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31
rufita11
@
2012 Oct 30, 6:06am
rufita11
@
2012 Oct 30, 6:06am
My parent's long time neighbor, got over 500K as a second on her house during the height of the bubble. She told my dad that she got her money, so the bank can have the house whenever they want it. She's been living rent free for over a year now. I double checked this on Zillow--she wasn't lying.
32
BayArea
@
2012 Oct 30, 7:04am
BayArea
@
2012 Oct 30, 7:04am
How ever 10-15 years down the road, that girl wont stand a chance getting a job, when she shows up at that same persons office for a job interview.
I would expect that she would be the #1 candidate for the job, ahead of you and I.
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Why isn't everyone underwater on their mortgage strategically defaulting?
1. It takes the average foreclosure 600 days to complete. Rounding, lets call it 2 years. (Source: http://allfinancialmatters.com/2011/12/02/the-average-foreclosure-length-631-days/)
2. By definition of being underwater, the owners have no equity left.
3. Median price of a home in '07 was $247,900 (Source: http://www.census.gov/const/uspriceann.pdf).
4. Assume they had a prime loan, for some reason, @ 5% (Source: http://www.bankrate.com/funnel/graph/default.aspx?cat=2&ids=1,-1&state=zz&d=1825&t=MSLine&eco=-1) with 20% down ($49,580).
5. Their monthly mortgage payment is ~$1,0000.
6. After the 2 years, they would have accumulated $24,000 in cash savings. Not to mention not paying for insurance & maintenance. (I assume you have to pay taxes still or face prison time?)
Why the heck wouldn't you default and squat? Am I missing something?
#housing