patrick.net

Both our landlord's home and our home -- the house we rent from him (his investment property) -- have been in the foreclosure process for over a year.

We pay rent.

He says he's been told that there's a chance he can get a loan modification for BOTH properties.

Hmmm... my stock portfolio went down, can I get a modification on that?

don't hate the player hate the game baby!

klarek says

They’re living FOR FREE.

So are people in jail. Sounds like hell to me. Huge losses of autonomy and independence when you practice these kinds of living strategies. Might look great on the surface, but deeper digging exposes a life with many needs unmet.

I'm not thrilled to send my tax money for these purposes, but I'm less thrilled with other top places where tax money is allocated.

These people are smart.

All these idiots paying thier mortgages are the ones creating our problem. If EVERYONE stopped paying thier mortgage the banks would HAVE to foreclose in a timely manner or society would collapse.

But we only have a few million people living for free now so 'thats affordable to subsidize' but if 100 millino stopped paying in no way could the feds/banks be so so sweet and kind.

I guess its called cheating the system - it can only work for a few smart people.

I say we all encourage every single person we know with a mortgage to STOP PAYING until they get a 2% loan mod AND a 200k principal reduction. (it might be coming in BO term#2...he can get away with murder then).

This is exactly the point. The banks blame the customers for not paying. The customers blame the banks for not being fair. The government pats them both on the head and, like a mother coddling a child, “Shhhh…it’s not your fault. What did the bad man do to you?”

I'm sorry but If by "pat on the head" you mean loan mods...I'm going to have to recommend people like Lynn to take a pass and keep playing the system becuase the system is tryong to play her big time. Who are loan mods suppossed to be helping anyway? Not the underwater homeowner in any way shape or form, but the Banks.

I would call this a "stab on the back, punch in the mouth and kick you while your down type loan modification program". So the smart thing to do is say no Thank You Mr. Sam and Bankster. The Weak and highly incompetent Government Regime is assisting the Banksters to "keep that cash cow alive". I say ithat f you want to be enslaved for the rest of your natural live than by all means it is your god given right to do so.

Banks behave like businesses so when they can't pay they just raise their hands, out or up, don't matter - but they raise them becuase it is not good business to throw your good money after bad. The Government sides with the banks giving them the tools to keep underwater homeowners -well - underwater and the loan mods are simply there to keep that cash cow paying until hopefully one day the market recovers and they can send them all to the slaugther house. Do you really think that banks aren't taking houses back because they are overwhelmed? I'll believe manythings but that one. My point is, push comes to shove and the home debtor has the right - and should - push back in their own defense. Don't be fooled, it is not the homedebtor whom is taking our tax dollars it is the Government and they are giving it to the banks not the people. And there is nothing you nor I can do about it exept to fight back if we can. So Lynn, go ahead and bleed the system who's gunning for you. My tax dollars are not going to help you anyway, at least not the bulk of them, those are reserved for those whom have benefited the most. They tell us so don't they - "Too Big to Fail" can't we read the writting on the wall?

APOCALYPSEFUCK says

monoliths of perfidy

Yes, I just reached for my dictionary while reading an internet comment. Who knew?! Maybe I WOULD benefit from more time on the interwebs, like all my friends tell me. I'm off to read that anthology...

I think people or way too eager to point the finger at each other. The mortgage industry made billions…banks are a business and they took advantage of every opportunity they could to make money. It was great while it lasted but now that the chips are down why can’t a regular Joe take the opportunity to stick it back to the banks whom are mostly - not entirely - to blame for this meltdown?

The logic behind this notion is one of the most basic fallacies of all: two wrongs make a right. While I completely agree with you that banks are the more culpable of the two players, there's a strange kind of apologist sentiment gaining traction on behalf of the deadbeat. Notice the endearing, all-American, apple pie 'Joe' to which you refer to them as, as opposed to, say, bag-of-shit or shameless taker.

It's worthwhile at this point to make the distinction between a deadbeat squatter and the strategic defaulter: both creatures are guilty of innumerate numbskullery and poor decision making; however, one exercises his contractual option to default on a bad business decision in order to free up his capital for other future failed ventures, while the other is a parasite, hiding out in perpetual moral twilight. The CNN article linked to above provides a pretty vivid profile of the latter.

I don’t believe in bailouts of any kind to anyone.

I can actually imagine certain nightmare scenarios where a bailout is the appropriate course of action; however, I think the idea has been very badly tarnished thanks to bungling approach by this administration and the last. Just for starters, a bailout shouldn't mean get-out-of-jail free with no-strings attached and bags of free money for your troubles. That's another story, though.

...this is survival of the fittest and everyone’s moral obligation is to see after their and their family’s well being first and foremost. Is Lynn playing the system? Perhaps…and good for her. I pay taxes and I do not want to bail her out but she is the little guy and I am not going to pick on her for trying to survive.

Perhaps, nothing -- Lynn is blatantly gaming the system. There's ensuring one's survival and well-being (foraging in the wilderness for grub worms and wiping your ass with a banana leaf), and then there's gigging the system for your own gross aggrandizement while having the temerity to cry victim as you do so.

There are no victims and I agree stop playing one. We are casualties of an economy gone wrong…get over it. You had your fun now pay the piper, face the consecuences of your actions learn from your mistakes take advantage of what you can to get back on your feet and move on. I can’t call anyone a dead beat, mainly because I do not know them and we all deserve respect otherwise who the hell are we? Live and let live. The government is corrupt the banks own the government and together they created this fine mess and all we can do is pick on each other?? Come on people!

This is a little too *Up With People* for me, but I think your heart is in the right place. I get it -- the banks are the scumbags with a capital S, but I'm sorry, that does not serve as blank check vindication for egregious self-interest as profiled in the story above.

I’d rather see the freakin banks take a dive, th elittle Joes inheret those properties even if they stretched themselves who cares!

I will say at least this much for Little Joe -- He Sure Can Sing.

http://www.youtube.com/watch?v=nuSmxLK2ze8

If you assume that the "borrowers" put 10% down of the original price and assume that they paid about 10 years of payments at a conservative (but compounding) interest rate,
and then look at how much actual cash the bank put in (10% of total) due to the supernatural power of fractional reserve lending, I think you will find that the "borrowers" were in for far more actual money than the banks were...

If you do the math, it changes the ethical equation a bit, IMO.

Also, the bank hasn't taken the house because it is not in their financial interest to do so, not because they are some kind of victim here.

Those of us who diligently pay our mortgages may resent the alleged homeowner, but both sides are acting in their own self interests. I for one would not want to live a life of constantly looking over my shoulder, but hey if they want to do so, that's their business.

Wow these people extracted equity, lived it up, and are still living better than me for free...while I pay taxes to bail them out, live like shit.

Sign me up for the next bubble and scam.

CaffeineAddict says

Sign me up for the next bubble and scam.

You don't have to wait. You can start your own scam. See what that life's like.

FunTime says

klarek says

They’re living FOR FREE.

So are people in jail. Sounds like hell to me. Huge losses of autonomy and independence when you practice these kinds of living strategies.

Epically awful false equivalency for a number of reasons, not the least because these folks are choosing to stay in the "dream" houses they wanted to buy, yet aren't paying for. Yeah, it's like jail......

APOCALYPSEFUCK says

I just assume for the sake of argument that everyone in America is a wanton criminal psychopath

A-F, you've kinda become my personal hero...

pkowen says

APOCALYPSEFUCK says

I just assume for the sake of argument that everyone in America is a wanton criminal psychopath

A-F, you’ve kinda become my personal hero…

Yeah, he said everyone. Haha.

klarek says

folks are choosing to stay in the “dream” houses they wanted to buy, yet aren’t paying for.

Well, if you think that comes with no negative psychological effect, then we just disagree. I think the adage "nothing comes for free" works with a lot of human experience. Peace of mind is worth a lot.

Norbecker says

I would say pulling almost 500K out of your house and then not making a payment for 5 years is a smart financial move. Playing the “victim” role to the max. We are just victims of the economy. No personal responsibility for their situation. Must be a lawyer or politician with that kind of ability to twist reality that much.
Meet the new boss. Same as the old boss.

Same old pretend-victims. Too bad we have to bail their sorry asses out.

Collectively we want big government - this is it.

Its fantassssstic to get 500k tax free money from MEW like this couple AND live for free for 5+ years.

Lets all congratulate these people for knowing how to prosper in our crazy CCCP-like system.

You sure as hell can't do this well saving money and renting. Take notes people this is HOW ITS DONE and its all legal.

Schizlor says

Im upset at the government for refusing to let the chips fall where they may.

No matter what the consequences are? It's better to kill the US economy? The taxpayers definitely lose in that case--but you're right, there is no moral hazard then...

tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

The market corrects and life goes on. Trillions in artificial home equity were magically created, and thus can magically disappear.

FunTime says

Well, if you think that comes with no negative psychological effect, then we just disagree.

What psychological effect? They are choosing to live in those houses, for free, and they picked out the house to begin with. Is there a psychological effect of "I get to live for thousands less per month than I was planning on living"?

FunTime says

I think the adage “nothing comes for free” works with a lot of human experience. Peace of mind is worth a lot.

Obviously these people have found it worthwhile to sacrifice that peace of mind, or probably aren't losing it at all.

Any other false scenarios and b.s. repression you want to put out there? You have used the analogy of going to prison and of psychological torture, so you're going to be hard-pressed to top your own bullshit.

PockyClipsNow says

You sure as hell can’t do this well saving money and renting. Take notes people this is HOW ITS DONE and its all legal

The sad thing is [certain] media parades these people as victims still. Somewhere down the line concept of personal responsibility went out the window and these people lived off the rest of us.

Good old redistribution from the savers to the spenders. I didn't cash out like they did via the bubble, so I'm just a taxpayer left paying for people like that "Lynn" person in the article. The system basically takes away from our family, our children, and hands over free money to these deadbeats.

And Obama, the great man himself, is trying everything he can to rescue these deadbeats at our expense over and over. Frustrating and infuriating.

tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

Please. We have a robust financial system that can roll with the punches on this. We haven't truly gotten that close to Armageddon.

Even in many of the worst cases, many transactions offset from notional value, and some shareholders and bondholders may have lost their equity stake, but it wouldn't have killed the economy any more than pretending the systemic problems don't exist does.

FunTime says

I think the adage “nothing comes for free” works with a lot of human experience. Peace of mind is worth a lot.

This is just purely childish, "life is harder, can't always have ice cream, wah wah wah". They made the choice, and they refuse to face the consequences as long as taxpayers are paying for their stupidity. If it was so bad, they would have moved on. But they choose not to, because they are living at the expense to others like some sort of parasites. I will simply disagree that these people are victims, most are just deadbeats taking advantage of the economic situation.

klarek says

The market corrects and life goes on. Trillions in artificial home equity were magically created, and thus can magically disappear.

Really? You're willing to bet the US economy on that? I don't know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn't seem too far fetched to think that without them it could have catastrophic.

corntrollio says

Please. We have a robust financial system that can roll with the punches on this. We haven’t truly gotten that close to Armageddon.
Even in many of the worst cases, many transactions offset from notional value, and some shareholders and bondholders may have lost their equity stake, but it wouldn’t have killed the economy any more than pretending the systemic problems don’t exist does.

I like the story Buffett tells of a trade he made during the worst of the crisis.

"On the insanity of the financial crisis: I sold a Treasury bill in December 2008 for $5,000,090, and it was a $5 million bill due in April. The guy was going to get $5 million for it. So he was saying that the Treasury bill was $90 better than his mattress. He could have put the $5 million under his mattress and been $90 better off."

I think we were a lot closer to Armageddon then you'd like to believe.

Here's a link to the interview with Buffett--it's pretty good.

http://www.fool.com/investing/general/2011/02/14/warren-buffett-speaks-out-about-the-financial-cris.aspx

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What do you think TARP was for? They knew roughly how overpriced the market was, and how much they'd lose. A reversion to the norm is not only unavoidable, but planned for. The b.s. of "complete destruction of the economy" if prices fall another ten or twenty percent is ludicrous. Even if it were true, the cost to prevent (delay) it from happening would be par with the cost of not doing anything at all. So fuck it, let it crash.

The other things to consider about this is liability. Let's say there's a fire, earthquake, mudslide, hurricane etc and damage is inflicted on the house. No insurance claim is going to be paid out unless the tenant is legit. If anyone runs a business out of a home like that then proof of insurance is also invalid as well.

I highly doubt that the banks would force everyone out but the risk of lack of insurance might not be worth it. All home improvements obviously would be put on pause as well.

If the bank can state that these people are legally squatters then law enforcement can ignore claims in disputes. If two homeless people are in an abandoned building and found fighting they both get kicked out. Likewise since there's no proof of ownership if something does come up an officer can tell both parties to leave.

If they aren't paying the mortgage that ALSO means they aren't paying the property taxes either. If they aren't paying the property taxes it can also mean they aren't voting in local elections (since some localities prevent that if you don't pay) and thus theres not much of any incentive by the local governments to even service such areas.

klarek says

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What do you think TARP was for? They knew roughly how overpriced the market was, and how much they’d lose. A reversion to the norm is not only unavoidable, but planned for. The b.s. of “complete destruction of the economy” if prices fall another ten or twenty percent is ludicrous. Even if it were true, the cost to prevent (delay) it from happening would be par with the cost of not doing anything at all. So fuck it, let it crash.

I don't think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous. That wasn't the purpose of the bailouts.

tatupu70 says

I don’t think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous.

Um okay....

tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

klarek says

tatupu70 says

I don’t think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous.

Um okay….
tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

lol--there are two parts of your statement. I did mention killing the US economy. But nowhere did I or anyone that I'm aware worry that a 10-20% drop in home prices would be the cause...

In other related news:

SEC Cuts Wall Street Some Slack On Derivatives Rules

http://www.huffingtonpost.com/2011/06/10/sec-derivates-wall-street_n_874877.html

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What would have been better is if we nationalized the deadbeats and put them into receivership instead of maintaining the status quo with the same incompetent management and the same risky behaviors and making them "Too bigger not to fail". We could have done better, but instead we just gave these jerkoffs cash and let them pay massive bonuses. Nothing would have collapsed if the Fed or Treasury took them into receivership like what should have happened.

corntrollio says

Nothing would have collapsed if the Fed or Treasury took them into receivership like what should have happened.

True enough. But then all the Shreks of the world scream socialism at the top of their lungs. And Fox news would have the tea party wingnuts marching on Washington...

tatupu70 says

True enough. But then all the Shreks of the world scream socialism at the top of their lungs.

Yeah, instead we have corporatism, and make sure that heads the banksters win, and tails we all lose. The jerkoffs who screwed us all get all the gains, and we pay for their gambling.

corntrollio says

tatupu70 says

True enough. But then all the Shreks of the world scream socialism at the top of their lungs.

Yeah, instead we have corporatism, and make sure that heads the banksters win, and tails we all lose. The jerkoffs who screwed us all get all the gains, and we pay for their gambling.

I won't argue it was the perfect solution, but I think you overstate the negative. In terms of actual losses, the bailouts were a VERY small cost. And the shareholders of the jerkoff's companies lost huge. The actual jerkoffs probably made out better than they should--I agree.

My biggest problem is that we didn't break up the "too big to fail" banks and reinstate Glass Steagall. There are too many people spewing the CRA nonsense, keeping us from making the needed changes.

klarek says

What psychological effect? They are choosing to live in those houses, for free, and they picked out the house to begin with. Is there a psychological effect of “I get to live for thousands less per month than I was planning on living”?

I'll try to help you through what I'm thinking. You can call it bullshit. I don't think you're much of a thinker, but maybe you just don't see my angle. See if this helps.

House Buyer: I'm so happy to have finally realized the dream of buying a home. Society supports me. My friends support me. My family supports me. I've told every one that I bought this house, I've had a housewarming party. Whoohooo!!!

House Buyer: Oh shit, my house situation is fucked! What am I going to do? I was making payments thinking I was making an investment, but now it's not an investment and now I can't even make the payments. Boy this sure got complicated and confusing. This is now almost as confusing as buying the place.

House Buyer: I give up! I'm just going to stop making payments. And I seem to have found a loophole in the legal system that pretty much makes it okay. Is it really okay? I"m not that sure. If doesn't feel okay, because this wasn't my original plan. Changing plans is stressful and confusing.

House Buyer: All that societal support I had for owning my house is only there now if I keep what I'm doing a secret. This is an uncomfortable situation.

on and on, downward spiral into the same insanity that plagues most of the population anyway, so maybe nobody even sees this and maybe you're blind to it too, klarek. Hey let's all be insane criminals!

Austinhousingbubble says

The logic behind this notion is one of the most basic fallacies of all: two wrongs make a right. While I completely agree with you that banks are the more culpable of the two players, there’s a strange kind of apologist sentiment gaining traction on behalf of the deadbeat.

You're right, two wrongs don't make a right. That is not my point here. My point is that in a war, you have to do what is best for you and yours. America's home values are down the gutter primarily due to the ponsi scheme(s) that Banks orchestrated. The great majority of people that purchased at the height of the market, did so by following the, then, rules only to have the building crumble down on them due to the "criminal" activity of the banks.

To clarify there's no "apologist sentiment" at least not on my thread. I merely say that Facing the new reality, and what brought it down, people the likes of Lynn have to make a choice. Given her options I say she is making the right one. I don't regard her actions as parasitic behaviour at all, I say she has planter her flag. She will without a doubt be facing the consecuences of her actions sooner or later, however dire those may be, but the bigger question here is why do you focus on calling her a deadbeat parasite instead of asking yourself why o why hasn'the bank foreclosed on her? 5 years? really? Damn, that is a long time - isn't it? The bank can and should start the foreclosure process, as is there legal obligation to their investors, within 90 days of missed payments. Go ahead foreclose! No? Why not? There is something utterly wrong in this picture, and I do not like it not one bit, but if I have to pick a side I'm on Lynn's corner.

Austinhousingbubble says

I can actually imagine certain nightmare scenarios where a bailout is the appropriate course of action; however, I think the idea has been very badly tarnished thanks to bungling approach by this administration and the last. Just for starters, a bailout shouldn’t mean get-out-of-jail free with no-strings attached and bags of free money for your troubles. That’s another story, though.

I should have said I don't believe in baillouts without repercussions. If it is a matter of national security than, I agree, and yes it is a whole new can of worms so we'll leave it at that.

Austinhousingbubble says

Perhaps, nothing — Lynn is blatantly gaming the system.

Exactly my point but she did not ask to be invited to the game. Nor did she create it. If there were no ponsi scheme, and she tried pulling this shit? She would be out on her ass within three months. But yet here she is 5 years later...wow!

Nassim Talib stated in the Black Swan that "Capitalism without bankruptcy is Catholicism without hell"

It creates moral hazard to assuming that businesses will just be bailed out. Now instead of less risk they are more apt to take MORE risk.

If GM has a potential recall they are more apt now to ignore it because after all if they get sued they'll go to the President for another bailout. Chrysler employees have already been caught drinking and smoking weed while on lunch for some of these same reasons.
http://www.myfoxdetroit.com/dpp/news/chrysler-auto-workers-busted_20100923_dk

Saying a business can't fail is like saying you want to watch a sport where neither team wins. Yes soccer can have that but if everyone constantly tied no one would advance.

Austinhousingbubble says

In other related news:
SEC Cuts Wall Street Some Slack On Derivatives Rules
http://www.huffingtonpost.com/2011/06/10/sec-derivates-wall-street_n_874877.html

I'm loosing more faith in our government every day. I'm not sure it can go any lower at this point.