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

[pellegrino]

abuses of chapter seven regulation make it significantly harder for those who actually need/deserve to file.

How? The laws apply equally to everyone.

[byu71]

We paid a lot less in tithing for those years though...

This got me thinking and the following is not a response though to you specifically.

Maybe we lack faith right now. Perhaps the SP should have focused on paying tithing and not foreclosure. If you pay a full tithing, the Lord will provide a way for you to make mortgage payments.

Just a thought, I am not saying how a SP should do his job. It's not one I would want.

[Jeff Lebowski]

I doubt that the church is counseling them to do this either, but from an economic standpoint it's the right thing to do. People and businesses break contracts all the time because circumstances have changed and no longer favor them. I wouldn't judge anyone who walked for strategic reasons. They have nothing to gain by staying.

That seems like an awfully slippery slope.

[I.J. Reilly]

You are honest. Keep paying as long as you can. I understand that if hardship comes, the situation changes but for you shitheads who walk away from your homes and you are able to pay, do us all a favor and get the hell out of the US-of-A.

For you shitheads who give liars loans or 1 year no-cap ARMs to people just so you can turn around and repackage that bad debt as securities to sell to foreign investors, bought CDS, leveraged up 30x and then raked in a bunch of government cash, do us all a favor and get the hell our of the US-of-A!

[wuapinmon]

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.

But, we have to remember the profound power that the old question "Are you honest in your dealings with your fellowman?" has on people because one bishop might say you're not if you walk away and another might not bat an eye.

I must be some type of crazy Mormon. I'm with SB (and you, JIC). I don't understand why people need a church leader to help them with such a personal decision. Study it out, examine your motives, pray, and then do what you think is best.

Nevada Mormons sound like a bunch of sheep.

See above. Don't start hucking rocks at people just yet, I'm sure you have something like this that you'd want ecclesiastical advice about.

It would be a big whoop to me if I held a second mortgage on some guy in the Stake and he came to me and told me his ecclesiastical leader just told him he should default on my mortgage.

That would be a very difficult thing to accept. What collateral do you have as the holder of the 2nd mortgage?

Dang it, must be the new contacts.

Here's my revised post: That's your fault for making a business transaction with someone in your stake. This is why I never do business deals with Mormons, because they can turn on you in a second when instructed to by higher ups.

I agree. My parents have been <redacted> over by Mormons in an endless stream since they joined the Church. My mom's partners are all, but one, right now, LDS. I trust these guys, but previous Mormons have not done them right always. I'm conflicted about it.

You are honest. Keep paying as long as you can. I understand that if hardship comes, the situation changes but for you shitheads who walk away from your homes and you are able to pay, do us all a favor and get the hell out of the US-of-A.

Shut up. Seriously. STFU.

But if the house is dramatically underwater, the bank could potentially lose a lot. Our home originally sold for $650K. An investment group offered a short sale at 50%. They bought it for ~53% ($355K). The bank ate almost $300K on the deal. We offered $407K the day they closed on the short-sale and closed with them 10 days later...

$650k in Lehi?

My wife and I seriously considered a strategic foreclosure. We rented a home in Lehi for just over 2 years, as we made payments on a $525K home in the Chicago area. It sucked. With the ridiculous taxes of the area, it amounted to almost $4000 a month. After tax. For 26 months. Before we sold it at a $100K+ loss.

It sucked. But we were able to make the payments, so we kept on doing so.

We paid a lot less in tithing for those years though...

Why would you not pay tithing? Do you deduct your mortgage from your increase? I'm not sure that would be okay for me and my house.

This got me thinking and the following is not a response though to you specifically.

Maybe we lack faith right now. Perhaps the SP should have focused on paying tithing and not foreclosure. If you pay a full tithing, the Lord will provide a way for you to make mortgage payments.

Just a thought, I am not saying how a SP should do his job. It's not one I would want.

I don't know if the Lord's promise includes helping us make mortgage payments on houses that we foolishly bought that we cannot afford, or that aren't worth what we paid for them.

[byu71]

For you shitheads who give liars loans or 1 year no-cap ARMs to people just so you can turn around and repackage that bad debt as securities to sell to foreign investors, bought CDS, leveraged up 30x and then raked in a bunch of government cash, do us all a favor and get the hell our of the US-of-A!

You make a valid point here. All the shitheads on Wall St. leveraged their butts off and have walked away. Not only did they get to walk away, but now they are getting huge bonuses.

I guess I can just say to all of those, Wall St., home buyers, real estate speculators, bond and stock players who leverage their butt's off, the government who is in debt up to their eyeballs, thanks. Thanks a lot.

[pellegrino]

That seems like an awfully slippery slope.

How so? It's not like they're getting of scott free. They have to pay the price of foreclosure and ruining their credit for years. If you've ever lived with bad credit, you know that it sucks and complicates everything. I'm not saying it should be an easy decision, but that it's likely the right decision economically, depending on how much their house has depreciated and how likely the market is to rebound.

[byu71]

That would be a very difficult thing to accept. What collateral do you have as the holder of the 2nd mortgage?

It is the same collateral the 1st mortgage holder has, the house. Except of course you are in second position.

[old_gregg]

How? The laws apply equally to everyone.

abuses --> higher threshold for filing, larger/longer lasting penalties. people who file every seven years out of strategy and because it's most convenient are the cause of these stricter regulations, which obviously disproportionately affect someone who would never have even considered bk before but is in an unfortunate situation now.

[wuapinmon]

It is the same collateral the 1st mortgage holder has, the house. Except of course you are in second position.

Well, this isn't my field, so help me understand.

6/2007, buyer does an 80/20 1st & 2nd. House was worth $150k. You've got $30k in a loan to him. House is now worth $120k. How much of the $30k can you hope to recover based on your percentage of the value. If you sell the house for $100k at a fire sale, do you get 20%?

So, you're out about $5k total (assuming you recovered some of it in payments until foreclosure), plus the opportunity costs of putting your money in a bad investment?

[byu71]

Well, this isn't my field, so help me understand.

6/2007, buyer does an 80/20 1st & 2nd. House was worth $150k. You've got $30k in a loan to him. House is now worth $120k. How much of the $30k can you hope to recover based on your percentage of the value. If you sell the house for $100k at a fire sale, do you get 20%?

So, you're out about $5k total (assuming you recovered some of it in payments until foreclosure), plus the opportunity costs of putting your money in a bad investment?

You could assume that since I didn't specifically lay out details. Here is more detail and rounded numbers.

Let's say in 2002 buyer buys home for $150,000. Puts 10% down, so is into home $15,000. I don't know when the market peeked, but let's say it was June 2007 and the house is worth $300,000. He goes out and refinances and gets $210,000. He puts his original $15,000 in his pocket plus an additional $60,000. A couple of months later he sees a really nice deal on a car he wants to buy. Interest on car loans is not tax deductible so he gets a second mortgage of $30,000. He now has $240,000 against his house which is an 80/20 loan.

Real Estate market tanks. House is worth $180,000. He says good bye with the $60,000 he pocketed and the $30,000 car. Not a bad deal on a $15,000 investment. Especially when sanctioned by your SP who says if you are under water on the value to loan, walk away.

[wuapinmon]

You could assume that since I didn't specifically lay out details. Here is more detail and rounded numbers.

Let's say in 2002 buyer buys home for $150,000. Puts 10% down, so is into home $15,000. I don't know when the market peeked, but let's say it was June 2007 and the house is worth $300,000. He goes out and refinances and gets $210,000. He puts his original $15,000 in his pocket plus an additional $60,000. A couple of months later he sees a really nice deal on a car he wants to buy. Interest on car loans is not tax deductible so he gets a second mortgage of $30,000. He now has $240,000 against his house which is an 80/20 loan.

Real Estate market tanks. House is worth $180,000. He says good bye with the $60,000 he pocketed and the $30,000 car. Not a bad deal on a $15,000 investment. Especially when sanctioned by your SP who says if you are under water on the value to loan, walk away.

I'm sorry, my brother. That sucks.

[byu71]

I'm sorry, my brother. That sucks.

This is a fictitious situation, but I am sure is happening in area's like Vegas and Phoenix where prices went through the roof and collapsed. In the late 70's in Utah County I saw members of the church halled into court because they were signing fictitous loans on houses with scam artists.

I personally would never loan anyone over $1,000 on anything, except my kids.

[Jarid in Cedar]

This is a fictitious situation, but I am sure is happening in area's like Vegas and Phoenix where prices went through the roof and collapsed. In the late 70's in Utah County I saw members of the church halled into court because they were signing fictitous loans on houses with scam artists.

I personally would never loan anyone over $1,000 on anything, except my kids.

Even that is tricky. I have watched my FIL hand over at least $50,000 to his son over the last 10 years in an attempt to help better his position, and has not seen one dime paid back.

[mUUser]

I'm sure you have something like this that you'd want ecclesiastical advice about.

In one on one counseling -- perhaps. Over the pulpit? -- reckless.