The company ‘You Walk Away’ is in the same Carlsbad office building as Klinge Realty. They used to have the prime first-floor office that was probably a few thousand square feet, but they have since vacated for a much smaller space.
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Jim Klinge
Klinge Realty Group
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- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
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Trustindex verifies that the original source of the review is Google. We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation. Thank you Donna and Jim, Jerry and MaryTrustindex verifies that the original source of the review is Google. We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years. Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community. In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.Trustindex verifies that the original source of the review is Google. WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough! Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale. Communication was prompt and we were well-informed throughout the entire process. For anyone looking for a dedicated and knowledgeable real estate team, look no further! ---Trustindex verifies that the original source of the review is Google. Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.Trustindex verifies that the original source of the review is Google. Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.Trustindex verifies that the original source of the review is Google. This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.Trustindex verifies that the original source of the review is Google. Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless. So grateful that I had them on my side!Trustindex verifies that the original source of the review is Google. We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.Trustindex verifies that the original source of the review is Google. The Good The Klinge Realty Group operates like a finely tuned machine, with a very personal touch. We contacted them on a Sunday and they were talking to us about our family and our needs on our living room couch the following day. They carefully listened to us and worked with us to identify the best and quickest path to listing within 2 weeks to take advantage of the low inventory conditions in our South Carlsbad neighborhood. They knew our tract specifically and had many previous sales there over the years - they came prepared with a thorough analysis of comparative sales and recommended a pricing strategy that they felt confident would yield offers the first weekend on the market. The Great Over the next two weeks Donna coordinated a range of vendors who she knew from experience could get the preparation to list work we needed done on time and with high quality. Our light tune-up involved excellent experiences with their stagers, landscapers, contractors, electricians, and plumbers. Throughout this period Donna's daily communication was clear, concise, and responsive. Any time we had questions Donna picked up the phone or texted immediately - but almost always, she answered our questions before we even knew we had them. The Outstanding We had a tricky situation with a shared fence that could have delayed our escrow. Donna used superb mediation skills to negotiate the terms of replacement and was personally on site with the fence contractor to make sure everything went smoothly. The fence looks great and escrow closed on time. The Truly Exceptional Our house came on the market on a Wednesday and between then and Monday morning Jim was personally at all three open houses. He was in constant communication explaining potential buyer reaction and strength. As he predicted offers began to come in on Saturday and each one was incrementally higher than the last. At the end we had 5 offers, 4 of which were over list, and the final accepted offer was $100,000 over list. In addition to being over list it included rent back terms that met our needs. The Recommendation For all of these reasons we would strongly recommend The Klinge Team to anyone wanting to sell in North County Coastal San Diego. I had been reading Jim's bubbleinfo.com blog for 15 years and knew when the time came to sell that he would be our first call. Jim Klinge is not your standard realtor. He is keenly aware of market conditions and sales strategies. And, works his tail off - though not as hard as Donna . At this point he's gone from realtor to friend and I plan to have him over to grill and chill at our new place to talk real estate, but also just about life and raising kids in San Diego. He's more interested in relationships than his sales numbers - and that's why his sales numbers are so high. We have already recommended the Klinge's to some close friends and another successful sale is on deck right around the corner...Trustindex verifies that the original source of the review is Google. We recently had the pleasure of working with Jim and Donna from Klinge Realty Group to sell our house, and we couldn't be more satisfied with the experience. From the initial meeting, they listened attentively to our needs and provided invaluable guidance on specific improvements to get our home market ready. Their responsiveness throughout the entire process was truly impressive. Anytime we had questions or concerns, they were quick to address them, ensuring we felt comfortable and informed every step of the way. What stood out the most was their team and extensive network of tradespeople, which made addressing any necessary repairs or updates seamless and stress-free. Thanks to their expertise and dedication, our house sold quickly and at a great price. We highly recommend Jim and Donna to anyone looking to buy or sell a home. They are a fantastic team who truly care about their clients and deliver exceptional results.Load more
My family thought it is a crock that there’s a company ‘teaching’ people how to be deadbeats. I hope moving into smaller space means that ‘You Walk Away’ is not a good business model.
What about the older couple in AZ where the lady says they are living up to all the terms of their contract? Did she forget about the part where they are expected to pay back the lender? Paying off your debt is just a technicality today.
I have been on the sidelines renting for the past two years…sold just after the peak in my market (Northwest), biding my time… about to jump in to a North SD County Coastal home… but after watching the clip on dead beat walkaways, seeing what is going on in the world financial markets… Double Pop (dip) Housing Bubble (recession), here we come… things might be decent here on the coast with all the summer movement upon us, but, I believe Q 4 is going to be a bloodbath down another 15-20% in the 800K+ market. The Fed can’t print money fast enough for our new welfare state.
What’s funny is how so many people have it backward. They think that falling housing prices would make our economy worse.
The truth is, the ONLY way to fix our economic problems is to repudiate debt and deflate asset prices. These walk-aways are exactly what we need to happen in order to break the multi-decade inflationary cycle (which has caused us to be uncompetitive in the globalized economy) and bring us back to a foundation from which we can grow in a healthy, sustainable way.
We cannot afford to carry the kind of debt we’ve taken on, both publicly and privately over the past few decades. Debt, by its very nature, brings economic activity forward…at the expense of economic activity in the future. The future is here.
I have no issue with people walking away from their mortgage contract. Its like the guy say, its a business deal, deal with it that way. Thats all it is.
But that fella and his wife in the video that were up front about not paying yet they would live in the house until they were kicked out…. That is some serious bullshit freeloading.
Breaking mortgage contracts is perfectly acceptable IMHO but exploiting the lag in the system for their own personal benefit is no better than theft IMHO.
That kind of nonsense should be investigated and persons charged if so applicable.
What’s good for the deadbeat homeowner is good for deadbeat nations and continents.
U.S. bails out Greece, all of Europe via IMF and Federal Reserve
CAR, high housing prices in a very few select parts of the country is not making this country uncompetitive nor does it necessary imply high debt loads. If someone is worth 5 million, then buying a one million dollar house cash is no problem.
What caused this housing mess was people taking on large amounts of debt with virtually no skin in the game and trying to live well beyond their means all in a bid to keep up with their neighbors and friends.
I know a guy who “unschackled” himself from his car payment……….he walked away!
People the look for technicalities to find ways out of meeting their obligations are truely sickening.
This is why there needs to be a 90 days and you’re legally forced to vacate “your” property if you’re not making the payments.
I’m surprised realtors aren’t behind a 90 days and your out rule. It would put more properties on the market. It would also create more transactions.
Companies do this all the time. As the video pointed out, Morgan Stanley does it, and corps that own hotels have been doing it for a couple of years now. They’ve walked away from newer, expensive hotels so they can use that money to buy recently depreciated bargain properties.
What is good for the goose is good for the gander.
Eerie
Did you know you can’t make one word posts to this discussion? Just found out.
Dont they call it a business decision?
“People the look for technicalities to find ways out of meeting their obligations are truely sickening.”
Deed in lieu isn’t a technicality. It’s part of the contract.
In the past 18 months, we’ve had 4 foreclosures happen within a 1 block of our house. 3 of the homeowners bought more house than they could afford. The other one lost their job.
2 of the 4 homes have been resold at @50% off the price the original homeowners had paid (the other 2 are being rented-I think). Everyone in the neighborhood is either underwater or had substantial down payments wiped out by these defaults.
If my wife and I were to walk away from this house, we would feel ABSOLUTELY ZERO GUILT. NADA!
The banks were the one who FAILED to exercise due diligence with their loans. We now know most of them were actively engaged in criminal conspiracies to inflate the price of homes. They also don’t give a damn about working with some of our neighbors who might lose their jobs.
Our home is underwater due to no fault of ours. The banks and the entire (mostly) gangster real estate industry got us into this mess and now they’re trying to play the “you should feel guilty” card. Banker please!
Since we don’t seem to have mature adults running these institutions, just like with a child, you sometimes have to take away their toys to get their attention.
I hope more people walk away. Soon.
If you trash your credit, can you still get access to credit cards, hotels and car rentals? Having credit cards is a very nice thing for traveling, interfacing with modern society, etc.!
chris g…
Stock brokerages and credit unions are pretty easy with credit cards. They will usually give you a credit limit based on your portfolio value and liquid funds. No one knows it’s an asset-backed credit card.
“I hope more people walk away. Soon.”
Why would you say that Consultant? Are you thinking the more ‘mainstream’ this activity becomes, the less chance you’ll have credit problems in the future?
Can anyone recommend a good real estate lawyer, that primarily does real estate? A “friend” wants to know. 😮
Safer calls bankers “zoo keepers” and those who strategically forclose “white elephants,” so I guess we understand his bias. People make logical decisions, like businesses do. And, many of these people have already PAID for the right to walk away. Bad analogies and biased journalism helps nobody, and it certainly doesn’t fix the economy, housing or otherwise. Bet drama sure helps CBS sell the soap, doesn’t it?
justme…
I cringe when I see “good” and “lawyer” in the same sentence.
If your friend just has a few questions, Bill Handel (a lawyer) has a great call-in talk show on Saturday mornings:
http://www.handelonthelaw.com/home/TuneIn.aspx
Problems with this 60 minutes segment, my take on the mirage of this virtual realty –
There’s no way the 1st (young) couple purchased a home in Sun City, AZ (they have age restrictive covenents). I suspect they purchased in Surprise, which is much further a field west of Sun City/Sun City West. It was the hip hot place for the young, up and coming, first time home buyer (with 10% or less in the game) during the big bad boom. Not a “surprise”, it is now a virtue ghost town.
The 2nd couple (probably a little more skin in the game here), purchased in one of the oldest neighborhoods in the downtown core (Encanto). An overly hyped area selling on vintage charm, but virtually surrounded by badly aging low income slums.
Mr. Scottsdale (lol), now that guy probably has more serious skin in the game. A little harder to walk away.
It all comes down to how invested you were/are. It’s easier to walk when you have 20K in, hardered when it’s 50-100K, harder still when it’s 250-500K.
And, it’s a virtue no-brainer when you went ahead and pulled all your original skin out through 2nd/home equity extraction in order to purchase into the immediate gratification factor as part of your parting gift package just for playing.
Safer talks about:
1. Individual guilt and shame
2. Emotions tied to their homes
3. Worry about neighbors’ feelings
Safer employees the same techniques in his questioning of his guests and experts that real estate agents, mortgage brokers, and banks used to play on emotions on perspective home owners to begin with?
In addition, he suggests that strategic foreclosures might cripple a recover, when in fact, people’s inability to move — because they are tied to their homes — does INDEED damage any recover, because labor assets cannot freely move to where and when jobs are created.
Isn’t it ironic that NOBODY EVER suggests that strategic defaults by businesses are to blame for crippling economic effects? In fact, strategic business defaults — including bankruptcies — are often praised as ways in which the U.S. economy remains dynamic during down times.
Unfortunately, individuals are proscribed from strategic defaults and bankruptcy protection because federal and state governments would rather create and enforce regulations upon individuals in a greater number of ways, and to greater degrees than it will the corporations. Thank banks and banksters for that.
Does Morality Safer think his employment contract morality obligates him to some code?
If corporations possess the rights of individuals, do they have a moral or ethical obligation to their communities or the economy?
Morley’s mainstreamness is mind-numbing.
If this really catches on the real esate recovery could be a long way away.I have a real problem with the banks and the govt allowing these people to virtually buy another home in a few years.When you are looking at the numbers it makes sense to a lot of people to give the house up and sit on the sidelines for a few years.They can save money and then buy another home in the current system.Wall street really blew on this one.
Truth is everyone cares about real estate. You cannot avoid playing the game thru a purchase or increased rents.
That said, real estate has become unaffordable without a financial windfall (inheritance, help from family, Google stock)
I would love to see real estate value reset down. I fundamentally don’t believe that a home in Carlsbad should be $700k+.
The best local real estate attorney is Rob Kovalsky, known here on the blog as “Kingside”.
I highly recommend – He can be reached at kovalsky@sbcglobal.net
If this really catches on the real estate recovery could be a long way away.
I disagree.
I hope it spreads like wildfire so we can take our medicine and be done. I guess the banks/gov’t cartel see it otherwise.
One last deed-in-lieu program would be prudent. Any homeowner who turns in their deed to their vacant house in the next 30 days gets $2,500 cash-for-keys. After that, cash-for-keys program cancelled.
Note in Morley’s video that the younger couple said they had no regret at all, after talking to their lender. The nasty attitude from the servicers are pushing the buttons of borrowers who are on the edge. It gives them their final reason to default.
Regarding the specific cities (and neighborhoods) addressed in the 60 minutes story.
1. Phoenix, like many major American cities in the south and west were terribly overbuilt. Except for price (per square foot) and some very minor stylistic and aesthetic reasons, a suburb is a suburb is a suburb (or exurb).
2. Practically everyone, everywhere in the Phoenix metro area drives. With gas currently at $3.10/gallon here, staying in the outskirts (regardless of whether you rent or own) has become cost prohibitive, unless the place you work and the places you normally need and want to go are close by.
3. The outskirts of Pheonix, the central downtown area and densely-populated Scottsdale are worlds apart here, as are the people that live in these places. As the Phoenix metro area continues to contract, denser areas — including older areas and areas along suburban business corridors — will be coveted more.
4. So, long-term trends favor faster, denser north-south and east-west corridors, downtown Phoenix, and denser and older areas of Scottsdale, Tempe, Mesa, etc., especially areas served by good public transit including light rail. Right now, you can buy blocks of houses in the ‘burbs and hundreds of 5,000+ square foot, Tuscan-esque McMansions in Phoenix’s periphery — homes that never would have been built BUT FOR the housing bubble.
You don’t have to be a real estate professional to see the long-term trends in real estate. Cities across the U.S. are consolidating, many for reasons unique to those individual cities, but also for reasons quite common to long-term trends in the U.S.
People will want less house, denser accommodations, less automobile travel, more services closer in, closer proximity to work and schools, etc. The municipal governments in most American suburbs simply cannot afford to support the vacant houses or neighborhoods. And left unoccupied, many of of these home will eventually become unlivable, due to extreme degradation from being left boarded up and otherwise neglected. How appropriate that here, way out west, we have created so many modern ghost towns.
Chris G,
I hear what you’re saying. But..update flash. Our criminal “financial industry” has already hit our credit. People who live in neighborhoods hit by high foreclosure rates have their credit scores lowered. They’ve been doing that for a while. They borrowed it from the redlining practices of the insurance “industry”.
Our bought and paid for Congress has allowed them to do this, and most of the Republicans in Congress protect this policy like it was God & Country.
Deed-in-lieu, for me, would be doing the right thing–not living for free. Those who do anything else and force the banks to foreclose are going beyond my moral threshold–especially those who can afford to make the payment in the first place. Clean the house, vacuum the floors and leave the keys for the bank so they can move-on quicly and easily!!! Should be MUCH easier on the credit report, especially with a letter of explanation to support it next time they decide to buy.
Ross Schwartz 619-699-8328 is a good R/E attorney.
[quote]People the look for technicalities to find ways out of meeting their obligations are truely sickening.
This is why there needs to be a 90 days and you’re legally forced to vacate “your” property if you’re not making the payments.
I’m surprised realtors aren’t behind a 90 days and your out rule. It would put more properties on the market. It would also create more transactions.
shadash | May 10th, 2010 at 6:33 am[/quote]
The problem is that the banks are not foreclosing. Who knows why (though many have guessed), but not only does it leave non-paying debt-owners in place, it also leaves them on the hook for the place.
If they do leave and the weeds take over, they get the fine. They get the tax liability. If someone breaks in and has a house party where some ODs,they are liable.
Until the bank actually assumes ownership through FC, the debt-owners *should* stay in place!
[Quote] Deed-in-lieu, for me, would be doing the right thing–not living for free. Those who do anything else and force the banks to foreclose are going beyond my moral threshold–especially those who can afford to make the payment in the first place. Clean the house, vacuum the floors and leave the keys for the bank so they can move-on quicly and easily!!! Should be MUCH easier on the credit report, especially with a letter of explanation to support it next time they decide to buy.
Local Boy | May 10th, 2010 at 10:52 am [/Quote]
Unfortunately for this plan, many/most banks are not accepting any DIL, as I hear it.
No way currently to force them to accept the property. Even a bankruptcy judge cannot order the lender to assume ownership.
Any suggested fixes?
“The problem is that the banks are not foreclosing. Who knows why..”
Can we all, maybe, finally agree that our financial “industry” has become one large, interconnected criminal enterprise.
One thing we should all understand about criminals, doing the right thing is the LAST THING on their agenda.
Correction: doing the right thing is not on their agenda.
We are not going to solve the economic problems related to housing and finance in general until we recognize these folks as criminals and start to treat them that way.
Consultant, you really can’t be mad at “criminals” who loaned people money in the past but choose not to loan money now. They have money, they can lend it however they see fit. Being able to borrow is not a right under the law (unless your dealing with Fannie & Freddie!).
Ever wonder why you have to PAY to see *your* credit score? Because your credit scores are not yours. You don’t own them. They are theirs. They created a system by which to loan money. They can do whatever they want with the system. You don’t have to participate. Banks who over relied on that system are in trouble. Consumers who thought they “earned” a credit score and the right to borrow are now shocked to learn that the credit score is just a score, not an actual bank account from which to withdrawal cash.
“One last deed-in-lieu program would be prudent. Any homeowner who turns in their deed to their vacant house in the next 30 days gets $2,500 cash-for-keys. After that, cash-for-keys program cancelled.”
This is a FANTASTIC idea. You might have to bump that up to $5k or more, though – just enough to get people off the fence. Can’t you imagine herds of people rushing to get their cash for keys? Problem is government will never sponsor this. Would the banks?
Keep walking away, people. It’s undoubtedly your best move if you have buyer’s remorse. Walk away NOW, and in 4 years you’ll still be able to buy a home for less than the bubble price you paid. In fact, your walking away will do its part to correct prices and make your next home more affordable.
You know why institutions perform so much better than individuals? Because they’re not managing/investing on emotion. If you feel obligated to stay underwater, you’re getting duped by the bank.
Chris g,
You’re reading WAY too much into what I wrote. And drawing the wrong conclusions.
We’ve never taken out an equity loan on any home we’ve owned. We don’t “flip” homes. Personally, I don’t like “flippers”. I look at homes as places to live, not poker chips.
You seem to be saying if groups can devise schemes that they control, that’s okay because the schemes belong to them.
That doesn’t necessarily make the schemes right. And if the schemes cause harm to numbers of people they are morally wrong and (should be) illegal.
The latter point is a large part of the problem in our “financial industry”. Over the last 20 years, a lot of harmful financial practices have been made legal.
Just because you can do something doesn’t mean you should.
And yes, I do get mad at criminal and morally reprehensible behavior (and those who allow it).
Freedom–that is a good point. I would try hard to persuade the bank to take it back. If someone is underwater but capable of making the payment, instead of a doing “strategic default” they should probably keep making their payments and at least attempt to preform a “died-in-lieu.” If that was unsuccessful, they might hire an attorney to assist, while continuing to make their payments. I talked to someone who was able to complete the process several months back(similar to a short-sale I guess). I confirmed that their credit shows “satisfied-zero balance” and they owe nothing back to the bank–no moral headache IMHO, and they are considering buying again soon-seems alot less painful and worth the effort, even if you need to resort to an attorney!
Consultant, I didn’t make any assumptions about your situation. Please don’t consider this an attack on you. I am merely defending financial institutions… they are not criminals for the most part (maybe a wee bit stupid sometimes!)
Somebody is contributing their savings so that you can live in a nicer house, right now, instead of later. You are paying them interest for that benefit.
And, yes, if I develop a scheme for buying tomatoes, then change my scheme such to exclude a lot of potentially rotten tomatoes, that is OK. It is my scheme. The tomatoes don’t have to participate. Obviously, I can’t go back in time and undo the previous rotten tomato purchases.
Something has changed in our world… people have forgotten that borrowers have NO rights to borrow. Lenders have NO obligation to lend.
Consultant, one thing I’d say about your earlier posts in this thread is that you said that your neighborhood is underwater through no fault of your own. Well, the truth is that you bought an asset in a free-market system which can increase or decline in value. Overpaying for a house, even at then then-market price, is your choice, and that ends up being your “fault”. Not trying to rub your nose in it, but you make your own choices in life.
I stayed out of the market until I could pay a reasonable price for a house. Like my realtor-friend said, “you don’t make money on a house when you go to sell it, but when you buy it”. Meaning, make sure you have a margin of safety when you buy an asset, so that you will make a profit on a distressed resale.
To the people who are still on the fence, I say walk away. Now.
There’s absolutely no moral issue here. The procedure for a default is already an integral part of the mortgage agreement. A homeowner who walks away from their home is simply exploiting the options in their contract that ALLOWS them to get out of a horrid and expensive mess regardless if they can make the monthly payments or not.
And if the banks don’t act swiftly enough on the defaulters, giving them free rent for many months in the process, that’s THEIR problem. The banks created this mess in the first place. They’re the ones who should be required to clean it up.
“Zookeepers of an ever-growing parade of white elephants.”
When I heard that line, I flashed on Star Trek’s “Trouble with Tribbles”
Hey, Mr. BofA CEO, can you open this here overhead hatch?
Perhaps it’s just my midwest upbringing, but I cannot support strategc defaults or DILs. If someone enters into a mortgage contract, he/she should be expected to abide by the terms. It is unconscionable that people, who have the ability to pay, would walk away from their obligation to pay.
Yes, banks and mortgage brokers have contributed to this mess through “creative” financing, overlending and outright fraud. It’s a shame our gov’t bailed them out. However, some people just made poor investment decisions. There is no guarantee of a positive ROI. If strategic default catches on, it’s the honest, mortgage-paying folks who will suffer, through higher taxes and less services. The slackers get to wait out the turbulence and get back into a house in 4-6 years. It should be more like 10 years.
Great discussion!
I just read a CNN/Money article entitled: “The Economics of Ditching Your Mortgage”. Here’s the link to the article:
http://moremoney.blogs.money.cnn.com/2010/05/07/the-economics-of-ditching-your-mortgage/#comments
And one of the comments I noticed was from San Diego:
“I also did a shortsale recently on my condo which I owed 275K on and sold it for 160K. I put down 20 percent on my condo when I bought it and unfortunately the value went down a whopping 60 percent through no fault of my own! It was a VERY difficult decision that I had to make, but it was the best decision I have made. I agree that if the banks can make financial decisions based on their best interests by refusing to cut principal or modify loans, then we have a right to make decisions based on our best financial interests and well being. I could rent a townhome for a lot cheaper than my mortgage on a smaller 2 bedroom condo. I feel no sympathy whatsoever for the banks. They don’t feel any sympathy for us. They are protecting their bottom line. It’s time that we protect our own. Posted By BG San Diego, CA: May 7, 2010 3:34 pm”
GameAgent, JimTHERealtor, Local Boy…thanks!!
Looks like this discussion hit a nerve. Jim, for fun you could take a survey, private or not, on this where your readers stand and post the results. Not trying to make work for you though.
hey jim
26.”If this really catches on the real estate recovery could be a long way away.” my comment
Your reply to my comment:
“I disagree.
I hope it spreads like wildfire so we can take our medicine and be done. I guess the banks/gov’t cartel see it otherwise.”
Not sure you really understood my comment.I am not saying it is a bad thing for it to happen.I agree with you that it would be the best thing that happened if we flushed the system.I’m just saying that if the people keep defaulting it will take years to work through the inventory.
I think if the strategic defaulters took the first 20% loss by losing a traditional down payment perhaps few if any people would have a problem with these people giving the house back to the bank. Barney Frank, are you listening?
All walk away are Dead Beats .
@KHarris,
Regarding: “Perhaps it’s just my Midwestern upbringing, but I cannot support strategic defaults or DILs. If someone enters into a mortgage contract, he/she should be expected to abide by the terms.”
As a fellow Midwesterner, let me help you out a bit here.
The mortgage contracts of many states ALLOW for people to stop paying their mortgages with LITTLE OR NO LEGAL repercussions. One major downside, of course, is how the default will be reflected on their credit scores, which can affect individuals negatively for future purchase, for getting jobs, et al.
In fact, in non-recourse states, mortgages payments are slightly higher to GUARANTEE the right to stop paying the mortgage. So, by exercising their rights to walk away they are INDEED “abiding by the terms” of the contract.
JJJ
real estate guy,
I understood your comment, and disagree. If there was a program that allowed for strategic defaulters to hurry it up, I think we could sell ’em as fast as they could process them.
Not everyone comes to the conclusion to default for the same reason, or at the same time, but if there was some sort of amnesty program that allowed for them to all hit the market quickly, we’d sell them. How many are there?
Since 1/1/08 these are the trustee-sale results in SD County:
Back-to-bene = 33,334
3rd party buy = 4,943
Total = 38,277 or 1,367 avg. per month
There were 73,959 sales, or avg. 2,641 per month, on the MLS during the same time. Could we handle 50,000 REO listings over the next 2.5 years? I think so, but it would likely push out the regular sellers who would hesitate on listing for a sharper price.
At least in San Diego we could use more well-priced inventory – we could easily absorb another 500-1,000 REO listings per month in this county today, at today’s prices. If supply overwhelms demand, price will fix it – bring them on, and let’s find out!
Here are the April attached and detached sales in SD County:
2000 – 3,186, $168/sf
2005 – 4,160, $367/sf
2010 – 2,793, $242/sf
My second remark was my hope.
We may find out how much we can handle, record-setting REOs, up 22%:
http://www.calculatedriskblog.com/2010/05/fannie-freddie-fha-reo-inventory-surges.html
JJJ–Right you may be, but it is HOW someone walks away that counts in my books. If someone can make the payments, then they should make those payments until they can arrange to deed the property back to the bank–if the bank refuses the DIL, then yes stop making payments–it is the bank’s choice to go the foreclosure route. At that point, do NOT delay the foreclosure and vacate without bringing in the Marshall. Furthermore, leave the home clean and in good condition with all fixtures in tack.
@ Local Boy,
I understand that “how” matters to you, and I appreciate that. However, (a) if you have paid for a right, to allow yourself to be foreclosed upon, and (b) decide to exercise that right, then the reason you exercise it is really moot. The contract doesn’t really consider the societal or economic costs or implications of the individual’s decision, which is what bothers many posters here.
Strategic defaults certainly enjoy a benefit past the point they stopped paying their mortgage. And, it seems obvious to me that whomever holds the mortgage enjoys some benefit from having the home occupied. At the point the mortgage holder incurs more costs than they do benefits, they the mortgage holder should take possession.
I suspect that there are many reasons the mortgage holders have been slow to take possession. One big reason I have read is that the faster they take properties back, the sooner we’d know the amount of bad paper on their books. So, maybe their slow paper shuffle is purposeful. If so, statements from Jim the Realtor about “wild fire” (with which I entirely agree) might just be scaring the pants off the people holding the paper.
JJJ
JJJ–Your point has been well taken, contractually those who walk away are not crimianals. The debate has been over “morals.” The problem I have are with those who, while they are “Walking Away,” choose to strategically take the bank for what they can. They can delay the foreclosure process to remain in the house as long as they can for FREE. They can sell their appliances on craigslist prior to foreclosure–after all, it is still their house, nothing illegal with that!!! Legally, while “Walking Away” they can plug up the tubs and sinks and let the faucets flow, after all it is still their house! How about moving out and renting the house to an unsuspecting family–I have seen first hand ALL of those examples. Morally, it is about HOW they Walk Away!
I keep hearing all these vague comments about how much a foreclosure will effect your credit score.Are any of you familliar with any real numbers?
If you are worried about your credit score than a deed in lieu would be the better way to go.for those who think free rent for a year has more value than feel free.
Do any of you know what accounts for acceptance of a deed in CA? In CA the grantor only needs to sign a deed.So what accounts for acceptance?If you fill out a deed, have it notarized and send it certified mail will that work?
To those commenting that it’s OK to default and give the property back to the back – when the market rebounds, be sure to share your gain with your lender when you sell your home. With the losses banks are having due to the RE downturn, is it beyond Congress to force Borrower’s into a ‘profit sharing’ plan with your lender? If the bank is expected to shoulder the loss, why should you get to keep all the gain? Maybe if you walk away, you should be relegated to ‘renter class’ the rest of your life since debtor prison no longer exists. But then who would the banks lend to?
@ real estate guy,
Professor Brent T. White (the gentleman that 60 Minutes used in his piece) appeared a few times on NPR over the past few months. On one show, called Talk of the Nation (see below), he addressed some of the credit issues one could encounter related to strategic defaults. However, since he is not a credit expert, I only recall him mentioning general credit issues (problems) that one could experience.
Here is White on All Things Considered in December 2009.
Professor: Some Homeowners Better Of Walking Away
http://www.npr.org/templates/story/story.php?storyId=121911468
Here he is White on Talk of the Nation in January 2010.
http://www.npr.org/templates/story/story.php?storyId=122573604
By the way, Jim the Realtor’s title for this story is certainly apropos, “Strategic Defaults Go Mainstream.” 60 Minutes sure has revealed its “mainstreamness” by being so far behind the times regarding this discussion.
I remember watching 60 Minutes decades ago, when they’d be leading it. Morely needs to retire.
JJJ
GW – the bank was the one who failed to do their due diligence when it came to the loan. They tossed lending standards into the bin, handed out jumbo loans to anyone who could fog a mirror and were more than happy to give people enormous sums of money without any income documentation.
They deserve everything they get.
Banks? Losses? They are back-stopped by Freddie and Fannie for their current loans. All taxpayers are footing this bill, whether we own property or not.
Jim’s nailed it again… if everyone underwater walked away then the flood of inventory would “normalize” prices overnight, and everyone that wants a house would buy one — myself (and shadash and CA Renter and erica and on and on and on) included.
The only thing that would be in short supply would be Jim himself!!! 🙂
Actions without consequences lead to more insanity.
Bring back the Debtors Prison. Problem solved!
Oh wait, we can’t because that would make people accountable for their actions and that isn’t very loving.
Bring back non-securitized direct lending. Debtors prison won’t be needed.
“They deserve everything they get.”
Including the massive taxpayer handouts?
Pemeliza – those taxpayer handouts, while patently offensive at first glance, were to cushion 401k’s and pension funds.
Had the big pension funds been disallowed from investing in the FIRE sector, we would have been able to let these guys fail.
We weren’t bailing out the banks, we were bailing out the retirements of millions of Americans. Which should never have been allowed to happen in the first place.
Absolutely right, tj!
We refuse to play this game as long as everything is being manipulated against us.
Bring on the foreclosures already!