Glenn Roberts   |  Ravenna Park  |  My Seattle   | Lake & Co Real Estate

Walk Away on Sixty Minutes

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Whose money is in your pocket.

Walk Away on Sixty Minutes

On May 9^th Sixty Minutes aired eighteen minutes of news/editorial on four homeowners who owe more on their homes than their homes are worth. About the man who bought a home for $1.4 MM which he says is now worth about $800K, but he loves the home and plans to stay there and keep paying the mortgage; him I applaud.  Sixty minutes didn’t say what his mortgage was and that might have been important to know in comparing him with the others.

Concerning the three others who have decided to not pay their mortgages any longer, I’m disgusted. All of them still had the ability to pay. They had their jobs or retirement income. But for purely financial reasons, they’ve decided to renege on their contractual obligations and, in essence, steal from the bank and help in the downward spiral of prices in their neighborhood, i.e. steal value from their community. One couple even added in closing that they would save a lot of money by not paying their mortgage for six months, but they would still live in the house until the sheriff threw them out.

The laws in our states that protect homeowners from foreclosure were made with this in mind: The people wanted to keep their homes, but because of ill health, job loss, or other temporary set backs they were unable to make a few payments. Hence the six months to a year of “chance to recapture” for the mortgagee with problems.

The people in the Sixty Minutes piece don’t have these issues. They are just unhappy because the chance they took to make money buying a home didn’t pay off. Does that make it okay to steal that payment from the lender by remaining in the house? Did the lender promise them a profit when they bought the home?

Sixty Minutes mentioned a large land owner who defaulted on an apartment complex in New York. They didn’t say if that landholder kept rents that should have gone toward loan payments. Sixty minutes also mentioned a company which consoles people who want to walk away. For a fee they ease the scofflaws’  consciences.

Sorry, my heart wasn’t broken by any of their tales of woe. How about you?  

 Glenn Roberts   |  Ravenna Park  |  My Seattle   | Lake & Co Real Estate

Where is the BOOM

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The Wall Street Journal has some answers

An article in the Wall Street Journal asks why there hasn't been a refinancing boom with interest rates at unprecedented lows. You would think that with rates at 5% and below there would be long lines at the banks. The Journal, of course, goes on to give some reasons. It just isn't getting any easier to deal with these financial giants.

1. About 1/4 of all mortgage holders are underwater and would have to bring significant cash to the table to do the refi.
2. Higher fees for those that do qualify make it seem not quite worth the hassle.
3. Those who have a 1st mortgage and a HELOC would only qualify as a "cash out" refi and then they don't get the good rate.

So the banks may be missing out on some income they could earn by being reasonable. But they're not. Another case of that industry failing to meet the needs of the public. Remember when no one flew because airline ticket prices were just too high.

Maybe someday we'll see real change in the banking industry.