. They loaned out money they shouldn’t have and they lost.

I somewhat agree with your thought here BUT the OP said that the strategic default would be the only blemish on his otherwise perfect record. If that is true then the bank lent money out to somebody they thought was a GOOD credit risk. If his credit was perfect like he says then the bank was doing what they thought was right. He put roughly 63K down on 480K which is almost 14%..."Perfect credit", sizeable downpayment, it sounds like a good credit risk to me, Assuming his income can support the monthly payment sounds like it was a wise decision to lend the money...

Maybe the banks need to add a deadbeat question to the application....

Condohelp says

Actually by foreclosing she is helping everyone else buy an affordable house!

We should thank her for being altruistic.

dhopp--

You are correct. This poster would have been difficult to weed out based on credit. Where the banks blew it was not realizing that housing was overpriced--especially in CA, Phoenix, Las Vegas, Florida and not adjusting their loan portfolio to adjust for the risk of price declines. If Patrick and all of us could see it, then I don't think it's too much to ask for a bank that has millions tied up in mortgages to see it too.

They were too focused on short term profits...

tatupu70 says

They were too focused on short term profits…

Well, ya!

tats, I know that I'm not telling you anything that yo don't know - but the attitude at the time seemed to be "if I don't approve this loan, another bank will..." and they spread the liability around. Nowadays, the people I hang with seem to be having a harder time getting loans.

Of course, I don't work 80 hours a week to

make lots of money. We work our asses off to pull 300k+ annually combined.

I'd say that I hang out with different people than the OP. But working 80 hour weeks, I doubt she does much hanging out...

dhopp says

I somewhat agree with your thought here BUT the OP said that the strategic default would be the only blemish on his otherwise perfect record. If that is true then the bank lent money out to somebody they thought was a GOOD credit risk. If his credit was perfect like he says then the bank was doing what they thought was right. He put roughly 63K down on 480K which is almost 14%…”Perfect credit”, sizeable downpayment, it sounds like a good credit risk to me, Assuming his income can support the monthly payment sounds like it was a wise decision to lend the money…

Maybe the banks need to add a deadbeat question to the application….

Exactly. Banks and lenders cannot look into the heart and soul of the borrower and realize that they are selfish pieces of shit. Strategic Default could not have been predicted, anticipated, or modeled. It is a sociological and psychological question of who bails when their stupid purchase loses value.

elliemae says

We should thank her for being altruistic.

LOL

tatupu70 says

dhopp–
You are correct. This poster would have been difficult to weed out based on credit. Where the banks blew it was not realizing that housing was overpriced–especially in CA, Phoenix, Las Vegas, Florida and not adjusting their loan portfolio to adjust for the risk of price declines. If Patrick and all of us could see it, then I don’t think it’s too much to ask for a bank that has millions tied up in mortgages to see it too.
They were too focused on short term profits…

This argument works both ways. So what you are saying is that the buyer of a house has no responsibility in knowing that they are buying an overpriced pile of shit? You said "if Patrick and all of us could see it"...so you are saying that it's ok that a buyer knows it's overpriced, as long as the bank lends the money then all of the responsibility falls on the bank...

Was the buyer not thinking about short term profits when he/she was thinking about flipping it?

dhopp says

This argument works both ways. So what you are saying is that the buyer of a house has no responsibility in knowing that they are buying an overpriced pile of shit? You said “if Patrick and all of us could see it”…so you are saying that it’s ok that a buyer knows it’s overpriced, as long as the bank lends the money then all of the responsibility falls on the bank…
Was the buyer not thinking about short term profits when he/she was thinking about flipping it?

No, of course not. There is plenty of blame to go around. If a buyer walks away then he will endure the consequences. Loss of downpayment, any principle repayment, and a credit hit.

But I think it's reasonable to expect a bank with entire departments focused on housing and mortgages to have a better understanding of the risk of housing price declines than the average homebuyer.

I think it's hard to know what a buyer was thinking about--some may have been flippers, many were probably people trying to find a nice place to live.

tatupu70 says

thomas.wong1986 says
Screw the bank leads to screwing the depositors.
How do you figure? Not unless EVERY bank made risky loans–which is clearly not the case.

Inflated prices created comps for future home sales, regardless if the future buyer used a risky loan or not.

So the one who can afford the home and used a traditional loan but still overpaid , but now is underwater and looking to defualt is screwing the bank which didnt give out a risky loan and their depositors.

Make sense! Its a price bubble ... its not just the loans. We been in a price bubble long before we had "risky loans".

thomas.wong1986 says

So the one who can afford the home and used a traditional loan but still overpaid , but now is underwater and looking to defualt is screwing the bank which didnt give out a risky loan and their depositors

It's not screwing the depositors--it's screwing the owners. And like I said above, it may not have been a risky loan based on the credit history of the borrower, but there was a lot of systemic risk in real estate at the time(home prices were in a bubble)--so it was risky. Banks just didn't understand that risk.

tatupu70 says

Banks just didn’t understand that risk.

Walk into a any bank today. All you see are kids behind the desk. They grew up in a bubble universe. The money anyway you look at it comes from depositors. They get the hit unless Govt doesnt bail them out. Prices are still very much in a bubble today. It will take a while for some to wake up to these facts.

For dajanara:

http://finance.yahoo.com/loans/article/110161/doubling-down-on-housing?mod=loans-home

From my first post in this thread, I mentioned option c) do the right thing, take responsibility for your purchase. It's not the end of the world, and it shows you have at least an ounce of integrity.

thomas.wong1986 says

The money anyway you look at it comes from depositors.

Depositors are insured by FDIC. Bank owners aren't. They are the ones who lose.