Illegal or just unethical? Walking away from your mortgage...

[john.beck49]

I have recently went thru this with a house on my road, people bought house, move in, trash house, get the big home buyers check from the .gov, along with the tax breaks for 4 kids.

There was a residency requirement, I think it was 3 years, to keep the home buyers tax credit without having to repay it. The IRS will start keeping their tax returns (which will probably be substantial with 4 kids and EIC) to recover the tax credit amount.

 

[30BulletHoles]

The thread wandered and became more about the practice of defaulting in general rather than about your specific case.
You mentioned the words in both the OP and your last post "with the intent" and that would be awful difficult to prove what someone intended to do.

Even if they stayed and paid the mortgage they would still be crappy neighbors.
I've had neighbors like that before and they owned their house outright with no mortgage at all.

Your parents are better off with them gone IMO and should celebrate.

^^^^this

 

[Billybob]

The illegal part that I was thinking was along the lines of Fraud. They intentionally took out the 2nd mortgage with the intention of ditching the house.

And as for more back for all the "here say" critics:

They moved in around Spring of '09 after economy had already been in the dumps, not pre crash. My reason for calling them white trash is for many reasons but to sum it up, I started taking their trash to curb for them. My bedroom windows faced their garage side of the house and they had a pile of about 15 green smelly trash bags of trash that even after numerous complaints, they would not haul to the curb for the trash truck to get. They have a lien against their house by the homeowners association for who knows how much because they never mowed or paid homeowners fees. They purposely removed the screens on the front windows of their house so their boys could leave through the windows as not to disturb that dad who lived out of the living room. I also found out they left their sons in the house for the last month by themselves and they have utterly trashed everything....

Anyways, I appreciate the input and for those who think I am being nosey or a pretentious neighbor, I am not. I just felt this is the core of what is driving the economy right now.

I apologize,(I helped make the thread wander)but given the facts as you present them then I would tend to agree with you. But I don't think it's what's "driving the economy right now", it's a result, not the cause.

 

[CODE_3]

It's a civil matter plain and simple. Everyone ( almost everyone) who has bought a house within the last two or three years and who has tried to sell their house is having a very hard time selling it. They are unable to get their equity back because most home prices have dropped.

 

[ExtremistPullup]

Isnt the house the collateral. Its part of the banks agreement and there gamble.

 

[RidgeHunter]

For advice on this situation, as I do in all other situations, I turned the humungus. The Lord Humungus.

 

[MLR]

We need to know the rest of the story. When the housing bubble broke, a lot of people owed the bank $100,000 on houses that were suddenly worth $75,000. In cases like that, the bank can have the house, in my humble opinion. And of course in a case like this, the house is collateral for the loan. Sound decision if you ask me. Let the bankers bleed for once.

My new car lost a huge ammount of its value as soon as I drove it off the lot. I did not see that as a reason for defaulting on my word. My obligation.
As for housing values my house also dropped in value. I still made the payments on it and paid it off. I kept hearing about people who said that the reason they couldn't stay in their home was because it had lost value? How does that make it harder to pay for?

Michael

 

[sandscards]

Isnt the house the collateral. Its part of the banks agreement and there gamble.

I look at it a little different I guess. The bank loaned me money to buy a house and the house is in my name. I picked out the house, not the bank. My primary responsibility is to pay the bank back the funds it advanced me for the purchase. The house is the collateral for the loan which never comes into play as long as I keep up my end of the transaction. Additionally, they would never have loaned me the money unless I had a decent credit history indicating I would more than likely pay them back the funds, and also given them a mortgage on the house so that if I didn't keep up the payments the could recoup some or all of their funds through the sale of the collateral. I own the house and can sell it or do whatever I want as long as I repay the bank the funds they advanced. Sure it hurts that the price went down and I owe more than it is worth. It would also hurt if the house doubled in value and the bank decided that they would be better off with the house than with the money I owe them. I just don't think you can have your cake and eat it too. I made an agreement to repay the loan and that is what I should do if able. If I can't then it is unfortunate and the bank will have to resort to getting their money back however they can with the sale of the house.

Maybe I am looking at it wrong but that is just how I feel. I gave them my word that if they would give me money to buy the house I would repay them. I didn't ask them to invest in the house with me to share in the profits or losses of the investment, and that is all it really is.

 

[Biggsly]

Of coarse, if the bank did not want to loan people like these the money. Obama would be leading the march to the bankers house.