The Church advises walking away from your house if you're underwater

[falafel]

At least that was the message in my stake this past Sunday.

We had a "special stake meeting" (not stake conference, but essentially the exact same format) this past week. Elder Cook was the visiting authority at the meeting. Our Stake President, a local "foreclosure" attorney, also spoke. I actually didn't attend, but apparently many people came away from the meeting with the specific counsel from the Stake President that it was okay, and even prudent, to walk away from their homes if they were underwater. Apparently this was said and explained while Elder Cook was on the stand.

I have no idea what a "foreclosure attorney" is (thats the term my wife used after talking with friends who attended). I doubt he works for the banks. I get the feeling he's a bankruptcy/loan mod guy.

I know we've had this discussion previously on the board in some format. My wife and I are split on this issue, but thankfully we're not in the position right now where we have to seriously consider it. Two of my wife's friends were "overjoyed" at the news, saying they had really been struggling with whether they could honestly walk away from their homes. One of them is in a real difficult financial situation and has been trying unsucessfully to short sell the house. She felt comforted by this new counsel and felt like a burden had been lifted. The other woman, however, has no problem making her mortgage payments. She just wants a bigger house. She also feels peace about it, I guess.

I really wish I had gone to my special stake meeting now.

[Tick's wife]

that seems odd.

[grapevine]

What about that story that N Eldon TAnner told that said someone said they could not pay for there home what should they do. Eldon Said sell your home and it is better to live in a rented home with honor than a bought home not paid for without honor.

[DU Ute]

At least that was the message in my stake this past Sunday.

We had a "special stake meeting" (not stake conference, but essentially the exact same format) this past week. Elder Cook was the visiting authority at the meeting. Our Stake President, a local "foreclosure" attorney, also spoke. I actually didn't attend, but apparently many people came away from the meeting with the specific counsel from the Stake President that it was okay, and even prudent, to walk away from their homes if they were underwater. Apparently this was said and explained while Elder Cook was on the stand.

I have no idea what a "foreclosure attorney" is (thats the term my wife used after talking with friends who attended). I doubt he works for the banks. I get the feeling he's a bankruptcy/loan mod guy.

I know we've had this discussion previously on the board in some format. My wife and I are split on this issue, but thankfully we're not in the position right now where we have to seriously consider it. Two of my wife's friends were "overjoyed" at the news, saying they had really been struggling with whether they could honestly walk away from their homes. One of them is in a real difficult financial situation and has been trying unsucessfully to short sell the house. She felt comforted by this new counsel and felt like a burden had been lifted. The other woman, however, has no problem making her mortgage payments. She just wants a bigger house. She also feels peace about it, I guess.

I really wish I had gone to my special stake meeting now.

Are there a lot of people in this situation in your stake? I can see the leadership being fed up with paying mortgages that are ridiculously upside down.

I had a good friend who lived in Draper in an older, modest home surrounded by new McMansions. He said his bishop got up one Sunday and told the ward that if they were going to come in asking for assistance there had better be a for sale sign in their yard.

[falafel]

Are there a lot of people in this situation in your stake? I can see the leadership being fed up with paying mortgages that are ridiculously upside down.

I had a good friend who lived in Draper in an older, modest home surrounded by new McMansions. He said his bishop got up one Sunday and told the ward that if they were going to come in asking for assistance there had better be a for sale sign in their yard.

Well, its Vegas, so yeah a lot of people are underwater. And Vegas has one of the highest unemployment rates in the country. That said, I'm not in a super affluent stake, so who knows.

[chrisrenrut]

Are there a lot of people in this situation in your stake? I can see the leadership being fed up with paying mortgages that are ridiculously upside down.

I had a good friend who lived in Draper in an older, modest home surrounded by new McMansions. He said his bishop got up one Sunday and told the ward that if they were going to come in asking for assistance there had better be a for sale sign in their yard.

I was under the impression that Fast Offering funds were not to be used to help make mortgage payments. Our bishop will help pay rent, but not house payments. Is that a church policy or a local leadership judgement call? Anyone know?

[Tick's wife]

I was under the impression that Fast Offering funds were not to be used to help make mortgage payments. Our bishop will help pay rent, but not house payments. Is that a church policy or a local leadership judgement call? Anyone know?

that was my impression too. Food, rent payments, bills, and maybe clothing, but no mortgage payments and all of this help is after the member has gone to their family first.

[TripletDaddy]

A couple that is in serious financial duress during the worst economic crisis of our lifetime is relieved that someone at a fireside advised them that walking away is a viable option?

What was their alternate plan? Exhaust all their liquidity and savings and then get kicked out of the home?

Thank heavens for that fireside, I guess.

Reminds me of the Church's counsel to stay out of debt. Gee, you think so?

[falafel]

A couple that is in serious financial duress during the worst economic crisis of our lifetime is relieved that someone at a fireside advised them that walking away is a viable option?

What was their alternate plan? Exhaust all their liquidity and savings and then get kicked out of the home?

Thank heavens for that fireside, I guess.

Reminds me of the Church's counsel to stay out of debt. Gee, you think so?

It wasn't exactly a fireside. It was a stake-wide meeting that took the place of our regular block meetings and was presided over by a member of the Twelve.

While the one family was under serious financial stress, they were concerned with honoring the contract they had to pay their mortgage. They were still able to do so, but not without making significant sacrifices.

The other family is simply motivated by a desired for a larger house. They came away from the meeting with the same impression that their local ecclesiastical leaders supported their decision to break their agreement despite the lack of any real hardship.

[myboynoah]

It wasn't exactly a fireside. It was a stake-wide meeting that took the place of our regular block meetings and was presided over by a member of the Twelve.

While the one family was under serious financial stress, they were concerned with honoring the contract they had to pay their mortgage. They were still able to do so, but not without making significant sacrifices.

The other family is simply motivated by a desired for a larger house. They came away from the meeting with the same impression that their local ecclesiastical leaders supported their decision to break their agreement despite the lack of any real hardship.

I don't understand how a person can walk away from a mortgage (I'm assuming forclosure) and then turn around and buy a larger house.

[Jarid in Cedar]

I don't understand how a person can walk away from a mortgage (I'm assuming forclosure) and then turn around and buy a larger house.

Because the bigger house is now cheaper

Also, they try to get the new loan before the foreclosure. There is a realtor in Cedar that actually walks potential homebuyers through this thought process :swear:

[falafel]

I don't understand how a person can walk away from a mortgage (I'm assuming forclosure) and then turn around and buy a larger house.

Because the bigger house is now cheaper

Also, they try to get the new loan before the foreclosure. There is a realtor in Cedar that actually walks potential homebuyers through this thought process :swear:

Yes, that's what they do. It happens a ton around here. You have to fudge the loan app a little I'm sure, claiming you are keeping your old house for a rental property or something. I'm sure junkie's seen it. Then once you close, you just stop paying on the old house. Wahlah!

[The_Tick]

Really it boils down to 2 questions...

Ethics vs. Reality

Fortunately we aren't in this situation, as we bought our house in 2001. The builder actually gave us money to be able to qualify.

But look at this scenario...

Let's say you buy a house for 300k in 2007. You have a 30 year loan and a payment right around 2k. You make good money.

3 years later...

Your house is now worth probably 160k. You still owe 296k. (Just grabbing numbers out of the backside folks.)

In 7 more years, you are still going to owe 20 years on the house. You will probably owe 220k at least still on the principle. If you are fortunate, the house may be work 170-180k. 10 years into it and you are still 50k in the hole.

The house may never be worth the purchase price. The house will never be worth the 500k you are going to pay with interest involved.

The bank wont work with you because you make good money. Regardless if you make good money, you are involved in a bad investment. Yes...you signed a contract, but people walk away from contracts all of the time.

What do you do?

I can respect someone that wants to stick it out. I really do.

I also don't begrudge the person for walking away. They weren't very smart in purchasing the house for 300k in the first place. But neither were the other 50 million people who are losing their houses. So this isn't an isolated event.

If you file for bankruptcy, and you let the bank take your house back, you have to ride out 7 years of bad credit. But after those 7 years you owe 0.00. The system rewards you for hitting the reset button.

I know multiple people in this exact situation. The Obama housing plan was an epic failure and hasn't helped a single person I know. I talk with my friends, and I tell them that if I was in their situation I would be walking. No questions asked and with no guilt. Just simply doing the math.

[SteelBlue]

I find it very strange that someone would feel the need to hear something from a church leader before they made a move like this. Sure, I understand that these are spiritual leaders but it strikes me as very immature both spiritually and ethically.

I look at it the exact same way that Tick does. If it makes sense financially for you to walk then walk and take the consequences, but don't drag Jesus into the equation.

[Rosebud]

Yes, that's what they do. It happens a ton around here. You have to fudge the loan app a little I'm sure, claiming you are keeping your old house for a rental property or something. I'm sure junkie's seen it. Then once you close, you just stop paying on the old house. Wahlah!

At least someone around here knows how to speak correctly.