Profile picture for jimmy57

Strategic Default

I've noticed that a striking number of our friends and acquaintances are now considering the option of voluntary mortgage default (mostly on 2nd homes and investment properties).  These are not people who can't pay their mortgages -- they have sufficient income or net worth -- they simply bought at or near peak prices and are coming to see these properties as losing investments that are money drains.

This is becoming a subject of common discussion at informal gatherings.  I sense that many people are just now in the stage of "testing"  this concept to re-check whether or not it makes sense financially, and whether or not it will be validated on moral grounds. So far, the answer from accountants seems to be "well, it does make sense" and from peers "I can see why you'd do that."  By in large, these are people who don't need to care what their credit rating is, or can certainly weather having a poor one for several years.

I wonder whether this class of future defaults is on the radar of policy-makers,  If it is,  how can they accurately estimate the size of this issue?


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May 19 2009 - US
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Replies (180)

Profile picture for sunnyview
LOL I am so glad that I was not drinking coffee when I read your new rule. I think the people forget that they are the government. When the government needs more money, it's going to come out of their paycheck. 

The government did not bail out the banks...I did. That's why I'm a bit mad.
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February 23 2010
Profile picture for jhatha
March 7-2010

We cannot wait to rent and walkaway from this upside down/underwater bad investment.  And while we go through the process (foreclosure) 6 to 8 months, we will be socking away the $2600+ mortgage payments preparing for our rental.  Even $1500.00 for the rental of a home as nice or even nicer is $1100.00 per month ahead.  Just think, no property taxes, no HOA dues and when something goes wrong, call the landlord.  

We can handle the credit hit.  Currently we have about 840 FICO.  The way things are going we will be able to save enough cash to just buy a house in a few years.  

BTW, we are in AZ, non recourse state, thank goodness.  So look out Bank of America and prepare to dine on your mortgage.

jedwards can't wait to rent



 



 









 
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March 07 2010
Profile picture for macmail29
The question of whether walking away from assets that were artificially  inflated so that Wall Street game makers could be become even more rich while cashing in on our demise, is in my opinion a pretty stupid one. The answer is obvious.

Not only did they walk away unscathed, they used our tax money to pay themselves huge bonuses at a time when most of us struggling to make ends meet.

Average Americans didn't invent this bubble. We were simply the stupid suckers that were lured into it...and boy have we payed the price!  


A few got very rich off us! Well, now it's my turn. Sorry guys. I'm not playing your game any more!
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April 29 2010
Profile picture for jhatha
May 1st coming in a couple of days and I begin paying myself instead of Bank of America for my two B of A mortgages.  Interested in seeing how long I can live in my home rent free as the savings account grows.  Hey this is a no brainer especially in Arizona where I live.  Strong "anti deficiency" statutes keeps the lender from coming after me and "federal debt foregiveness act" for any 1099 received from lender.  More people ought to walk away.  I can handle the credit hit for a few years.
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April 29 2010
Profile picture for ordphx
Isn't it amazing how the truth is FINALLY coming out into the major media.
Companies pumping up the market with bad loans, so they can buy insurance betting they will fail.   Conflict of interest ?    Rot in jail Goldman Sachs.
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April 29 2010
Profile picture for jimmy57
These recent comments make sense to me; I think more and more underwater householders will be doing the math.

Still renting here -- for 3 years since selling our house.  Still, friends and family ask when we're going to buy, and opt for "stability." 

I do the simple math in my head:  yes, I'm paying another year's rent, but in the last year, my landlord's property has depreciated by at least the total amount of annual rent, and that's before counting the taxes, insurance, HOA dues and repairs that he's had to pay (never mind his neg-am loan on the place!).
He avoids just doing the math-- or he can't bring himself to admit keeping this place has been a BIG mistake for him.
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April 29 2010
Profile picture for ordphx
I agree with you Jimmy.   I will say this however. The only reason to own now is to have the authority to not have to get approval from your landlord to paint your house and hang up a few pictures on the wall.  Other than that, there are no benefits at the current time.  Get a nice landlord, and maybe he'll pay YOU to paint the house!  Not a bad deal.  There's more stability in renting now.    I'd rather be renting now than be living in an upside down house. That's for sure.
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April 30 2010
Profile picture for u0999
I recently watched a video from a newscast in Miami area. A lady bought her house couple of years ago for some 300K. Now the house is only worth less than 150K with no recovery in sight. After agonizing deliberation, she decided on strategic default. Before that she tried to negotiate with bank but to no avail, banks just don't want to do anything. Next frame, she's buying the very same house back (through intermediary) for 115K. What dumbfounds me is this - it costs bank tens of thousands of $ to complete the foreclosure. Plus I am sure the inetrmediate guy had some cut after he bought the house from the bank. So in reality bank probably netted 50-60K on this foreclosure. Why won't they rather work with the owner to lower the principal to say 150K or whataver market value is? 

I have heard the same story from various acquiaintances having difficulty- banks just wont't talk. It seems they rather lose 3X more in foreclosure than do a reasonable and workable modification with the borrower. It is illogical and yest it is being reported left and right. Makes me think that truly the endgame was to bet on securities derivatives that all this mortgages will fail.

I myself bought primary residence in the very beginning of 2005, with customary 20% down. I was very conservative when buying (I could have qualified for a house 3X more expensive) but I thought I was being prudent buying way within my means buying $130K condo on 90K/year salary with 20% down. The only oops I did is 5/1ARM- that is because I was not sure if I would stay in FL or return back to Chicago from where I moved. I always paid on time, and until recently I was always paying more than required payment, prepaying the principal. Now the ARM  has adjusted (downward luckily, for now). However, every day I look at Zillow it seems my condo lost another $1K in value. My principal is about 82K now, and zillow estimate is about 96K. realistically, I would probably not even get 86K if I tried to sell because foreclosures in the complex go for 30-60K.

I tried to talk to the bank to simply lock my existing ARM and convert it to 30 year fixed. They won't do it. They say I need to refinance - meaning spend another 3-4K?? Why? I am already a customer, and a good one at that, never late. What is the problem with simply locking the rate and call it a deal?

Now I see imprudent borrowers (people with liar loans, people who way overstretched to buy) and banks getting assistance and bailouts. I will soon be stuck with property that is not worth even 40% of what I paid and with no remedy in sight. They won't modify the terms, they won't adjust the principal ( I am not upside down on paper- at least yet). So prudent honest borrowers get no break and banks rather end up with yet another property on their hands with a  fraction of a value than negotiate a realistic solution.  This makes people like myself entertain idea of strategic default.
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May 03 2010
Profile picture for SamNate
 Let me start by saying that we qualified for $500,000 when instead, we purchased our first house in 2005 for $227,000. The neighborhood was built in the early 40's and at the time was becoming a hip place for young families to grow. Our goal was to fix it up nice enough within about 5-10 years and rent it out - we didn't intend to retire here...
 Well, the house next door just short-sold for $40,000 and the house down the street sold recently for $32,000!!! The neighborhood has quickly become the preffered home for bums and drug addicts. Our 12 year old son is no longer allowed to play outside becuase of this.
 Our 30 yr fixed mortgage payment is $1600 per month. The average renting rate here is around $600 per month. We cannot afford to rent it out, pay the mortgage difference and pay our own rent in a nicer area. So, what option do we have? We don't want to forclose.
 We can afford this just fine, however, it is no longer a safe enviroment for my family and we feel "morally" forced to live in this crappy place :(  
 We feel like we are being punished for the wrongs of the banks and other "innocent" homeowners.   
 
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May 10 2010
Profile picture for shasta_steve
Not really sure if you are asking a question or making a statement to feel better about yourself if you decided to walk.  One thing you did not say was how much you actually put down on the property.   Not reallys sure how you are being punished either.  Yes there were lots of things going on with the banks and loan officers helping people who should have never bought a house, but it is possible that your neighborhood would have gotten bad anyway.   I do get a little tired of the victim card coming out everytime someone is unhappy with their decision.  

For me it is not a moral decision at all, it is a financial one.  You have to decide what is best for your family.  Sounds like to me you are seriously underwater and it may be best to walk or try a shortsale.  Lots depends what state you are in and if the bank can come after you for more money.  Do you want to buy another house any time soon and do you need your credit?  Sounds like you may make enough money to "buy and bail".  It is harder but believe me there are plenty of loan officers out there who will help you out.   
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May 10 2010
Profile picture for src12173
My biggest worry is this:  On our court of 14 homes, six are vacant due to foreclosures.  The same is true for just about every street in our neighborhood.  I am concerned about who will be moving into these homes.  We bought our home at $460k.......... it is now worth $275k according to the county tax assessor.  I can't imagine it selling for more than $225k..... probably more like $200k. 
We can afford our mortgage.  We love our home.  We love the home owners that are living on our street.  However, we are all in a situation that is proving to be a bad business deal at this point.  I'm tempted to walk.  I fear the future neighborhood.
We are not snobby....We are not rich or even "well-off"......... We are comfortable but frugal.  I hope this doesn't sound offensive to anyone but I don't want to live in a neighborhood of people who can only afford homes in the low $200k.  We have two small children and we want to be surrounded by families that have made smart choices in life and are in a financially secure situation.

I do have a question about walking away from a home.....  We have a 2nd/HELOC.... how does walking away from our 1st effect the 2nd?
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May 12 2010
Profile picture for ordphx
From what I understand, Goldman Sachs and other Wall street firms did not disclose to their investors that they were buying insurance (credit default swaps) on the same collateralized debt obligations (CDO's) that were being sold to their investors.   This is currently being investigated as a possible SEC violation on behalf of Wall Street (Goldman being one of them).     If they created artificial demand, which resulted in huge short term demand, followed by huge long term drop in demand and increase in supply, then yes they are responsible. But are they accountable? and are they legally accountable for the mess that was created?  They created a false market destined to fail, but the one legal thing that may get them in hot water is the allegation that Goldman didn't disclose their insurance purchases (credit default swaps) to the same investors they were selling the CDOs. Had they disclosed that they were betting on that same instrument to fail, then the investors obviously wouldn't have bought them, which means wall street wouldnt have created so many bad(destined to fail) loans.    Something to chew on.
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May 13 2010
Profile picture for shasta_steve

SRC a lot depends on what state you are in on how the 2nd will be handled or the 1st for the matter.  If you are in California or Arizonia and the 2nd was "purchase money" you should be ok.  If the second was taken out after close of escrow it will be a recourse loan and they will most probably come after you at a later date.    The 2nd has the right to foreclose but if you are underwater there really is no chance of that.  A good website is loansafe.org.  There are people on the site who can answer most any questions for your problems but in the end it is usually worth it to go find a decent attorney. 

Now I don't know what state you are in but I would not worry too much about people "only" being about to afford a home in the low 200s.  Really you might get people who are actually better with their money than the ones you have now.  For a 460k house someone should have a minimum of about 150-175k household income for less than 20% down loans.  In most places that would be considered somewhat high income.  I would bet very few of your current neighbors actually did that. One of the good things about the current situation is people actually have to be able to afford the houses they are buying.   I would be much more worried if the investors come in and they start turning them all into rentals.   I know on my block there are 2 houses for sale and two (including one I just bought) just sold out of 10 houses. 

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May 13 2010
Profile picture for Pickles98
Does anyone know about strategic default in Georgia?  In particular, I am interested in info on deficiencies in this state, to see if my mortgage co can come after me down the road.  I am always current on payments.  My problem is, I may be forced to move in a year or 2 and am very underwater.  I plan to actually leave the country for work but want to resolve whatever happens before I leave, if possible.  I've also seen foreclosures in my neighborhood sell for 100k less than what I currently owe.  Any help on this will be appreciated.  I want to get some general insight before I talk to a real estate attorney.  My house is not currently on the market. 
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May 17 2010
Profile picture for myhouseisunderwater
Ok so I've been considering strategic default too.  I'm underwater and have a few concerns:

I'm in FL and have been told that assets could be seized.  Isn't anyone worried about this as they move on?  It's the only thing keeping me in my house right now.

Also, what would happen if I chose to start paying only 1/2 my mortgage?  Would foreclosure come as quickly as not paying at all?  I'm considering pay 1/2 each month or paying every other month.

thx.
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May 19 2010
Profile picture for jhatha
If you are going to foreclose; don't pay ANYmore payments at all; thats the idea.  Banks won't accept 1/2 payment.  Don't pay.

jhatha
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May 19 2010
Profile picture for shasta_steve
Myhouseisunderwater, Florida is a recourse state and you are in a much worse position than say California. From what I have read Florida is one of those states where the lender can and will pursue you.   If you are considering it you really need to talk to a real estate attorney who specializes in this information.  I know there are several websites out there who specialize in this information but loansafe.org has several members from Florida you could ask this question of.  Do not talk to agents or loan officers as they only know about short sales and how to make a profit. 

Very few banks will accept half payments but some are getting smart and putting them in suspension accounts.  They will keep them there until they either get a full payment or until their fees take them.   Really you would be just throwing your money away.  By paying every other month you may buy some time but each time you pay it will be credited to the oldest payment due.  You will still be racking up late fees every month and they will eventually come after you. 
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May 19 2010
Wow...well...yes...I saw this coming too, and warned people about it.  BUT...and this is a big BUT!...people are not taking in to consideration the legal consequences of doing this!

Not only is it against the law to Rent Skim (accepting money for rent when you know you are not going to pay the mortgage on the property - see CA Civil Code 890) if the property is an investment of non-owner-occupied, but if the loan on the property is not the original purchase loan (any refi, 2nds, HELOCs, etc) the loan is no longer a non-recourse loan.  This means that not only could you be prosecuted for rent skimming, but you WILL be sued for any loss the bank has when you walk away from the house.

So...if you think it is just a moral dilemma, one that only affects your credit score with a foreclosure...think again!  It will affect your pocketbook with attorney's fees for defending the rent skimming violation AND declaring bankruptcy when you can't afford to pay back the $100k lossd the bank sues you for...or worse yet...if you have the money and assets that are not protected, you could lose those as well!

Feel free to ask me about protecting yourself (with a legal asset protection vehicle or how to get cheap, but effective, legal advise), or at least about making informed decisions at 888-971-TEAM (8326)
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May 24 2010
Profile picture for shasta_steve

Wow what a load of crap.  Mr Orshoff is nothing more than a spamming leach that comes out to prey on people using scare tactics and outright lies.   He is a prime example why you need a good lawyer and advice from someone who has no interest in your decision.  
 
First off in reading CA Civil Code 890 you will see the definition of rent skimming to be not using rent "DURNING THE FIRST YEAR AFTER ACQUIRING THE PROPERTY", to pay the mortgage.  I would also be interested if he can show one example where a homeowner, who later turned his house into a rental, was prosecuted for rent skimming.  I read many websites and have never heard of anyone even being treatened with prosecution.  The vast majority of people in this situation have held there property longer than that anyway. 

Also another scare tactic and outright lie is he states "you will be sued" for any loss suffered by the bank.   All non-purchase money mortgages in California are non-recourse.  If you buy a home, as a primary residence with purchase money, and do not refinance, even if you later turn it into a rental, it will still be non-recourse.  Now California is a one action state and the lender only has one shot at you.  They can either sue you (judicial foreclosure) or just take the house (non-judicial).  They almost always just take the house even if you have a non-purchase money loan.  If they do non-judicial they can not later sue you for more money. 

Now there are lots of things you should talk to a qualified attorney about but don't believe the scare tactics of Mr. Orchoff. He is only here to spam the board and to try and scare you into giving him money for worthless advice.  Get educated and you will see it usually is not as bad as it seems.   It is stressful enough without having to deal with the scam artists and leaches.  

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May 24 2010
Funny You SHould Mention That...Here is a recent blog I wrote for another blog site:
Perhaps this will help you make the decision. Something to think about.

-------

You hear alot today about strategic foreclosure. I understand why people are thinking the way they are thinking, but I don't think they are really thinking long term. Beyond killing the neighbors house prices even more, here is something to think about for the individual who is considering a strategic default.

Several things one must consider.

1. Might your credit card interest rates skyrocket or your accounts be closed or maybe you will be unable to obtain other credit? Maybe or maybe not. Better check on that. A 7.2% interest rate doubles money every ten years. Credit card interest is revolving meaning you pay interest on interest.

2. That new or used car you need to buy a year or two from now... WIll the interest rate be 6 or 7% or might it be over 20% which is the case for those with bad credit scores. A depreciating asset to begin with and lets say a 24% interest rate. You will be paying twice for the car after three years of paying interest (maybe more as the interest is on the front end).

3. Since you no longer own a home, or at least won't after a year or so of living there for free, you will now become a renter. In the D.C. area, the best rentals are being gobbled up by all the people transferring in with good credit. I guess you might have to settle for something less down the street.

4. While you are paying rent, you will be making your landlord a wealthy individual, if they are not already, by paying his mortgage. Meanwhile, you will have nothing when you move out and finally decide to buy another home. Even though your foreclosure may have been forgiven, you are likely to be considered a higher risk and may need a higher downpayment, more points on the loan up front, and/or possibly have to pay a higher interest rate. The difference between 5% and 8% on a home loan over thirty years is a very significant number on a monthly mortgage note and on total interest.

5. And while you were paying rent, this foreclosure mess will likely resolve itself as all of the bargain hunters will have bought homes like yours at a discount. During this period, houses might shoot up 20 or 30% and you might have at least been in the black on your home. Now, you will have to buy a home for a higher price while your neighbors are using the equity to buy a vacation home at the beach.

There are alot of things to consider when buying, selling, or even defaulting on a house. I can't advise you on a foreclosure, titles, mortgages, or legal issues. These are best left to the professionals in each of those areas.  I can help you buy or sell a home.  I'll ask you questions that you will need to consider that will assist you in making the right decision on a property.
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May 24 2010
Profile picture for jhatha
My own experience.  Bank of America is now calling daily with recorded call saying, "Please hold".  I did this once and found out they were B of A Debt Collections and want to know when you will payment the late payment.  No need to answer those anymore.

Most callers have thick accent from who knows where?  India or Bangladesh or Pakistan?

Oh they also want the last four (4) digits of our social sec number which I tell them they already have and then I hang up.  Tonight I was asked if I planned to make the June 1st or July 1st payment and I said no. June and July will be the 2nd and 3rd missed payment and will be under the bed along with the 1st missed (May) payment.  What a joke.  Hope it last for 6 or 8 months.

Feel free to email me for questions or comments.  jhatha@gmail.com
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May 24 2010
Profile picture for ordphx
If you are a couple hundred thousand upside down, what's the lesser of two evils?   Keeping a toxic asset, or walking away and using all of those wasted payments to buy things with the cash you will make in the next several years?    File bankruptcy, and free yourself of the ponzi scam that wall street tricked us into.   It's not irresponsible. It's a good counter action to wall street for thinking they can screw us all, and then hold us hostage for many years to come.   They are doing the same thing to their toxic assets.  Why not you?      To be frank, all I need is a secured credit card, and a job.  The rest will fall into place.    Credit is overrated unless you are a business and NEED it to run your business.
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May 24 2010
Profile picture for sunnyview
People need to make a decision about whether to default based on fact not commissioned advice, shame or fear. If you an owner are considering default, you should know that your credit will take a hit, you need to know whether your state allows deficiency judgements and you also need to know how much underwater you really are based on real comps not feared value. You should NOT pay anyone without a law license to advise you about going the bankruptcy route or listen to them about real estate foreclosure laws in your state. Agents will often recommend a short sale and that may not be the best option available.

Default is emotionally hard enough and people should not be subject to others who see this as an opportunity for them to make money on the underwater owners misfortune. Make the best decision you can based on fact.
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May 25 2010
Shasta_Steve...You are a mindless hack who should read the Good Neighbor policy and stop making unfounded libelous comments! 

I posted this specifically because I know people personally who have been sued for Rent Skimming AND a personal friend who lost his home in foreclosure 8 months ago and is being sued by the bank for the $210k loss they experienced.  I read my post again and can't figure out how you think it was spam!!!???  It was simply a warning to people who are not taking in to account what CAN happen (I did not say will...but it certainly can!) if you make the decision to walk away.

Yes.  Purchase money is non-recourse and will always stay that way.  But, if they refinanced...it IS a recourse loan and you most certainly are liable for the losses the banks will realize.  Will they sue?  I am sure that every situation is different.  But I have seen it first hand that the banks WILL go after honest homeowners who could not afford to pay...don't you think that it is reasonable that someone who could afford to pay but walked anyway that the banks might see an opportunity to recoup some losses?!!!  Come on.  It's common sense.

Now I am not an attorney and do not give legal advice!  I always recommend seeking legal advice from an attorney as each person's situation is going to be different.  I also know (because I have attorneys in my family) that attorneys can be expensive.  If I have used something myself that has saved me money you better believe I am going to talk about it.  As for monetarily benefiting from anything that I said????....NO...simply no. 

I NEVER post spam and am ALL ABOUT giving information to make informed decisions WITHOUT seeking a payment...and if there is something that requires a payment...I am all about seeking the cheapest, most effective method for doing that.  Why not ask me a question first before responding the way you did in a public forum.  That just shows your ignorance about what actually goes on out there.

Scare tactics?  Hell yes!  If someone is upside down on their home and are in danger of losing it they should be scared.  If an investor bought multiple homes with OPM (other people's money) and are now walking away "strategically" from a legal obligation they signed their name to when they still can afford to make the payment they agreed to pay...they should be scared!!!  We should all be scared!!! 

If the banks, the government and lawmakers let people walk away without recourse on recourse loans we will likely see a doubling (at least) on the foreclosure rate in this country which is already out of control and facing another wave.  I just think people who are considering this should be prepared for action against them...even if it never comes.

I said in the past (as I did with this issue) that "they" would stop buy and bails and they did...the lending restrictions are so tight on previously held property that you better make enough to support both payments (the existing home and the new one) or you don't get a loan.  The same thing will happen here.  A few people might get away with it, but it will not be allowed to happen on a large scale.  Not without retribution.

I am not positing for profit.  I post for education and out of concern. I work for a non-profit education organization that teaches financial literacy. I am an advocate for raising the level of knowledge to avoid the mistakes that got us all in this financial crisis.  I have the balls to use my name and number because I want people to know that I will back up what I say.  Shasta_Steve hides behind his little waterfall.  Post your number and contact info...and check your facts before your mindless commentary makes you look even worse than your attempted insults.  And next time read the Good Neighbor policy and keep your unfounded libelous comments to yourself.
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May 25 2010
Profile picture for shasta_steve
Well when you said that you were posting for a non-profit I all ready to say sorry.   I then called 888-971-TEAM (8326) and now not so much.  Maybe you should read the the policy about posting personal information. (SPAM)
 
I also invite anyone on here to call that number and see if there is a chance in you know what that it is a non-profit.  You can also type the number into the internet and look up his website.  He does have a nice youtube video and I am sure he will do those refi's for free to help you save your house.
 
Look you were giving out half truths about the rent skimming law and you got called on it.  You may know people who have but I really doubt it was Joe average homeowner.  I have no doubt that some investor may have had five properties he bought with nothing down and then never made a payment but for the average homeowner there is no way.  It says right in the law that rent skimming is done during the first year after getting the loan.  You were trying to make it sound like anyone who took rent and was not paying their mortgage was rent skimming and would get prosecuted for it.  

Ok now it is very possible to get sued, even in California, if you have second.  That is why you need a good laywer if you have a second or have refi'd   As you very well know if there is only one loan to worry about it is almost never done.  Is it possible yes but what you said was "you WILL get sued". 

Now they may very well start to go after people but they have not yet.  One of the problems going after people is they spend a lot more money and then the people move into bankrupty.  There are also taxes that can be a big problem for people who took money out of their mortgages.  I agree there are many things to think about but they should be discussed with a competent lawyer and not someone trying to drum up business. 

Now are you really trying to say that 888-971-TEAM is a non-profit number?  Are you really trying to say you were not stretching the truth a little, trying to scare people,  to get people to call it?  Again call the number or just google it.   And no I am not in the business but I am doing a strategic default right now.  I did not post my phone number, as I am not trying to sell anyone anything.   I do believe that you can contact me via my email it you really want to. I will continue to point out when you and others make deliberately misleading statements trying to get business.  Now if Zillow wants to kick me off then I guess that is their right.   

Again if anyone is thinking of a default, stategic or not, they really need to get in contact with a good lawyer to see just where they are.  Every loan is different and every situation is different. 
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May 25 2010
You are taking away from the point of what I posted to begin with.  That is just the number to get in touch with me.  You just posted the number several times and asked people to call it.  I only posted it so that people could get in touch with me.  I did not realize that was an issue.  I certainly did not mean it as a form of advertising.  I think that we are in some serious excrement and just because a cute name has been attached to it does not mean that "strategic defaults" are not a serious problem for the homeowner walking away!  They are!  I honestly am not interested in posting something I am genuinely concerned about to get business.  I get business because I am good at what I do, and honest in doing it.  That is not what I was posting about.  I posted because this is another piece to that disaster that is the real estate market.  Consumers, loan officers, lenders, banks in general, the government...and did you see I mentioned consumers???...are all part of the problem.  This default of the month is just another in the long line of things that make up the whole problem.

There are no half truths to what I said.  It IS accurate.  To tell people that they should not be concerned or to discount the potential disaster that the VERY WELL COULD FACE is a travesty on your part!

You are condoning that people walk away from their signed, agreed to, legal contracts, and telling me that my speaking the truth about what could, DOES, has in specific cases I am personally aware of, and frankly should in some cases, happen is a scare tactic.  I don't think so.  But even if it does scare someone in to being safe and seeking further advise...GREAT!!!  It should!!! They should!!!  And frankly the only valid thing you have said is your last paragraph where you tell people to seek legal advice...they should!!! 

I stand by everything that I said!  I was not trying to get business...I was trying to inform.  The fact that you are doing a "strategic default" tells me that you are trying to justify your position.  I get that!  I just also know that your should be protecting yourself AS MUCH AS POSSIBLE!!!  If the loan you are defaulting on, but can still afford to pay, is not all purchase money (therefore a recourse loan), I would double down in Vegas that the bank will go after you for the loss.  Are you really willing to gamble that they won't without taking measures to protect yourself?

Do you really think it is wise to suggest that people not be scared of recourse when they are breaching a legal and binding contract for usually the largest dollar amount they will deal with in their lives? 

Most investors that I deal with (and what I have taught) realize that you must cash flow positive on an investment with EVERYTHING that goes in to a deal, including vacancy factors.  If the property takes a loss short term, it doesn't matter, because they are cash flowing positive...it just becomes a longer term investment.  Now I realize that that is the ideal situation and many people got over zealous and bought with no money down expecting continued appreciation...long term...it will come back...short term it hurts and if you can't take it then you have to stop the bleeding...but this is a situation where you can take it you just don't want to.  Do you really think...now try to think rationally...that if you default on a loan that generates tens of thousands, or hundreds of thousands of dollars of loss that you are not going to be held liable if the loan is recourse?  Do you think that if you continue to collect money for rent but are not making the mortgage payment that you are not in violation of your legal obligation?  No reasonable person, not being swayed by trying to justify their own personal situation, would think not.

I'll never say I told you so...I just know that since it is already happening to others that I will likely be able to make that statement.  Feel free to contact me personally and I will be happy to document the non profit 501c3 education corporation that teaches financial literacy.
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May 27 2010
Profile picture for workabee
What crap Darren. If you weren't trying to "get business" then you'd never have posted your number at all. Now you're posting like a disgruntled slick who's been fingered. Shasta called it. Get over yourself.
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May 27 2010
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Boring Boring Boring
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May 27 2010
I told you so.


As for advertising.  Here goes.  I own a Quiznos in Santa Monica...come in and buy one get one free if you say "Shasta Steve is a Hack!"  I also own a graphic design and printing company.  The same discount code gets you 1500 free full color business cards when you buy 1000.

I know...I am through on Zillow.  You can't handle the truth...so I will give it elsewhere.  Good luck!  You'll need it.
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May 28 2010
Profile picture for sunnyview
Excuse me for saying so Mr. Orshoff, but it seems like maybe you can't handle the truth. Many professionals get business contacts from Zillow Advice and follow the posting guidelines without issue. If the format doesn't work for you, then there are other choices available. I hope you do help people as you say and that you don't prey on them when they are troubled. People that do that are not very nice people in my experience.
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May 28 2010
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