Friday, January 8, 2010

Underwater? Stop Paying Your Mortgage, Stupid!

University of Arizona law professor. Brent White agrees with my recommendation to those who owe more money than their home is worth! (Underwater)Stop Paying Your Mortgage, Stupid!

I have been arguing for more than a year as I saw people's lives being destroyed by using their retirement funds, college funds, etc to pay on a mortgage on a house that is worth less than the loan. Invariably, when the funds ran out, they lost the house anyway, leaving them totally destitute. This makes no financial sense. Corporations and businesses don't play by these rules. Case in point: Maguire Properties Inc., one of the largest commercial landlords in California, walked away from seven prime office buildings in Los Angeles and Orange counties last year, defaulting on loans worth more than $1 billion. "The deal no longer made financial sense!"

Tishman Speyer walked away from a $3 Billion mortgage on 110 buildings in NY's Stuyvesant Town after property values fell to half of the purchase price.

Sunshine Properties, a major hotel owner let a string of Hyatt's, Hiltons and other marque properties go back to the lender when their values fell.

Morality? Please! What would Ben Bernanke, or Tim Geitner do if they were in such a dire situation?

We are under no obligation to adhere to any moral standards that are different from the banks who made the immoral loans that brought down the financial system. They knew what they were doing, but only saw the dollar signs generated by the lending frenzy.

Then, when the inevitable defaults happened, will they write down the balance of your underwater mortgage so that you can pay it off? You mean the banks taking a real loss, are you kidding? They even strong armed the government, (you and me) to pay off their paper losses! They have totally forfeited any moral claims on borrowers, in my estimation.

As a former bank loan officer myself, I will show you how to stay in your home for 12-36 months without ever making an additional mortgage payment, allowing you to recoup some of your lost money so you can accumulate a nest egg for your future.

So, if you are underwater in your home, get over it. Think of the money, like a business person. The house has been lost due to the financial schenanigans of the banks. Save your money, prepare to find a cheaper rental. It is even possible that you will be able to buy another, similar or better house in the future at a much better price.

Your credit may be bad for 7 years, so buy that car or whatever before you do this but think about it, do you really want to be the one with the highest credit score among your homeless mates living in a card board box under the viaduct?

If you would like to know how you can stop paying your mortgage and remain in your home for 12-36 months, contact me.

Bill Young, Personal Financial Consultant

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