Wednesday, January 28, 2009

Question of the Day

Last night I was asked a question that made me think. The question was this: What do you think is unpatriotic? Well after some debate, I went with the obvious: instant coffee. But really, in all seriousness, I think that Mr. Limbaugh's comments about hoping that President Obama fails is about the most unpatriotic thing you can do. Seriously. You would hope for the country to remain in a disastrous down spiral so that you can win Rush? Go take some oxy cotton and shut up.

Along the lines of American ideals is our ability to find ways to fight back and cheat the system. I heard the most astounding concept yesterday. Here the back story.

Here in Phoenix, we have had a very badly hit real estate market. In good centrally located neighborhoods (Chandler, Tempe, Scottsdale, etc) it hasn't been as bad, but in new developments that cropped up on the outskirts of town during the big boom three years ago for example Maricopa, Arizona, things are very very bleak.

As an example, a friend's house in Maricopa which was purchased for $225,000 two years ago, is now estimated to be worth $95,000. Ridiculous. Really what is a house owner to do? They can foreclose on said house to save their butt or keep paying on a house that may never recover to what they bought it for. My friend is choosing to foreclose, take 7 years of bad credit and move on with his life. These aren't bad financially irresponsible people, just people who are in an untenuable situation.

Then last night, I learned of the inguenity of the American people in this brilliant way of sticking it back to the man. A couple who had purchased a house in Maricopa found the perfect solution to this situation. The couple who are still very much happily married are going to go get a divorce. The mortgage is fully in the husband's name and as such will become his property in the divorce. He will then stop all payments and foreclose on the house killing his credit. His then ex-wife whose credit score will remained untouched will then purchase the same house from the foreclosure bank for a much much lower price than it was at previously. She buys the house, they get remarried and voila, they are back in business. As amazing as this story is, I think it could actually work in the right situation.

Is this amazing, idiotic, or ethically wrong? I am interested in hearing people's opinions. I for one think that while definitely ethically questionable, is one of the reasons that we as a public will make it in the end. Essentially, we are fighters and will take a lot to be taken down. What think u?


Anonymous said...

So... how will this help our economy? Do you think this will improve the real-estate scenario if everyone decides to just stop making their payments? Our country and our banks are already in financial ruin. You are upset that Limbaugh would SAY he hopes Obama will fail, but don't care when these people are taking ACTION to ensure our country and economy fail?? I think these people should be ashamed of themselves for abusing the bankruptcy system and using it to save some money. Unacceptable!

The Chaser said...

I think it is more complex than that though. If people weren't loosing their entire life savings on a housing purchase, they wouldn't be looking for these solutions. It is a rock and a hard place situation? It is not people trying to get ahead in the game of life, it if people trying salvage their lives. Can you afford to lose 150k because investment bankers were cheaters and making poor decisions thousands of miles away which led to the collaspe of our entire economy? These are the same people who are getting bailed out by our government (AKA our tax dollars). Where is the bailout for home owners. I am not even a huge advocate of bailouts to be honest, but I do know that I had a conversation with my friends who own a house worth 130k less than a year ago and I had NO good advice to give them. Suck it up doesn't seem like good advice. Banks should use part of their bailout money to renegotiate the mortgage prices on these houses to avoid more foreclosures, but instead they are passing out bonuses.

What is your advice to these people anonymous? I am curious.

My 2 cents. I welcome the dialogue.

B Squared said...

Allow me to put my 2 cents (now only worth 1 cent) in. The banks can't re-negotiate the loans because they don't own them anymore;they only service them. So the bank has two choices, service the loan or take back the house. They are not in the real-estate business. Lest you think I am biassed on this issue, my house is worth $400K less than a year ago and still no takers. And I am trying to retire. The problem was greed on both parts. Over inflated home prices, cheap loans (short term) and buying and reselling mortgages for a profit. Lots of guilt to go around.

megan said...

shoot. i'm not sure what i think. i think it's creative for sure, their little plan. tell them to let elvis remarry them, that would be cool.

back to the point. what was the point, oh yeah. the situation sucks, hands down. i don't own a home yet, but i couldn't imagine having invested all that money to see your house depreciate that much... that's outrageous.

yep, sorry. i've got no advice either. i think they should video tape it & send it in to punked... do you think they'd show an episode where the govt got punked?

Anonymous said...

Glad I don't have business dealings with that couple...pretty dubious ethics going on there.

Anonymous said...

I understand that the couple lives in a house that lost more than half of its value, however, it seems like they are jumping the gun here. Why do they need to get rid of the house? Why can't they continue to live there and ride it out until the market improves and subsequently, the value of their house? It just seems like the more sensible option than a divorce/dissolution.

ctgobucks said...

Come on anonymous people, man/women up. If you have something to say, at least put your name on it. Hannah, I feel sorry for your friends losing their house, that sucks. As for the R-tards who are getting the divorce, so they can lower their house payments, thats like cutting off a cheek so you can wear a smaller jean size. How much money are they going to lose on things like legal fees, taxes, and closing costs. No matter how much a house appreciates, or depreciates, your mortgage should still be at the same price you agreed on, so unless they took a mortgage they couldn't afford in the first place, they should have no problem making payments. If it has depreciated that much, they will be paying less in taxes. Just wait it out. if they can't afford the house, they need to get a cheaper house anyway, because if the house re-appreciates, they won't be able to afford the taxes when it goes back up if they can't afford it now. I'm guessing it's a 30 year loan, and if the recession lasts another 20 plus years, they'll have bigger things to worry about, like learning to speak mandarin. No matter who's name the house is under, divorce kills both parties credit score. If you know these people, hit them in the head with something. The bank does not have to sell it back at any time, and will likely have second thoughts about selling it to anyone associated with someone who just defaulted on a loan. That may be the worst idea I have heard since I bought that solid gold toilet. seriously, that is retarded.