patrick.net

Goran_K says

Yeah I agree. Instead of calling this guy a deadbeat, and idiot, why don't we just appreciate the information he is providing to the community? I think these people know they made a mistake.

I don't get any sense of that at all. Did we both read the same post? It reads not as a contrite person who admits they made a mistake, but as a self-righteous person blaming all their problems on Wells Fargo. This person appears to honestly believe that he is morally entitled to keep that HELOC money.

Do you understand that this is not the same as a first mortgage? If you buy a house and the value declines, you are in effect losing money. I still think you owe the money you borrowed, but I can understand how someone might make the choice to walk away from a mortgage when they are in effect losing a great deal of money.

But with a HELOC, THEY DIDN'T LOSE ANY MONEY. They got every cent of that loan, and thanks to an overdeveloped sense of entitlement and a flashy lawyer, got to keep all that money. Who do you think is footing the bill for that? Do you think it's Wells? Dream on. It is the middle-class taxpayers who are getting screwed. When you game the system, you are taking a big shit on your fellow taxpayers.

So again I ask: Explain why you feel that you are entitled to keep money that you did not earn.

Its really the system we have and how it works we are angry at.

The fact is: most people (at least half from my experience) will take ANY and ALL credit extended to them regardless of ability to pay, or how abusive that loan is (200k student debt is common).

So we know if they lower lending standards to 'fill out peice of paper, get 3 million in loans' that there will be endless people lined up for this money. Its called being a debt junkie. These people simply declare BK as often as the law will allow and thier 'wealth cycle' is part of the business/credit cycle. They will be broke between credit binges (rececessions) and live like kings during peak borrowing years (non recession/boom).

This is the modern financial system - it just works this way.

Homeboy says

It reads not as a contrite person who admits they made a mistake, but as a self-righteous person blaming all their problems on Wells Fargo. This person appears to honestly believe that he is morally entitled to keep that HELOC money.

Well that could be true. I read it as "My life got wrecked, I probably won't do that again."

But that could be way off, admittedly.

"we considered to be a worthless loan."

This is the phrase that is troublesome. It wasn't a worthless loan when he received $152,000. It only became a worthless loan when the value of his house collapsed. So why not give them their money back? What did you do with it? This is the one part of the story he leaves out. If he put the money into the home and it lost value, a person can feel a little sympathy. I could make the argument that the banks (first and second) lost. But if he spent the money on cars, vacations and entertainment, then he got his money! He should pay it back.

Here is the real rub. How can a lawyer and a doctor be that stupid about money?

Not a "worthless loan" since its not a money purchase loan. What you got is a very expensive education on the topic of a "line of credit". You might want to sue your college for granting you a "law degree".

You should be thanking Wells Fargo, they did you a favor.

Addendum - My apologies, I withdraw my 'law degree' comment since you never stated that you graduated.

A simpler story would be "I stole over $100,000.00 and got away with it". How this person can go through the day thinking they are a victim is stunning.

Here is where for me it begins and ends, " When the housing bubble burst our house dropped in value from $870,000 to about $400,000."

And that rant about the house being 870K and now 400K? Well THAT is YOUR problem (alone) not society's in my view. You bought the place, right? And now what? Do you now have buyer's remorse? I personally don't care.

I don't get you people talking so freely about just walking away from a debt. Do you want to eat someone else's bad debt? I don't. And where is someone going to just "walk away" from a near million dollar debt and then go buy another house, if they as has been mentioned by another"play their cards right?"

This is the mentality that has contributed to this current condition in my opinion. It hits me as buy it, don't like it, don't want to pay for it just walk and let someone else eat it. What the hell kind of ethics is flying around here? And what bank is going to lend money to anyone when their credit standing is down the sewer? It takes years of credit history to build a record on integrity. I am sorry this entire scenario is sickening to me.

That was my pension fund they lent to you that you didn't pay back. While I was working 70 hours a week driving a truck for 25 years, saving my pennies and living out of my camper, you were bidding up the price of homes to ridiculous levels with your stupid 'credit'. I'm still waiting for the correction to finish bringing prices down to where a worker can make a house payment. Hope you enjoyed your house.

I agree that we need a whiner of the day/week award forum. It's just too entertaining to read self righteous people explaining that although they just bilked a bank for a crapload of money, they still deserve our sympathy because they believe themselves a victim!
Amazing! I want more.

Starrstruck says

This is the phrase that is troublesome. It wasn't a worthless loan when he received $152,000. It only became a worthless loan when the value of his house collapsed. So why not give them their money back? What did you do with it? This is the one part of the story he leaves out.

Probably bling.

taxee says

That was my pension fund they lent to you that you didn't pay back.

No it wasn't. Very unlikely this borrower's debt was in the tranche that ended up in your pension fund. That is, unless your pension fund was being every bit as greedy and irresponsible as you imagine this borrower.

The saddest thing about this bubble, and something if you page all the way back to 2006 when many of us were discussing this long before it popped, is that it ends up with everyone turning on everyone else while the systemic problems that allowed and encouraged the bubble go untreated.

People "walking away" from debt actually has no bearing on the root causes of the issue. In fact, it probably helps in a very counter-intuitive way. But no one wants to hear that because it offends their sensibilities and they can't be bothered to think through things beyond the sound bites, so instead we paper it over and lay the groundwork for this to all happen again in a generation or two.

Here is what plenty of people in today's world need to read and learn, what the manipulators don't want you to read and learn, it's all right here:

http://www.cblpi.org/ftp/Econ/DeCoster_Stuff%20Does%20Not%20Equal%20Wealth.pdf

I wouldn't blame Wells Fargo for this. How would you act if I borrowed $400,000 from you and refused to pay it back?

When a borrower makes a dumb decision and gets a loan they can't afford, it's their fault.

When a bank makes a dumb decision and writes a bad loan, it's still the borrower's fault, also. Huh?!

Banks didn't create the bubble by lending to everybody with a pulse and cause prices to skyrocket? And while they got bailed out by the Fed, that's okay, but we can't provide any relief for borrowers?

Gimme a break, Charlie Brown.

Everyone isn't entitled to a bailout. One mistake does not mean we should forgive everyone else for it. Besides I was never for bank bail outs anyway.

You want to run a nation bankrupt and to fail? Bail everyone out and watch them repeat their mistakes as they will be conditioned to believe that mistakes will always lead to a bailout.

thunderlips11 says

When a borrower makes a dumb decision and gets a loan they can't afford, it's their fault.

When a bank makes a dumb decision and writes a bad loan, it's still the borrower's fault, also. Huh?!

Banks didn't create the bubble by lending to everybody with a pulse and cause prices to skyrocket? And while they got bailed out by the Fed, that's okay, but we can't provide any relief for borrowers?

Gimme a break, Charlie Brown.

Homo Economicus. A Legendary Creature, like Bigfoot, claimed to exist by Pseudoscientists.

Thank you very much. :)

taxee says

That was my pension fund they lent to you that you didn't pay back.

You should get a new pension fund then. It's not our problem that your pension is stupid in their investment choices. :)

So you own 5 properties, and in this thread you admit to trying to rip off $152,000 from Wells fargo in the form of an equity loan? Your legal costs posted here do not include the advise you needed because you are a complex property manager with complicated holdings and your desire to attempt this shenanigan.

I have money at Wells fargo and they are one of the most responsible banks with very safe reserves compared to the other banks. Responsible banks should be rewarded in a free market.

Wells fargo lawyers should force the sale of your other holdings to cover the $152,000 your are trying to skip out on.

If you do manage to walk away from your $152,000 equity loan then that will be converted to income that you will have to pay taxes on because it is a gain.

As I see it all 5 of your properties will be foreclosed on and put on the market thus driving down Bay area housing prices further for the new generation of buyers emerging.

I know a few investors that have gone through your exact same story. Those are the people you need to talk to. They are good at preserving any assets they have left.

dhmartens says

Wells fargo lawyers should force the sale of your other holdings to cover the $152,000 your are trying to skip out on.

Apparently his holdings don't have much equity. Otherwise, the settlement would have been higher. I still don't understand why someone would hang onto a property that's $400k underwatered. There must be more to the story. The gentleman just shared his experience with the readers. No need to scrutinize him. People live & learn.

E-man says

It's just a business decision from all angles. You borrowed by the rules; you default by the rules; you buy back in 2 years by the rules.

Exactly. Walking away isn't the problem. The problem is the government bailing out the banks everytime they make bad loans.

One possible solution is to label the housing crash as a "Natural Disaster" and allow families with houses to apply for federal emergency disaster assistance. Treat it like any other Tornado, Hurricane, or Earth quake.

yes and stock market crash is natural disaster too
and bernie madoff + all other ponzi are natural disaster

there would be zero money left for actual disasters.

When the shelves are empty because clever people spent all their time gaming the system instead of doing productive work I guess you can call it a natural disaster. Just blame it on their nature.

dhmartens says

So you own 5 properties, and in this thread you admit to trying to rip off $152,000 from Wells fargo in the form of an equity loan? Your legal costs posted here do not include the advise you needed because you are a complex property manager with complicated holdings and your desire to attempt this shenanigan.

Where did you get this info? I didn't see anything about them owning 5 properties.

I think in his other posts on this forum

taxee says

When the shelves are empty because clever people spent all their time gaming the system instead of doing productive work I guess you can call it a natural disaster. Just blame it on their nature.

+1

I sounds like you Won when Wellsfargo agreed to give you a free $152,000 as long as you paid their $38,000 legal bill. You should have taken that sweet deal. What, you can't get $38,000? Hard to believe.

taxee says

When the shelves are empty because clever people spent all their time gaming the system instead of doing productive work I guess you can call it a natural disaster. Just blame it on their nature.

The only cleverness I see here is your response. History has produced many incidents of "bare shelves", none of which were the direct result of too much game theory.

dhmartens says

I think in his other posts on this forum

Wow. Disgusting.

Homeboy says

dhmartens says

I think in his other posts on this forum

Wow. Disgusting.

Sorry, but this is not correct. Dhmartens must have misread some of the posts.

Speaking of research:

Wells received $25bn in mandatory government bailout funds

Wells returned $27bn = $25bn + $2bn in interest to the govt

Given they didn't want or need the money, but nonetheless did what their country required of them during a crisis, it sure seems to me that the problem here isn't fractional reserve banking.

Though I will agree that actually doing some research is a good idea. Also good: heed your own advice.

Yup says

Fractional reserve banking. Wells was leveraged 30-1 when the market crashed. They had 3 dollars of capital for every 100 dollars they lent out. They got bailed out. Why are so many of you freaking out about not paying them back. Wells and all the big banks are insolvent.

Yes, banks create money out of thin air. While many know this fact, it's an important point that people keep forgetting:

Banks loan out money that doesn't exist until the loan is written.

Yup says

Fractional reserve banking. Wells was leveraged 30-1 when the market crashed. They had 3 dollars of capital for every 100 dollars they lent out. They got bailed out. Why are so many of you freaking out about not paying them back. Wells and all the big banks are insolvent.

Let me explain this AGAIN. We don't give a rat's ass about Wells Fargo or any other bank. They can all rot in hell as far as I'm concerned. The issue is, when all the people who borrowed huge sums of money against the equity of their house and kept the money and never paid it back, they screwed US, their fellow taxpayers.

When people say the only possible course of action is a massive transfer of wealth from responsible, hard working citizens, to deadbeats who game the system, they have no idea what they're talking about. That is NOT the only course of action available to us.

In fact, that's exactly the sort of thinking that is bringing this country down.

The following would be my solution - lets say you put X as your downpayment back in the day. Lets assume that your home value went up. Lets call that new total equity value Y at the new specific point in time. Lets also say that the homeowner at that point took out a home equity loan in the amount greater than X. If they now default on the amount that exceeds the X (original downpayment money) after taking out the home equity loan, they should be sued for that amount and if unable to pay back, they should be imprisoned as if they committed a bank robbery for the same amount. Sounds fair?

Banks loan out money that doesn't exist until the loan is written.
That's not correct. Banks loans are funded by customer deposits. The Fed is the only one with the power to print. They do this during times of Quantitative Easing by unsterilized buying of Treasuries (and/or Asset Backed Securities).

Yup says

Our current version of capitalism is very similar to monopoly. At the end of the game 5 people are broke and 1 person owns everything. What do you do if you want to keep playing? You start over......

How do you start over if one person has all the money? What do the other people play with?

Yup says

We should have wiped them all out, written off all the bad loans, and used the 700 Billion dollar bailout to capitalize new banking institutions.

I like that, except "write off all the bad loans" sounds hopelessly naive. What is a "bad loan"? A loan where the borrower isn't making his payments? So every borrower who isn't making payments gets to keep all the money he borrowed and doesn't ever have to pay it back? How would you get ANYONE to ever make a payment on a loan again? Hmmm... keep making my loan payments or default and get to keep all the money. Tough choice, huh?

The difference between what we have now and a game of 'Monopoly' is that 99 players are doing what you would expect while one player can print as much money as he pleases. He can also change the rules at any time. And for the 99 the pain of loss is not a game.