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Guest Post: They Keep Stealing - Why Keep Paying?
By Dylan Ratigan
They Keep Stealing - Why Keep Paying?
The dire straits of the middle class of America has made it near
impossible for our politicians to keep up the pretense that our current
government truly works for the "people." Between the multiple overt and
secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.
When Senator Durbin said "The banks... frankly own this place," you realize it was not in jest.
Couple this with recent protections handed by the Supreme Court to
corporations to directly influence elections and it can make things
seem hopeless for those not on Wall Street or their chosen politicians.
Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.
And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.
If you are one of them, chances are you didn't do anything wrong. Almost all of you were not subprime borrowers
or speculators, but merely people buying a house that they thought they
could afford at the time. You were just unlucky in that you bought a
house during a time when an outdated Wall
Street and their complicit politicians decided to use housing to regain
the income they lost due to the Schwabs and Etrades of the internet age.
You didn't cause this mess. They did.
Now you are struggling to make the same payments on this mortgage on
your now overpriced home even in light of a crashing economy and
massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.
Well, it is becoming time to take matters into your own hands... I
suggest that you call your lender and tell them if they don't lower you
mortgage by at least 20%, you are walking away. And if they don't
agree, you need to consider walking away.
It probably doesn't feel right to you.
That is because you probably are a good person. But your mortgage is a
business deal, and it is not immoral to walk away from a business deal
unless you went in to the deal with the intention of defaulting.
But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and -- get this -- now even Fannie Mae execs want to keep you from exercising your rights.
But before you let them (or anyone commenting below) force you into
paying that $500k mortgage on a $300k house, ask them if they'll push Jerry Speyer into "honoring his obligation" by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?
Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how "you're supposed to meet your obligations, not run from them"? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?
And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping "teach the American people...not to run away" by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn's? After all, at least you aren't single-handedly putting 1,100 employees out of work when you walk on your mortgage.
As part of the deal for your house, your mortgage holder gets interest
payments from you and they also use the note to your house for their
capital reserves. In return, they take the risk of a foreclosure. In
many states, you paid extra to have a non-recourse loan
where the lender just gets the house back if you stop paying -- your
interest rate would've been much lower if you were held personally
liable like a student loan. But if you still feel bad, then donate the
money saved to charity instead of to their bonuses. And when someone
tries telling you why it is so wrong, here are some answers:
- Yes, it might seem selfish, but you are actually going to help fix our country the right way,
through the use of pure capitalism. There are 3 parties involved in
your mortgage -- the mortgage holders, the servicing bank and you. You
probably want to stay in your house. Most of the people who actually
own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don't care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves
outrageously. The credible threat of you walking away from your
mortgage en masse is the only market-based solution that will force
these banks to work with the mortgage holders on your behalf.
- No, you will not "hurt" your neighbors -- certainly not near the scale of
the banksters. Chances are someone just as nice will you will move in
and (unlike you) pay a fair, non-inflated price for the house.
Encourage your neighbors to fight back against the banks and ask for
their own mortgage reductions as well.
- Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn't a bad thing.
- Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.
- No, the banks won't necessarily pass the losses on to customers.
They already make a lot of money. If costs are passed on to every
consumer without banks competing on price, that's a sign of illegal
collusion or a monopoly. Let's fix that
instead of just letting banks ruin our lives. They might, however, not
all make $145 billion in bonuses next year doing something
fundamentally so easy that it is an unpaid job in Monopoly.
Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to "save" the economy without rewarding those most responsible for the damage.
Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.
But thankfully, in this country we still have the tools to fight back
and regain our country. Our vote, our voice, our laws and what we
choose to do with every penny we have that doesn't go to taxes are the
benefits of our hard-fought freedom, and in this battle we must use
them all to fight back. It's time for the citizens to once again own
this place.
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Fuck 'em. Don't pay.
+1 mil.
+100.
I mull this over daily. Unfortunately, we cannot take the hit on the credit score due to my husband's security clearance.
And we did agree to the terms and we can afford our payments and still put money aside for savings and so forth (at least for now).
I just don't know anymore.
And you've just simply described how for the most part we are captured by "the system". The more you have to lose, the more you must play by the rules IF you are an individual.
A corporation is set up from birth to shield the owners from liability and "moral" quandaries. We are set up from birth to become hopelessly tangled in an economic system we have little control over.
Time to incorporate "-Michelle-".
However, in Virginia the courts have started "piercing the corporate veil" going after the corp's assets. Better entity would be family limited partnership (FLP) where the courts can only issue a "charging order". In effect, should a creditor get a charging order the general partner/s of the FLP can take any partnership earnings as income leaving the creditor with a K-1 distribution on paper but no distribution in cash. All my clients have a FLP. Have to be careful in designing the FLP but still a valuable tool.
I suspect that as the Ponzi unwinds and the desperate men become more desperate, any efforts to protect individuals from corporations or government, even if those individuals are cloaked in FLP's, will be stripped away by "our" court system.
I'm not being negative, just realistic. I remember when the Roth first came out with it's "tax free withdrawals" promise. I told my clients way back then to be careful because it was obvious the path we were on. I just saw a few articles over the past month asking if Roths are "safe".
They aren't and we aren't unless we rise up and shakes these bastards from our backs. Where is the moral courage?
Oh, not negative, and I do agree that the tptb will continue to "seize" assets not matter the entity. However, the FLP was brought to the forefront in asset protection by an attorney named Stacey Eastland who, at the time, worked for the Baker Botts firm in Houston. Yes, the former Secty. of State, Jim Baker. The FLP was designed to protect the "oil" oligarch's assets. They work wonderfully. More importantly, though, Stacey Eastland now works for the squid in their high net worth estate planning office. Perhaps this fact may reduce any litigation within the terms of FLP planning. Until then...... F...ng squid Eastland. BTW, will you be sending a compiled PDF of your current writings?
"BTW, will you be sending a compiled PDF of your current writings?"
I just published it a few hours ago. Thanks for requesting it.
http://www.scribd.com/doc/33507389/Welcome-to-the-Insane-Asylum-Our-Collective-Psychosis
Spot on about the Roths. People converting traditionals to Roths and paying the taxes now will be in for a big surprise when they change the tax status of the Roths sometime down the road. Except for the few who listen to me when I tell them this is how I think it will go. Most people berate me for constantly being so negative, while conveniently forgetting that most of what I told them 5 years ago has come to pass.
We closed our Roth after hearing the rumblings from Andy Stern about a national retirement plan.
Additionally, why the Roth's (and other qualified plans) do grow tax deferred, try to remove these assets from the taxable estate. You will spend the tax deferred compounded savings on lawyers and associated cottage industries just trying to reduce the same taxes. Qaulified (regulated by the govt.) plans are another ponzi scam sold to the sheeple by their government. And, finally, if the historical marginal (not effective) tax bracket is close to 60% why would anyone not take taxes at the lower rates now in effect. Does anyone believe in regression to the mean or the law of averages?
"I suspect that as the Ponzi unwinds and the desperate men become more desperate, any efforts to protect individuals from corporations or government, even if those individuals are cloaked in FLP's, will be stripped away by "our" court system."
Possible yes - and that's when you change countries. I did it 20 years ago and if needed I'll do it again. If a government insists on fucking its citizens then it's time to change once allegiance. Now, good luck finding a place that's not run by banksters.... Venezuela? Not sure I'm up for THAT! :))
I have that poster on my wall
freedom's just another word for nothing left to lose.
AND/OR being ready and willing to part with all that you "have", and therefore being free via non-attachment.
And even then, the limited rules that corporations are supposed to play by turn out to be lies, suspended if you're "too big to fail," if your old execs run the Fed, if your workforce is unionized, etc.
They've fucked us for years. Time to fuck 'em back.
Change how you hold title - does that change the debt liability?
It's not the title...It's the deed of trust in terms of negative credit.... Spouses can transfer assets between each other with no tax consequences. Typically, the mortgage is in both spouses name and if only in one name then the house still has a lien on it. No help there. BTW, for an extra asset protection, the title to your marital residence should be held in joint tenants in the entirety (JTTEN)
I'm debt free and have been for years. However, were I to be encumbered with a debt that is way more than the value its then a business decision, nothing more. Businesses, specifically including the ones that have the note on your house, do it ALL the time. Its a book entry/logic decision. No more, no less. They dont sit around and discuss the morality of walking away from the debt or knowing that it may screw other people over. The TBTF's have shown us the way. If it aint specifically in the contract in unbreakable language - then fight like hell to not do it. They do it and have no issue doing so. It may be considered ruthless, but then again, I learned from some of the best over the last couple years...
You may think you are debt free, but the government is transferring the debts of others over to you every second of every day. It will eventually crush you.
It will eventually crush you.
Maybe you missed the part where I say I have lots of physical. The only thing that could crush me is if my hoard falls on top of me. The difference may be that I don't lie down when/if the feds tell me this or that or to pay up for their debt. There are many many ways to live/survive without being on a W-2, etc... And there's a few other continents to live besides North America, or even other places in N America besides the USA.
I have some physical too, and I hope you are right that you will be able to avoid being reamed. But I think you're gonna have a hard time keeping your gains on your precious metals.
im thinking this way... if it goes confiscation, or super increase in the taxation of profit/gain, then its going to get buried for many years until they once again allow legality. And even if it does become non tradeable (legally) there will always be a black market. Even at the downgrade due to being non market legal that mark down from actual price will still be less than the govts take. And if you find someone else that values it as much as you do and is willing to trade services for it then you've solved all the problems that could exist. Even if they outlaw the damn stuff, it will still have value - and likely much more than what would be left to you by following the diktat of the feds. And by outlawing it they only validate the point that it has more value than what they say or fix the price at. That opens up your black market at that point in trading services directly. True, you cant go trade it in at a coin shop for FRN's, but if that comes to pass, who would want to?
So you keep paying on a mortgage so that your husband can keep his sec clearance job. I hope that job is actually worth it vs taking a non-sec cleared one. When it isn't, just go. Don't be the slave that agrees with his chains.
Ditto
From Too Small to Matter by Jim Quinn | LewRock.com | June 24, 2010
… As I watched the film (GASLAND), it was clear that there are many parallels to the BP disaster in the Gulf. Corporate fascism rules America. Corporations spend billions to generate legislation which benefits their bottom lines. Their lobbyists write the legislation and bribe the corrupt Washington politicians. The American people suffer. The documentary GASLAND leads me to the following conclusions:
The unholy alliance between Big Business and Big Government is destroying this country. The "small people" do matter. The time is approaching when the little guy is going to rise up and take back what is rightfully theirs. Some people are waking up. Some people are getting angry. Some people care about the future of this country.
If you want to get angry, tune into GASLAND on HBO this month.
http://www.lewrockwell.com/quinn/quinn31.1.html
Jim Quinn is Senior Director of Strategic Planning at an Ivy League university.
The pictures alone are worth taking a look at the article. Nothing like flammable tap water. Have to wonder if the fire department uses the same water source...
Basically, this is what you are financing if you are paying off ANY bankster debt:
Yes, this is the state of DRINKING WATER in America today.
Smoking while relaxing in the bathtub sounds like a REALLY bad idea up there in gasland.
Unless you really really like that smokin' hot BBQ smell in your bathtub, of course.
The granite countertops sure look nice though.
Smoke On The Water
Fire water just like Deep Water Horizon right here in the burbs...
Well there goes NG and oil's already circling the drain. Coal was shit on last year with a documentary in WV. Looks like Leo's solars and nuke will be the energy longs. Maybe T.Boone will fire up that windmill deal out of the grave too. It could happen in an uncorrupted solvent government.
JR. great comments and very apropos. Big Oil is the enemy-du jour, (and rightfully so given that the GOM disaster will likely be the worst environmental disaster in history), but Natural Gas 'fracking' is a threat to FRESH water supplies! These bastards are irreparably polluting our fresh water sources for the sake of $'s. We don't need more natural gas supplies (sorry T.Boone) at the cost of fresh water aquifers and wells. We WILL run out of oil and we WILL eventually run low on natural gas but NOT at the cost of fresh water. Oil and natural gas may not be renewable but they eventually will be replaceable. Fresh water is not replaceable or renewable and will be the one single commodity that will determine the human race's ultimate fate. We don't need oil or gas to live, just to produce shit and make energy. But we need fresh water to live, period.
But you don't understand! If we don't give them special exemptions from the rules, it would destroy the economy! The consequences for us all would be much worse if the CEOs of the megacorps didn't make millions of dollars in bonuses out of our tax dollars or poison our drinking water.
I already AM angry. I just want to know where these fuckers sleep!
I have to disagree on one point JR.
If the CEO of Megacorp was a 'good' man he would be fired and replaced by an evil man, and as I have said before, there are plenty of evil men in line ready to do the job.
(I am not really fond of the word evil, perhaps morally flexible is a better way to put it. Sociopaths can eat babies and sleep at night, you and I probably can't.)
The power-that-be are still trying to prevent "moral hazard" from becoming endemic with consumers. If this line in sand is not held, all debt will be defaulted on and the system collapses.
Unfortunately, they planted the seeds when they panicked and bailed out the failing TBTF banks without restraining the banks from showering huge financial windfalls on the bank employees. Now, they are reaping what they sowed. The system is now f##ded.
I agree with you. How about that! Are we "group thinking" now, you and I?
http://mises.org/daily/4513
Hi MsCreant. You asked me a couple of days ago for an update on New Orleans. Hadn't smelled the oil for some time until today, it was very strong when I came out of my house this morning, and stronger still at lunchtime. I've lived here for 22 years now, and the weather so far this spring and summer is indicative of a very bad hurricane season coming, much like it was in the months before Katrina. There have been some videos posted on Youtube by Louisianians purporting to show oil coming down in the rain. I am very skeptical of these, I have seen no evidence of it here, and it's been raining a lot the past few days. The video I saw just showed someone's driveway, and the oil sheen was probably from a leaky oil pan gasket. If I start to see oil covered windshields after a rain I'll tape it and post it. My feeling is we'll have at least one mass evacuation from this area in the next couple of months, and if a storm comes through here and dumps oil in along with the water I'm not coming back and helping rebuild this place again like I did after Katrina. That experience probably took 10 years off my life expectancy. For those who ask why we don't just leave right now, think about how difficult it would be for you to just pick up and leave everything right this minute and not know when or if you would ever get back. Easier said than done, believe me.
Thank you Richard for a level headed on the ground report. When you tell me it is raining oil, I will know it is true. It sounds like instead of smelling the coffee, you smell the oil. Good luck and thanks for humoring me.
Our vote, our voice, our laws and what we choose to do with every penny we have...
Actually, our votes don't count for much, our voices drowned and what pennies we do have are all required to simply put food on the table. Where was Dylan before the flood?
Like any other prophet, he was probably lost in the wilderness raging against the injustices. Nobody was listening.
They were always there. Nobody was listening. They are listening now. That pretty well sums up epic failure; moving to save yourself only after you are in the jaws of destruction.
This is outrageous subversive propaganda..........and I love it. :>)
Time to undertake Project Mayhem.
Where did that guy go, anyway?
I don't know but based upon comments left by PM in his/her last few postings, I think he/she was getting a bit tired of our paper courage. Everyone wants someone else to "do something" about this.
You and I and he and she and them and they are all the some one's that must do something about this. WE are the authorities. The buck stops here.
Amen bro. Maybe PM went like I have? My own business is booming right now (don't ask me how) and I'm "making hay while the sun is shining." I'm still working to advance my family's preparedness and agendas rather than the "system". I've been lurking @ ZH the last while for the most part as I'm pretty confident it will take a collapse of the system (indicative of Dylan's suggestion) to have a reset to civilians having any say over the corrupt that run Mega corporations.
You know, I was thinking about this kind of stuff, as I tend to... wondering what happened to get us to where we are.
I always hear people complaining about how "unbridled free market capitalism" (really, we have a free market? that's for another topic) has ruined everything, and corporations are running everything, and we need government to step in.
But government is just a reflection of the people. Of the people, by the people... What happened is that we abdicated our personal responsibility, as consumers, customers, employees, and citizens, and handed it to our government. In bits and pieces, large and small, over time, willingly and subversively.
We handed the reigns of power to the government, the government that has sold us out, is asleep at the wheel, or is conspiring to enslave and endlessly exploit us, depending on who you ask, perhaps a bit of all. Certainly it's clear to all but the most deveoted that government and bureaucracy interests don't correspond with The People's, except by chance.
We already know our legislators don't read the bills they vote on, does anyone seriously think they write them? So it should be no surprise we are in the state we are in.
The change will not come from the system. We cannot look for political solutions (sorry Tea Partiers). We have to imagine a radically different world, one where all the power today concentrated in the government is diffused to individuals and local communities. It is WE who are to hold everyone accountable: criminals, thieves, warmongres, polluters, murderers, exploiters. Not government, not society.
When no one owns something or is materially responsible for it, we already know what happens. Tragedy of the Commons. This applies to all ideas, large and small. Whether it's the local park, a river, or liberty, the same concepts apply. If there's no one who will stand up for it, and do what is necessary to protect it, it will be lost.
But for most people this is too much. When you grow up in the hive, and live all your life inside it, the hive way of life is the bets way. It is the only way. The hive must be protected at all costs. The hive provides safety and protection, and supplies all we need. Outside the hive lies chaos and danger.
Cognitive dissonance indeed.
Second that, he was fucking awesome.
People are to tied up to their credit score, like it's a part of them. A friend of mine is deep under water on a place and she keeps paying because she is worried about her credit. She even told me she knows the right move is to walk, but emotionally she can't do it.
Exactly what good is a corporately-managed algorithm (credit score) when your capacity as an individual to service debt is exhausted?
If you can't eat it, wear it or take it to bed, it probably isn't worth having.
The real irony is that alot of people that have piss-poor credit scores are the most financially solvent. They simply lacked the means to do themselves in.
I love this but then there is always the snag that the govt. will come in with a bailout, which then means those who walk away will get covered by tax payers. Otherwise, I love this.
Talking a little treason, are we. The gloves are off, then. Well well.
In 18 months it will not have mattered. But nicely said, Mr. Ratigan. Thank you for simply stating the obvious.
Tyler,
For the love of Christo. Please ban The Rat from any further posting.
That was the worst piece of crap, useless, article I have ever seen.
Did he just discover hyperlinking? Every other f'ing word leads the reader hack to huffpost.
Hey. Did little Johnny not get his pop tart this morning? Awwwwww.....
Hey, Bank of America has apparently hired 2,000 new workers to help manage loan defaults. Does this qualify as a 'green shoot'?
http://www.bloomberg.com/news/2010-06-23/bank-of-america-hires-2-000-sta...
sarcasm off
There is no end to the armies of minimum wage American Idol watching idiots the banks will employ to squeeze every penny from you. There is no end to the law firms they will hire to go after your paychecks and bank accounts.
An attorney friend told me that one of his clients (a waitress) was being sued by Chase on a past due credit card. Chase hired the county sheriff to wait outside her place of employment after a busy Friday night and confiscate all cash on her person since she was not depositing her cash tips in a bank account that Chase could levy.
This is exactly why, whenever I give advice to someone, I always start by: "Get rid of all your debt!".
I believe this type of blackmailing tactics - there is no other word for it - are only going to get worse & worse as the economy sinks. I would not be surprised if prison for debt is re-instated sometime in the future for individuals and small corporations.
Even with your Debt paid you can get into trouble. I bought a Property in Baltimore City, Maryland for $70,000. in 1989. Three years ago I paid $3,300. in Property Taxes. They raised my Property Taxes to $7,500. a year. Mostly because I rent the Property and cannot qualify for the Homestead Credit.
So, even though I paid the Property off I now I have to Buy my Property back from Baltimore City every 9 years.
Unfortunatly, probably time to Sell but the prices are so depressed.
someone is lying; you or your "attorney friend." OR, if a waitress was actually mugged by the sheriff, and this waitress is a client of any attorney, and neither the waitress nor the attorney have filed a criminal complaint against the county, then we are talking about some seriously stupid individuals here.
Actually, depending on the state, all it takes is an execution order signed by a judge to seize your non-exempt assets.
Sheriffs do this all the time.
This story seems outrageous, but if Chase has a money judgment and she ignored prior seizure orders, a judge very well may have ordered the sheriff to catch her coming out of an all cash jobs.
Nothing pisses a judge or sheriff off more than someone ignoring them. They wanted this waitress to feel their power.
There is no loan made and there is no funds lent.
The debt collector is moving to perfect a security agreement.
This security agreement is a voidable element within the financial service agreement, where the debtor agreed to a payment stream over time.
Read
HEINTZ ET AL. v. JENKINS, 514 US 291,299 (1994)
State ex rel. State Bar of Wisconsin v. Bonded Collections, Inc., 36 Wis. 2d 643, 154 NW 2d 250 (1967)
Either wakeup and get out of the pool, or stay asleep and drown in equity.
An attorney may stand as a debt collector, yet the debt collector is statutorily prohibited to stand as an attorney at law claiming it represents the original creditor in the appellate agency sitting in judicial (equity) review of the administrative claim.
“ For these reasons, we agree with the Seventh Circuit that the Act applies to attorneys who "regularly" engage in consumer-debt-collection activity, even when that activity consists of litigation. Its judgment is therefore Affirmed.” Heintz v. Jenkins 514 US 291,299
“However that may be, a plaintiff cannot convert a claim of damages for breach of contract into an equitable claim by the facile trick of asking that the defendant be enjoined from refusing to honor its obligation to pay the plaintiff what the plaintiff is owed under the contract and appending to that request a request for payment of the amount owed. A claim for money due and owing under a contract is "quintessentially an action at law." HYPERLINK "http://web2.westlaw.com/Find/Default.wl?DB=602&SerialNum=1996142036&Find..." \t "_top" Hudson View II Associates v. Gooden, 222 A.D.2d 163, 644 N.Y.S.2d 512, 516 (1996); see also HYPERLINK "http://web2.westlaw.com/Find/Default.wl?DB=708&SerialNum=1977118754&Find..." \t "_top" Atlas Roofing Co. v. Occupational Safety & Health Review Comm'n, 430 U.S. 442, 459, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977).”
Wal-Mart Stores, Inc. Associates' Health and Welfare Plan v. Wells 213 F 3d 398, 401
I'm junking you for this, because your commentary (e.g. "there is no loan being made") is junk. All that the portion of the case that you posted says is that you can't transform a money judgment into equitable relief. In other words, if you have a money judgment that is uncollectable you can't get the court to order the debtor to pay it anyway. It's your job as a creditor to locate assets that can be collected against. That's called "judgment enforcement" and that's what you hire lawyers for if you are a serious creditor - to locate and try to levy against assets.
There are some disadvantages to wrecked credit, but there are ways to deal with it. It's not the end of the world. Lots of mortgage holders can save tons of money from it, and it might not have that bad of an effect on your rating.
You can get a mortgage loan six months or so out of ch.7 bk at decent rates provided you take the right steps coming right out of bk. Its all a game. Get a secured credit card, make payments, take a car loan just prior to filing and keep the car so you get monthly good standing updates and on time payments from the financier the minute you get your discharge, etc... and in six months they will be falling over themselves to lend to you as you now have lots of disposable and no/little debt and you cant file ch7 for another 7 years from prior filing so they got you and you cant get out the second time. I repeat, its all a game.
.
That EURO buying support has returned ...
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
I have a credit score over 800 and have never missed a payment on anything...but I am giving serious thought to what this article is saying. I am getting married in Jan, live in WA state and have a first and 2nd (heloc). The only thing that keeps me from telling my bank to shove it is the 2nd loan that is recourse and is with my credit union. I don't like the idea of telling them to shove it b/c they have always been good to me and it doesn't sit well. On the other hand, what if I continue to pay and 6 months down the road I am in a worse financial position? I can afford to currently make my payments but honestly, I just want to wash my hands of the house and start over. I also don't want my fiance to get dragged into it when we get married. I guess I need to talk to an attorney but I would love nothing more than to tell B of A and Fannie to pound sand.
Been in your boat, and I am not judging or making you feel ignorant, but the last thing you need to do is talk to an attorney. They will not be of help to your situation, they will tell you to pay. The person(s) you need to talk to are people who have done it already, people who have experience going through walking away. Attorneys are like bankers, all they care about is what will end up in their wallets. Unless it is a bankruptcy attorney you are referring to.
Yes, I am referring specifically to a bankruptcy attorney. I just don't want to get caught on the wrong side of a deficiency judgment or anything like that. I also don't want my soon to be wife dragged into anything. Bottom line, I have the house that is worth less than what I owe and a car and some mild credit card debt. The car and credit card are no problem, I just get scared thinking about my house dropping 10% and being 100k underwater. And yes, both of my loans are interest only arms (easy on the bashing).
Seems to me you are in a far worse financial situation than your score would suggest. Revolving debt on the CC at 18+%; car loans are almost always negative equity instruments, and two IO mortage loans -- ARMS to boot?
How many months of savings have you got stashed away? And if the FMV of your house drops 15% over the next 12 months, will you still be paying regularly? Why?
That is my point, if (when) my house declines in value I am in very bad shape despite my high score. My credit card debt is at 10.99 and will be paid off by year end so I am not too worried about it. My car loan is at 6.49 and I am even on it.
The first is I/O, the 2nd is I/O because it is variable and by nature of the heloc that is all that is required.
I have 0 months of savings since I put all of my cash into a down payment 5% and the rest of my cash went to pay off my school loan in full at the time of closing (aug 2008) b/c they changed the terms at the last second b/c of the panic in the markets.
Your point about fmv dropping 15% is precisely why I am exploring my options, I don't have anything outside of retirement accounts (roth and r/o ira) so there is nothing that they can take from me. That is why I am looking at walking on the house b/c I only suffer on the credit score side.
Check with a lawyer, but you seem to be in a perfect position to walk away. You have no savings to go after, and all the collateral on all your loans are under water. Protect your wife's credit rating by defaulting or declaring bankruptcy before your marriage. Then you can bounce back using her untarnished credit rating.
Look, I've worked in the ch7 field before, although not as an attorney. Talk to an attorney. From what you're saying it doesnt sound like you have lots of cash and in a situation where its a classic 'strategic default' nor does it sound like the kind that they are currently proposing cracking down on. If you qualify for a ch.7 then there is very likely no chance that you would qualify as a 'strategic defaulter'. If you do see an attorney make sure they explain the difference and discuss with you the option of filing under state law vs federal law. There are some differences and depending on the types of assets and how much they are worth it may be advantageous to file under state law. Specifically, WA state used to allow a larger amount of exempted home equity than the federal filing - that may have changed since I've been out of it. In any case, make sure you discuss it with the attorney if you do go to see one.
Thx GB; I just got off the phone with a local bankruptcy attorney regarding my situation. At this point, I am going to keep paying and see what happens. If the value drops to a point where I am uncomfortable, I will likely try and get buy-in on a short sale. If that doesn't work, I can always quit my job and wait for my income average to qualify me for ch. 7 and then just be done with it. I hear what you are saying regarding asset protection, fortunately, I don't have a lot outside of some basic furniture. Your point about this not being a classic "strategic default" is something I hadn't thought about but it makes sense...I don't have much in the way of assets so it would be hard to classify me as such. Good insight.
You are no more in debt than a snail cruising along your lawn. It's fiction.
Kind of a novice at this but can't you walk away from the 1st but still pay on the 2nd?
I believe that once you walk away from the first they can call the 2nd due in full. Besides, why would I want to pay for an asset I don't have? I am considering just taking the couple thousand I pay on my first each month and just paying it all to my 2nd for as long as I can before I get booted out of the house. That way the first lender takes the hit and the 2nd gets made as whole as I can make them.
Like I said, Novice! I did not know the second would get called on default of the first but it make since. I'm pretty much in the same boat, except I'm underwater after losing 60k in equity(down payment). Don't really want to walk away as it is a great house and the wife and kids love it and the neighborhood.
...and if you pay off all those loans your score will drop well below 800. Not that it matters if you're paying cash for everything.
Ignore your score.
Yeah, that is what really got me considering my options. I have been brought up with the idea that my credit score is the end all be all and it has really shaped my behavior but once I started looking at it in dollars and cents it was like an epiphany. I mean, who wouldn't sacrifice their credit score to walk away from a potential liability running in the tens of thousands of dollars if not more? Other than a car, I don't really use credit so I could get by without it.
delete
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Talking to an Attorney was your best option. Some States like Maryland have Recourse Loans. So, unless you declare Bankruptcy they can get a Deficit Judgement against you. You could end up never being able to Own anything. So, be careful of your States Laws.
If you get your debt discharged, you can always gift them extra money if you feel guilty (check with your lawyer first though!). It's not like a bank is going to turn down free money.
I've been saying this since March 2009, and Dylan is just now coming out of box? They can't make you pay, all they can do is scare you into paying, walk away from homes and credit card debts. Put your money in hard physical assets like gold/silver. Screw the bankers.
Why only mortgages? It's time to stop paying ALL debt to the banksters.
When you pay you are not paying a debt. You are paying via contract on a payment stream over time. Alleged creditor is not able to convert breach of contract for the amount unless the alleged debtor gets lost in equity.
What you are really say is to breach a contract to perform.
Who gives a f***?
Part of background checks for a job these days includes reviewing your credit rating. Since most HR departments look for reasons to exclude applicants, because they have so many, this could essentialy turn many prior homeowners into immigrants in their own country.
I need to correct your restatement of propaganda. This is not attack on you as you may not know of the propaganda of the credit for employment check nonsense. Credit scores can only be used if the job being applied for is related to financial responsibilities or access to funds. If the position is not related to the above mentioned aspects then a credit report is not to be considered an element of consideration of a background check.
I am on the board for background screening company and of the 1,000 plus clients we have across the United Slaves of America, all follow these guidelines. Plus, companies are profit motivated and reluctant to spend anything beyond the basics for an item they feel to be cost rather than a profit. Credit checks are expensive when compared to other aspects of a background check and the bureaus make non-public companies jump through hoops just to be allowed to run the credit check.
The credit check for employment claim is based on two pieces of misunderstanding and misinformation. One is the Fair Credit Reporting Act and the verbiage requirements of the release form to be signed by candidates giving permission to run the background check. The word "credit" shows up everywhere, but that is a CYA move more than anything and often refers to a “consumer report” or the background check itself. You know, “It depends on what the definition of is - is”. Secondly, this is a part of a media push by credit companies through press releases. Press releases drive news and have no investigative check on the facts of the press releases. It's all bunk. Just like the "Credit Counseling Companies" that run ads all day to get you out of your credit obligations. The same credit card companies that people owe money to own these counseling services. Don't believe everything you read or hear if it comes from the idiot box. But then again, who am I…quite possibly an idiot. That is for you to discern I guess.
Just remember this, I have no vested interest in bringing this out in the light.
I can tell you that any law-enforcement related position is going to run a credit check on you as a part of a background investigation...candidates struggling to pay bills or behind on debt are viewed as increased risk for dishonesty/theft. So no, it is not just financial type roles or traditional jobs with access to funds.
Ohhhhh, pirates. Code-enforcers. The ones that focus on revenue generation for the cities that have over-spent and over-promised. Right. I meant productive job in the private-sector. The Armed Tax-Feeders Guild doesn't count in my mind.
Here is how I handle those police types - www.youtube.com/watch?v=443LDl7sy9s. Don't tase me bro.
I wasn't trying to be a dick, just point out other jobs that require credit checks in addition to the ones you mentioned.
If you are going to make a post that infers you are an insider and know all about credit checks and companies that run them, it is irresponsible to let your personal beliefs put a slant on the data. Just my .02
Thanks for the info.
Sorry, I wasn't trying to be either. Tax feeders ruffle me feathers.
You need to come up to speed on current events. In Silicon valley this is now a common prcatice for HR departments of companies such as HP and Cisco.
They are violating the Fair Credit Reporting Act. Fortunately for them most candidates aren't aware of their rights and the legislation that protects them. Either way it is irrelevant to me, at this point anyway.
Well their justification is that anybody handling a budget is subject to a credit check, which is pretty much any direct hires applying for a management position.
"United Slaves of America"
LMAO - Simply brilliant, and spot on!
For some reason I feel that the Fair Issac's score is not as relieable an index any longer. I am not sure I could put a formative calc on it, but when you have such as distortion as we do have now, it seems reasonable to assume the score doesn't matter as much. Damn, people with great scores can't get loans now so wtf. Take a chance??
RENT
Hey, I am a Landlord and if your Credit Score is terrible I will not Rent to you. Problem is that even Countrywide was giving Mortgages to Customers that I would not even rent to. They were giving Mortgages to People with 550 Credit Scores. From my observations People with 550 Credit Scores have on average 8 accounts with Late Payments and at least 2 Judgements.
It was never meant to be a reasonable index. It was meant to justify higher interest rates on the poor and uneducated / ignorant.
+1
Amen! Great article - forwarded to friends and family.
Dylan Ratigan is a populist buffoon. His rabble-rousing rants are based on emotion, not facts. That he is presented on the Marxist Socialist National Broadcasting Corporation (MSNBC) is quite fitting, and that his buffoonery was too much for bubble-vision speaks volume.
But Tyler, I really like your web site.
Right on Chemba. Shitcan this plastic mouthpiece.
I'm 38, this is my second house, I have still have equity (believe it or not) and yet I wrestle with what to do since the SO's business has failed (thanks to over regulation by the State of Auhnuld and his fucktard cronies in Sacramento). I can continue to pay (for a while) but at what point do I just say fuck it, hide it all in a matress and tell them to kiss my ass and drop off the grid.
These are the choices the middle class in this country are forced to deal with everyday, while that asshole obama's out golfing I'm working 80 hours a week to keep above water.
Same thoughts here. Quite frankly, I don't need the credit or the credit score. If I just say enough-is-enough, my cash flow itself will provide for a far better existence. Why do I even want to play the game?
Why try to fight an unwinnable system? For the honor of an ambiguous credit score? Who gives a shit when I've got $50,000 in checking?
Why try to fight an unwinnable system? For the honor of an ambiguous credit score? Who gives a shit when I've got $50,000 in checking?
Exactly. If you pay cash no one gives two shits, or even one shit, what your credit score is.
Before long, 50k fiatscos will just about buy you a loaf of bread... I hope you are well off enough to watch that 50k evaporate & shrug it off.
The rest of the world still seems happy with jewbux so who am I to complain?
well said, mr. ratigan
i say, go further than that, stop paying your debts and buy cheap waaay out of the money puts on those banks (they are insolvent anyways...only mark to make-believe claims otherwise) that expire mid to late 2012 to recover some of your losses
You got it brother, learn from the best. Play it like GS would.
Anyone that is wondering, or struggling, or thinking about defaulting just needs to ask themselves one question "What would Goldman do in this situation?". Let GS guide your way. They themselves said they do gods work. So should it become necessary to walk away from your house, just as Goldman would do, then be absolved knowing that you've performed some holy trinity shit and the angels can keep on singing in heaven.
Well Said!
And student loans? I know people paying +$600 every month on something they can never get away from.
Yep. There's nothing like taking a bright kid and demanding he/she be a fucking debt slave just because they have the aptitude to be an Engineer, Accountant, Teacher, Scientist, etc.
When you can't just fuck over the poor, you have to figure out a way to fuck over the smart. Voila...student loans.
Pretty smart of the Guy who got a Second Mortgage to pay off his Student Loans. You cannot get out of Student Loans in Bankruptcy. Yet, you can get out of a Second Mortgage. Sounds like he planned it out pretty well.
Not only mortgages. But, people should tell them to shove it in their ass on student loans also. They have been shown to be nothing more than an enslaving scam to the professional class also. They are riddled with middle man fees, outrageous interest, and asinine tuition costs. Fck em. Garnish my $0 paycheck all day.
Nice script Ratman. Who was your ghost writer? Is your new image going to be Superman? Defender of the People.
In the event there was anybody left that still thought the bailout was necessary to prevent a complete collapse of market stability, I took the liberty of grabbing data from official government sources (BLS and Census) and charted to show that, even with the bullshit data they are inclined to present US, here's what really happened to the housing market. We went from a CPI adjusted total median value for new homes sold of $140,925,925.90 in May 2005 to a CPI adjusted total median value for new homes sold of $25,791,838.61 in May 2010. The calc is (median home value x total new units sold) / CPI, and the reason I capture it this way is to get an idea of how the market is financially affecting the "real economy", ie., the economy that affects the vast majority of people, expressed in transactions that actually happened (as opposed to the bullshit figure that includes "homes for sale", because really, who gives a shit until the products are actually purchased). Our new home housing market is 18% of the size it was 5 years ago.
http://i45.tinypic.com/vjceo.png
Excellent data, Panafrican, that fit in with these comments from The Great American Squeeze | So You Think You Can Invest | April 22, 2010
Excerpts
The Great American Squeeze is the phenomenon of constant pressure being applied on regular people from all directions. These directions take the form of tax increases, inflation, the end of various government stimulus efforts and a reduction in already existing services with the net result being an overall reduction in the quality of life. The reduction in the quality of life can result in mild setbacks such as eating out less or canceling cable TV to drastic life altering events such as homelessness and hunger. ...
Let's start with tax increases. In 2011, the capital gains tax is set to increase. Taxes are also being increased on higher end income earners and tax increases are being phased in as part of the recently passed health care bill. To top it all off, now there is speculation that a Value Added Tax (VAT) could be implemented.
Next up: inflation. Inflation is live and well, despite what some hardcore deflationists would have you believe. Food prices rose by 2.4% in March, the largest increase in 26 years. … Crude oil is back over $80 per barrel.
Government funded stimulus programs are rapidly being phased out. The economic stimulus package that was passed last year will see its expenditures peak out in the second quarter of this year. …. Finally, perhaps the biggest government stimulus of all, the $1.2 trillion residential mortgage backed security (MBS) program has just ended. We expect the recent strength in the housing market will end in a relapse of the housing bust of 2007-2009. ...
Lest you think that these various data points don't actually trickle down to you and me, here are some recent personal experiences that we have had being caught up in The Great American Squeeze.
Where we live in Hoboken, New Jersey, property taxes have greatly increased in recent years, starting in 2008 with a 47% increase in property taxes. Since that time there have been additional increases seemingly every few months. Our landlord has seen the city portion of their property taxes skyrocket in the last two years. This led to the owner trying to extract additional rent from us in the middle of a lease to make up for the shortfall. We of course refused to pay. Now that the lease is up, the owner is asking for 12% more in rent this year than they asked last year. We will be moving and there is now a good chance that the owner will have a difficult time finding a new tenant as they have priced themselves out of the market in our opinion.
If that was not enough, NJ Transit has decided to raise their fares by 25% effective May 1st. Our cost of taking the bus to work will increase by $1 dollar per day. Meanwhile, the number of bus routes are being reduced. Less for more? That did not used to be the American way.
The NJ transit fare increases follow recent increases in the New York City subway fares over the past two years. Upcoming subway service reductions and a fare increase of 7.5% are also planned. In addition, we have anecdotal evidence that the quality of service has already decreased dramatically from the beginning of the year.
We fear that The Great American Squeeze will be enough to financially knock out a far larger number of people than is commonly understood. Shielded bureaucrats and political organizations do not seem to understand how close many people are to the edge. … This is a long term and likely permanent decrease in the wealth for a large contingent of the country.
http://www.soyouthinkyoucaninvest.com/
Existing or total home sales are a better measure of the effect on the vast majority of people. Unfortunately, long-term NAR data are somewhat hard to come by, except by purchase. The negative to the .gov and NAR data is that they don't reflect house size, which has grown significantly over the years. Case-Shiller overcomes that defect, and suggests housing is still 25%-30% overvalued. The downside could be worse as markets tend to overcorrect.
There will be debtors' prisons.
Coming soon to your area.
Probably. But at least they will be privately owned, and all the debtors will finally be working full time plus. They won't get paid, of course, but they WILL be working.
And your friendly county judge will be a silent partner in the operation.
And THIS is what makes America great!
I liked my post so much on another (ZH) blog I am going to post it again here! heh
There is no shame in admitting that the reason we are in this mess is because we spend what we don't have. This is a political mess not a personal one. Spending needs to be cut so that not only is the current 10% of GDP fiscal deficit returned to balance, but that we go further and produce surpluses of 5% of GDP until debt is eradicated.
Taxes take 30% of GDP, spending is 40% of GDP. Debt is (say) 100% of GDP. If we reduce spending by one third, the budget will be in balance but the impact on the economy will mean we have to do spending cuts of around 40% to catch up with the decline in government sponsored economic activity.
Then we can leave spending at only 24% of GDP with a surplus of 6% of GDP per annum for say sixteen years and repay the national debt. Debt/GDP of zero.
We can then leave this in place for another 16 years and build up capital stock that would pay for our health and retirement spending.
Do it again for another 16 years and we will be a wealthy nation.
OK OK OK i know we are screwed. We are broke, all of us and we just have to admit that we need to lie, cheat and steal our way out of this and stop paying the favored sectors of lawyers, lobbyists and bankers who are the current best liars cheaters and stealers of our futures.
There is another way. Hit the RESET button, like this.
Set the proper amount of prudent debt and equity ratios per company, state and individual. we can then take the EBITDA or free cash flow divided by a notional "fair" risk adjusted reasonable rate of return for each of debt and equity (i am thinking 5% for debt and 10% for equity).
We can then create a new GDP based on the weighted average sum of these parts. New Government debt can be set at a level that we can afford to pay out of taxes, again probably 10% of taxes.
A new currency can then be introduced at a conversion rate that is consistent with our comfortable ability to service a level of debt we can afford.
We know the old currency is worthless and only has value because the other global currencies are just as fucked or more fucked than we are. SO let's not pretend that fiat currency has any future or that someone else won't come out with an equivalent before we do.
So there you have it. The honest way which we, as liars cheaters and stealers wont adopt because it means we own up, or the RESET way.
It will be just like starting over...wop wop wop wop!
further would be this, squat as long as possible. Two years is not hard in many states as long as you use a lawyer that specializes in this type of thing(use google). Use your monthly payments to but physical gold/silver. When you can't hold off the banks any longer sell all the copper and appliances. Leave a upper decker for the banker.
Default on your loans and expatriate to get out of the student ones.
There are plenty of things that TPTB can do to keep the debt machine raping on at least in nominal terms.
Time for non compliance of all kinds, I've completely had enough of bailing out losers (BP Next)?
Are we just keyboard warriors or has the time now come, I mean c'mon!
It's only after we've lost everything that we're free to do anything.
--Tyler Durden--
If strategic default becomes commonplace, home purchases and maybe just about every kind of capital good could well require a 50+% down payment. That may not be all bad, but it would be difficult for many people. I wonder if Dylan Ratigan has through through the consequences of what he (almost) advocates.
Bohica
You haven't thought it through, it seems. If default became sufficiently widespread, then down payment requirements WOULD increase, you are correct. BUT, this would cause massive price deflation, and we could all buy houses and other assets for such low amounts that a 20% down payment would be the same, in dollar terms, as a 5% down payment now. The adjustment is not a matter of speculation, but of mathematics.
Oh, right! Like massive price deflation will make us all relatively wealthier. Your "mathematical" logic would have us believe that people were better off during the Great Depression than a few years earlier.
Let me get this straight. You think you're better off pay 5, 8, 10 or even 12 times the appropriate price for products?
You have fallen for the MASSIVE LIE that deflation == depression. Absolute, pure unadulterated BS.
As humans invent and implement more efficient means of production, it is 100% natural for prices to FALL. That is deflation. That is rising efficiency. And both are GOOD - very good.
You - and most people - have been suckered into believing that it is natural and appropriate that the predators-that-be should simply steal more than double that natural rate of deflation, which is what they do to create inflation in a world that naturally has deflation.
Wake up, people. Stop paying your mortages if you are under water. The author is correct - the fault is not [primarily] yours. Remove all your money from banks, and convert to gold, silver, seeds, weapons, ammunition, farmland, and best of all, productive-equipment you operate. Above all, stop feeding the beast.
The powers-that-be are actually the predators-that-be. Do not feed the predators! It just makes them stronger. Starve them into weakness, ready for the kill.
Oh, and I've never owned a house, never borrowed one cent, and never owed money to anyone. So my positions are based on principle, and not self-serving.
In ancient Rome they had a real estate crisis that was dealt with successfully. What they did was to remove all interest from loans and charge paid interest towards the capital. It is a simple solution that requires bankers to take a bite of the sandwich along with eveyone else. But bankers will not forego their profits even as we bail them out. So it will never happen here.
But hey, there is a simple, elegant, proven solution to the consumer credit crisis that will also goose the economy out there. The only thing standing in the way is banker scum.
20%? Screw that. Try 70% haircuts!