# NYT - Walk Away From Your Mortgage!



## Murt10 (10 Jan 2010)

Interesting article.

I wonder when we will start to see it here. Maybe it is happening but we just don't hear too much about it, in case it leads to more defaults. 

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?em

IMO people who are in negative equity are being taken for fools. Most people who bought a house 2 - 3 years ago, are noe living in a property that is now only worth 1/2 what they paid for it. Do they really believe that it will come back in a reasonable time frame, to a price that they can afford to sell it and trade up? It will take time for the penny to drop with them, but drop it will, and then what? 

These people need sit down and do the maths. When enough of them realise what is going on, and that they are paying back loans that prudential loan companies, (and a blind man with a stick), could have seen that they would never be able to repay over the long term, they will start defaulting in large numbers and then something will have to be done for them. Another NAMA to bale the banks out again, I don't know. Maybe as voters these people will begin to organise. 

Sure, these people entered these contracts of their own free will. They could have said No. But you also have to take into account the fact they were young, that they were being sold credit, by very smart commission driven salesmen, aided and abetted by all the other vested interests involved (Government, banks, properts supplements, recent property experience, hard sell, an ineffective financial regulator and Central Bank). You snooze, you loose! was the mantra.

Can't afford to get on the property ladder, why not buy in Blugaria, rent the property out (guaranteed rental and all that sort of guff), sell it in a few years and buy a house in Ireland. 40 year mortgage, No problem. We'll even take Rent a Room as earnings. 

This time 10 years ago, we had just survived the Y2K bug. The world as we knew it didn't come to an end. Roll on 10 years and it very nearly did. I wonder if, in another 10 years, we will look back at 2010, NANA etc and see that that was really the beginning of the end.

Time will tell.


Murt


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## Commercial (10 Jan 2010)

I think this is an irresponsible article to put up. We as tax payers are baling out the banks. Now to put this up and to put ideas into peoples heads to walk away from their mortgages if they are in negative equity. We will never get out of this mess if people start doing this. 

People were young and bought into 100% mortgages. But all ages did this. Property developers were older as were the bankers. 
It was a decision to be taken very seriously and people did it based on available information. Therefore they have to take responsibility for their actions.

So to encourage people to walk away from their negative equity mortgages will leave us all with higher tax bills for even longer.

Thanks for that!


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## twofor1 (10 Jan 2010)

Murt10 said:


> I wonder when we will start to see it here. Maybe it is happening but we just don't hear too much about it, in case it leads to more defaults.


 
It’s not as easy to do over here.

It seems, in most States anyway the only consequence of handing back the keys and walking away is limited to loosing the property.

You hand back the keys over here, the bank will sell the property and pursue you for whatever balance is left plus costs etc, whereas over there;

Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them.
In some states, lenders also have recourse to the borrowers’ unmortgaged assets, like their car and savings accounts. A study by the Federal Reserve Bank of Richmond found that defaults are lower in such states, apparently because lenders threaten the borrowers with judgments against their assets. But actual lawsuits are rare.


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## sunrock (10 Jan 2010)

I remember the ad by BOI i think whereby a young couple were constantly interrupted in their attempt to have sex.The none so subtle message was that they should get on the property ladder even though values were exorbitant.
Americans can in most cases just hand back the keys and walk away,end of story.
In Ireland,apparently one cannot do that as you can be pursued ,through future earnings  etc...to the grave if necessary.And debtors can be send to jail etc!
Bankers in banks posting big losses get bailed out by taxpayers ,many with millstone mortgages. You couldn`t make it up.It just goes to show that the people who make the rules are only looking after themselves.


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## pjmn (10 Jan 2010)

Commercial said:


> I think this is an irresponsible article to put up. We as tax payers are baling out the banks. Now to put this up and to put ideas into peoples heads to walk away from their mortgages if they are in negative equity. We will never get out of this mess if people start doing this.
> 
> People were young and bought into 100% mortgages. But all ages did this. Property developers were older as were the bankers.
> It was a decision to be taken very seriously and people did it based on available information. Therefore they have to take responsibility for their actions.
> ...



Agreed...


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## Murt10 (10 Jan 2010)

Commercial said:


> I think this is an irresponsible article to put up. We as tax payers are baling out the banks. Now to put this up and to put ideas into peoples heads to walk away from their mortgages if they are in negative equity. We will never get out of this mess if people start doing this.
> 
> People were young and bought into 100% mortgages. But all ages did this. Property developers were older as were the bankers.
> 
> ...



You are more than welcome!



Commercial said:


> "We as taxpayers.......We will never get out of this mess........will leave us all with higher tax bills for even longer" !


As I said the vested interests are as usual more concerned with themselves than anybody else. As long as I'm alright ...  That's what got us (and by us I mean all the citizens of the Country) into this mess in the first place.

The decision to take out a house loan was taken very seriously by the loan applicants at the time, but now circumstances have changed and they were not made aware of all the relevant information when they took out the home loans.

I am being criticized for wondering when the victims of this scam will wake up and smell the coffee, and refuse to lie down. What does any rational person think will happen when the ECB decides, which they must inevitably do, to increase interest rates. More of these loans are going to become unaffordable.

We, as citizens of the Country, benefited to some degree from the profligate Government spending of the past 10 years in one way or another.

Brian Lenihan solved some of the problem with NAMA, but that was just a short term fix, a band aid job to stop some of the major VI's being badly burned.  He should have cut to the chase and declared the banks bankrupt, which they were. 

In the National Interest, he should immediately have suspended the banks from the stock exchange. He should have immediately sacked the Directors and top staff, frozen all their assets, and written off all shareholder value, along with that of all the bondholders.

Don't get me going about the banks, remember that clip when the AIB bloke who oversaw the making of this crisis. He was telling us that he was taking a big hit. His salary went from 3m to 2m and he still was allowed to retire on an absolutely massive pension instead of being sacked and locked up.

Now we hear of developers transferring their mansions and other assets into their wife's names, others (Anglo chief) heading off to Canada, no doubt avoiding the enquiry that will follow - eventually, in the fullness of time, in due course etc (a la Sir Humphrey Appleby)
BOI now headed up by an insider, 3% pay increases granted to all bank staff, by bankrupt (except for the largess of BL) banks.

AIB's former internal auditor and whistle blower made to sign a confidentiality clause. I'd love to see this lifted. Was there anything illegal being done?

"Respected" economists on every news bulletin telling us that the only way was up. The they told us about the so called soft landing we could expect. These people are all very polished and well educated. Very few, except David Mc Williams, said that the emperor had no clothes.

You may argue that the young people looking for loans should have been aware that things could go wrong, but if even the national news stations were party to selling them the dream (lie), where were they supposed to get the information to enable them to make an informed decision? As I said the Central Bank and the Financial Regulator were comatosed at the wheel. Light touch regulation, my bum. 

Bankers by their very nature are greedy, it's in their blood. We, the mugs, have now spent our pension reserve giving them pots of extra money which we expect them to use to make loans to SME's and save us. No they wont. Their first instinct is for self preservation, their second is to look after their friends, way down at the bottom of their list is the gobdaw that bailed them out in the first place.

Are we mad. How many times do the banks have to roll us over before we see them for what they are. 

The First time buyers trusted them and have now sold their futures in order to take on loans that should never have been granted in the first place. They must take 100% of the hit while the bankers crack the whip and threaten them with prison if they fail to make their repayments.

The so called "Respected" economists and banking spokesmen should know from history that every bubble starts with "This time it's different!"

Personally, if I had a massively unaffordable loan, on a house worth a fraction of what I had been conned and hoodwinked into paying for it, I would investigate heading off to the UK, or somewhere similar, declaring myself bankrupt, have all my loans written off and 7 years later I could start again - debt free.

Why should only companies be able to walk away from their debts and start over.

Not discussing the inevitable is akin to talking about a soft landing and look where that got us to. As I said in my OP Time will tell.

Murt


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## LS400 (10 Jan 2010)

I also senced the Im alright.. senario.

Well said.


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## pjmn (10 Jan 2010)

Murt10 said:


> BOI now headed up by an insider, 3% pay increases granted to all bank staff, by bankrupt (except for the largess of BL) banks.



Factually incorrect...


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## Murt10 (10 Jan 2010)

pjmn said:


> Factually incorrect...



Sorry? What's this then? My imagination 


[broken link removed]


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## pjmn (10 Jan 2010)

You are factually incorrect to use the term 'all' - some staff did get that increase - others did not...


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## Murt10 (10 Jan 2010)

No.No. No. I'm not going down the route of being dragged off into an argument about trivialities. The fact is that the vast majority of staff working in the banks received the increase.

A wage cut and a pension levy (another name for a wage cut) was imposed on everyone including cleaners in the public service. The silence regarding the wage cuts being imposed on the banking staff is deafening.


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## pjmn (10 Jan 2010)

You are the one moving the goalposts - you have made a statement - which is factually incorrect - I have pointed that out - no more, no less...


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## Strathspey (10 Jan 2010)

Commercial said:


> So to encourage people to walk away from their negative equity mortgages will leave us all with higher tax bills for even longer.
> Thanks for that!


You probably don't want to hear that a friend has just increased the term of his mortgage back to 40 years, paying the minimum back, and is just playing the waiting game, waiting for a redundancy payout and then he's off back to the sunny, southern hemisphere....and you can be sure AIB or BoI will have little chance of extracting money from him for abandoning his property in Ireland, that's if they even find him.


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## flattea2 (10 Jan 2010)

Commercial said:


> I think this is an irresponsible article to put up.


 
Free speech, discussion etc....


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## number7 (10 Jan 2010)

Dont consider a discussion on the topic as irresponsible.


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## Complainer (10 Jan 2010)

Interesting how some consider it unethical to even discuss options around default, but there are no such concerns expressed when business owners want to go into liquidation to escape their lease contracts!


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## canicemcavoy (10 Jan 2010)

Murt10 said:


> Interesting article.
> 
> I wonder when we will start to see it here.


 
The USA is not Ireland.

Ireland is not the USA.


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## sunrock (10 Jan 2010)

It might be impossible for people to keep up their mortgage payments if they become unemployed or interest rates rise.Unemployment is forecast to rise by 80,000 next year. Even if no one who can pay, walks away from paying their mortgage,there is bound to be loads of people who just won`t be able to afford to keep paying their mortgages.The impact this will have on the banks is likely to be very serious


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## ecstatic (11 Jan 2010)

I must admit i am one of them fools who got caught in negative equity.

And yes at the moment i am strongly considering defaulting.

The thing is with no credit in the economy there is no way values will return.

Im not the only one thinking about this another family member has 12 properties and is considering the same when his interest only period finishes.

For people to say dont think about it its irresponsible hang on its a choice that one has. 

If enough people default a mortgage moratarium could be given that happened in omaha in 1930s.

At the end of the day regulation was lax for mortgages etc so i dont see why not default the underlying asset is supposed to be the secuirty. If enough people default the government would be forced to wake up they are clearly doing nothing and financing there own workers with borried monies with any act of prudence.


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## D8Lady (11 Jan 2010)

ecstatic said:


> Im not the only one thinking about this another family member has 12 properties and is considering the same when his interest only period finishes.



Right there is the problem - 12 properties? Where was the buiness planning, assest allocation, risk management, personal responsibility?

While I have sympathy for the first time buyer, a professional property owner should have had eyes wide open.

Why should I (potentially) bail such a person out with my taxes?


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## Kine (11 Jan 2010)

Murt10 said:


> No.No. No. I'm not going down the route of being dragged off into an argument about trivialities. The fact is that the vast majority of staff working in the banks received the increase.


 
Since when does 6000 employees constitute a MAJORITY ina n organisation that currently has c 15000 employees, and at the time had closer to 17000? By my calculations (dusts off calculator) 6000/15000 = 40%. Correct me if I'm wrong, that doesn't add up to a majority?


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## Mpsox (11 Jan 2010)

Personally speaking, I have little sympathy for people who bought properties overseas, in markets which they knew nothing about, often sight unseen. These people were not investors, they were speculators. In some cases they got conned, in most of the others, they were plain stupid, but in most cases, they got carried away. 

The same applies for people who bought lots of properties in Ireland, anyone with a basic knowledge of economics knew 3 years ago that the basic laws of supply and demand were going to apply at some stage in the near future. There were simply too many houses being built in Ireland for our population and economy size.

Do the banks, Govt, regualtors etc have to bear some of the responsibility for the mess we're in,? of course they do and at some stage in the future I expect some sort of saga over mis-selling of mortgages will occur. However the fundamental issue here is that people got carried away with themselves and got greedy and thought that this great money making property pyramid scheme we had in Ireland was never going to end. The whole culture of saving for a deposit and furnishing a house (like I did) got forgotten about and it became about me me me and now now now

Negative equity is really only an issue if you want to sell. Other then that, over the life time of the mortage, there is a reasonable chance, that the value of the property will recover some, if not all of the paper loss it currently shows. We are going to have to do something radical with our properties in Ireland, we're going to have to live in them for more then a couple of years before moving again


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## number7 (11 Jan 2010)

D8Lady said:


> Right there is the problem - 12 properties? Where was the buiness planning, assest allocation, risk management, personal responsibility?
> 
> While I have sympathy for the first time buyer, a professional property owner should have had eyes wide open.
> 
> Why should I (potentially) bail such a person out with my taxes?


 
I think that is the point d8lady, you shouldn't bail out anyone who was given a mortgage that they couldn't afford (and whose responsability was it to check out the bona fides of the "professional property developer" The Banks of course) the banks and bond holders should pick up the tab not the tax payer.If that means they go to the wall then so be it.

It is just not possible that a business that makes its profit by charging interest on monies lent conducts its affairs in a manner that is likely to create defaults and then gets a bailout from the tax payer.

Can anyone in their right mind claim that the excessive lending that was everywhere over the last 10 years was not caused and supported by the banks. 

Defaulting is now a very real debt management strategy "going forward" and the tax payer should not be paying for the deficancies of the experts.

Iceland's president has refused to sign into law the laws passed by parliment to allow for the repayment of overseas depositors based on the fact that they were depositing their monies in the highest interest accounts available on the basis that their was a greater degree of risk and that the average Iclandic citizen has no moral or legal debt to these depositors.

Now thats whats called leadership not the panderers that we have.  

By the way the counrty is awash with so called professional property developers that are up to their oxters in it.


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## ecstatic (11 Jan 2010)

the point was stated correctly above it should be the bondholders who take the hit not the country but unfortunatly incompetency reigns supreme in dail eireann and the irish people are rolling over and allowing it too happen.

we should be on the streets demanding the political heads until we recieve politicians who are fit to run the country.


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## bullworth (11 Jan 2010)

ecstatic said:


> the point was stated correctly above it should be the bondholders who take the hit not the country but unfortunatly incompetency reigns supreme in dail eireann and the irish people are rolling over and allowing it too happen.
> 
> we should be on the streets demanding the political heads until we recieve politicians who are fit to run the country.




+1




Kine said:


> Since when does 6000 employees constitute a MAJORITY ina n organisation that currently has c 15000 employees, and at the time had closer to 17000? By my calculations (dusts off calculator) 6000/15000 = 40%. Correct me if I'm wrong, that doesn't add up to a majority?



Not one person working for a bankrupt company should get any pay increase whatsoever. In the real world the wages paid by a company  and the number of employees are dependent on company profits and losses. If they dont like their wages without rises they can go join the dole queues. The money they are leeching off the state in pay rises could be invested in taking people off those dole queues and putting them into real jobs; real jobs which dont need government bail outs and subsidies. Noone has  a right to a job just because they work in a  bank.  No section or class of person in society should have any more rights than those who were forced to join the dole queues and who did not have their jobs protected and their wages subsidised by the taxpayer.


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## sunrock (12 Jan 2010)

As has been previously mentioned,defaulting on ones mortgage is illegal and the banks can come after you for the shortfall even if you hand in your keys.They can also get a part of your future earnings even if you are on welfare.Don`t expect any sympathy from the government(apart from the usual crocodile tears by whichever spokesperson they parade on the news or primetime). After all they bailed out the banks using taxpayers present and future money.
If it was possible to just hand in the keys and be done with it, the banks would have been much more careful with their lending practices.While I have sympathy with those who find themselves in negative equity or/and have difficulty in paying off their mortgage.I fear they are sorely deluded in expecting the government to help them out.The powers that be are in serious trouble themselves in keeping the banks viable and will do everything possible to keep the mortgage payments rolling in.
Just look at how many politicians from all parties are directors of the banks and i also imagine that some of our political elite are big shareholders and maybe even bondholders in the banks.


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## mrANGRY (19 Feb 2010)

This is my first post ever to any forum.  I am at present on the wrong side of the financial divide outlined (rather smugly in some cases!) elsewhere in this forum. I am not financially irresponsible.  I bought a house in 2006 because...I needed somewhere to live.  I have worked in senior management positions with two companies in Ireland both of which have subsequently ceased trading. My mortgage is in arrears. I attended the local district court last week to defend a repossession order being aggresively sought by INBS; only given a stay of execution due to the compassionate nature of the Registrar. There were 25 other repossession cases being held that day; all with mainstream lenders who are now pursuing cases at the borrowers expense, allegedly before rumours of a government mandated assistance package come to fruition. I also have two other loans in arrears, on which judgement mortgages have been issued, now seeking to force sale of my home. I was the sole attendee at the court; seven cases were adjourned; the remainder have left the jurisdiction. Present government action, or should I say the lack of it, leave those in the financial cul-de-sac with no other option but to run, not walk!


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