[pedalling_faster]

i'm looking at a property that would leave me with about a $130K loan.

i understand the advice about "get out of debt", but i think there's something to be said for borrowing in 2010 dollars and re-paying in 2025 dollars. if there are any dollars left.

ON THE CONDITION THAT you have sufficient income/savings to cover the loan. for a $130K 30 year loan the payments would be about $700 a month.

SO MY QUESTION IS - what happens to loans like this during the various disasters that PeakOilers prep for ?

#1 Currency Devaluation/ Major Inflation - this outcome doesn't seem so bad.

#2 Medical emergency eats up savings, you could end up homeless. i'm not sure what you would do in this situation, except possibly, for example in a case of cancer or end-of-life care, to choose to go without the medical care so that you leave something worthwhile behind for your heirs.

for the property in question, there is some pressure to use B of A. i detest B of A, i have negative trust in B of A - i expect them to screw me.

is it possible for banks with B of A ethics to change a loan terms somehow so that what seems like a sure deal becomes a nightmare - assuming you make your mortgage payment ?

the mortgage payment on this is less than my current rent, and that $6500 tax credit for repeat home buyers
http://www.federalhousingtaxcredit.com/faq2.php
really does provide an incentive. i would pay $10K down, but then i THEORETICALLY would get a check or tax credit for about $6500 that would cover 9 1/2 months mortgage.

it's mighty tempting. just trying to decide if it's healthy temptation or unhealthy temptation.

[Dr. Ofellati]

Banks run this show.

There's your answer.

[mcgowanjm]

i understand the advice about "get out of debt", but i think there's something to be said for borrowing in 2010 dollars and re-paying in 2025 dollars. if there are any dollars left.

That's the bait. Guess who the critter is that the bait's put out for?

Debt meet slave.

[patience]

Our county has U6 UE of 20%+. A 3 BR brick ranch on one acre, way out of town, recntly sold for $10,000 for taxes. Rundown a bit, but not bad. There are more houses listed in our county than ever before, and NOTHING is selling.

Wait. By the time this bottoms out, you can buy that same house for the current down payment amount.

[TreeFarmer]

When you borrow money to buy a house, you not only have a mortage on that house, you have mortgaged everything you have. If you don't make the payments, the bank can take the house, sell it, and the sue you for any shortfall.


Don't borrow money unless you mortgage an item and that is the only item the lender can take if you don't pay.

TF

[mcgowanjm]

When you borrow money to buy a house, you not only have a mortage on that house, you have mortgaged everything you have. If you don't make the payments, the bank can take the house, sell it, and the sue you for any shortfall.


Don't borrow money unless you mortgage an item and that is the only item the lender can take if you don't pay.

TF

And when you are 'renegotiating' the terms in programs like 'HAMP',
the loan goes from non recourse to recourse.

Option ARMs and Recast Shock Syndrome: Toxic Financial Products ...
These loans are imploding like their subprime siblings. ... the buyers that they would be able to refinance the loan with more affordable terms. .... the bank takes EQUITY in the home (if the home prices go up from that renegotiated price) ... FGR, I believe you mean changing the loan from non-recourse to recourse? ...

www.doctorhousingbubble.com/option-arms ... -examini...

10% of California Mortgage holders are delinquent.

[dsula]

Now is a great time to buy a house. It is unrealistic to assume house prices will keep falling. People need a place to live as much as they need food. If you loose your income you're screwed the same way whether you rent or own.

[Dr. Ofellati]

When you borrow money to buy a house, you not only have a mortage on that house, you have mortgaged everything you have. If you don't make the payments, the bank can take the house, sell it, and the sue you for any shortfall.

Only true is some states.
In other states - Cali I believe - the loans are non-recourse, which means that all the bank can do is take your house. Walk away at any time by mailing in the keys.

[mcgowanjm]

When you borrow money to buy a house, you not only have a mortage on that house, you have mortgaged everything you have. If you don't make the payments, the bank can take the house, sell it, and the sue you for any shortfall.

Only true is some states.
In other states - Cali I believe - the loans are non-recourse, which means that all the bank can do is take your house. Walk away at any time by mailing in the keys.

OMG, I think non recourse/recourse loans will go all the way to SCOTUS.

I went looking for info to see which states did what and
found out that the Crossroads Mall in OKC (remember the one with the working oil well, but the Fed didn't get the mineral rights
when it took over the BK Mall?) is owned by a prominent Arkansas
Realtor Group:

Attorneys for Flake, Rogers and Mathias counter that the plaintiff's interpretation of operative agreements are based on "erroneous facts" and that the loans remain non-recourse, with only the property securing the loan.

http://www.arkansasbusiness.com/article ... 9928&cID=c

[PrestonSturges]

NEVER walk away, because increasingly the banks are not foreclosing because they don;t want to be stuck with the property. Then walk-away owner still owns a gutted crack house that has no insurance.

Lots of people are just living in their hoses without paying because not even the bank wants it.

Debt could be a good thing, and if the value of money goes to zero, use it to pay off that loan fast before the fed revalues everything by tacking on several zeros to the principal of your mortgage.

[eXpat]

Now is a great time to buy a house. It is unrealistic to assume house prices will keep falling. People need a place to live as much as they need food. If you loose your income you're screwed the same way whether you rent or own.

Nop, house prices will keep falling, unemployment will keep growing and oil prices will keep their way up. Albeit the downhill is gentle (for now) it is downhill.

[Maddog78]

Nop, house prices will keep falling,

Depends where you live.
Where I live, prices are up 15% this year to an all time high.
This recession didn't hit everywhere the same way.
No, it's not in the U.S.

[rangerone314]

Now is a great time to buy a house. It is unrealistic to assume house prices will keep falling. People need a place to live as much as they need food. If you loose your income you're screwed the same way whether you rent or own.

Nop, house prices will keep falling, unemployment will keep growing and oil prices will keep their way up. Albeit the downhill is gentle (for now) it is downhill.

House prices will not fall beyond a certain point.

People need a place to live, the population is increasing.

Inflation alone could jack up house prices.

Having a house with enough land and water where you can grow your own food will prove to be invaluable in the future. As is having property you can modify, etc (compared to an apartment)

[mcgowanjm]

Now is a great time to buy a house. It is unrealistic to assume house prices will keep falling. People need a place to live as much as they need food. If you loose your income you're screwed the same way whether you rent or own.

Nop, house prices will keep falling, unemployment will keep growing and oil prices will keep their way up. Albeit the downhill is gentle (for now) it is downhill.

House prices will not fall beyond a certain point.

People need a place to live, the population is increasing.

Inflation alone could jack up house prices.

Having a house with enough land and water where you can grow your own food will prove to be invaluable in the future. As is having property you can modify, etc (compared to an apartment)

You're a smart guy, ranger. Think about it:

needing a place and increasing pop means (almost nothing)
to having a shelter. Or if it did, then the Record Vacancies
would all be taken by force to live in. Problem solved.

We're in a Secular Deflationary Winter (yes Kondratieff).
That's why the $24 Trillion in US debt loan guarantees aren't
working. The tub to be filled is $1.4 Quadrillion.

Houses will fall to 3x the wage level. And further because
bubbles always move past the mean. We have at least a 45%
downfall to go. 1930 isn't the measure. 1873 is.

[mos6507]

People need a place to live

People are moving in with their relatives or getting roommates. Demand is not as inflexible as it may seem.

[Maddog78]

What a contrast to what has happened in the US!
No moving in with relatives up here.
I don't think it can carry on and we are due for a downturn in our housing market but it has been an amazing year considering.

http://money.canoe.ca/News/Economy/2009 ... 6-qmi.html

The Canadian Real Estate Association has raised its forecasts for this year and next after home sales hit a record in October.

The association forecasts national housing sales will rise 6.6 per cent this year, compared with a previous forecast for the market to be close to 2008 levels. In 2010, sales are expected to jump 7 per cent, making it the second strongest year ever for sales after 2007.

Canadian home sales reached a new monthly record in October as record low interest rates and pent up demand brought buyers back into the market.

The CREA said seasonally adjusted home sales hit 45,818 units in October, 2 per cent higher than the previous record set in May 2007 and 74 per cent higher than in January when activity dropped to the lowest level in a decade. New records for the month were set in about a fifth of local markets, including Toronto, Montreal and Ottawa.

The average prices also reached a new high for the month, jumping 21 per cent over the same month last year. The national residential average price rose to $341,079.

"New listings are still expected to rise in the coming months in response to headline average price increases," said CREA Chief Economist Gregory Klump. "New supply dropped dramatically in December last year and earlier this year in response to a difficult pricing environment. Sellers who moved to the sidelines should be drawn back to the market as prices rise further over the rest of the year and in early 2010."

The sharp rise in resale housing demand has shrunk inventories. There were 194,994 homes listed for sale on the MLS system at the end of October 2009. This is 20.8 per cent below the peak reached in October of last year, and the sixth month in a row in which inventories are down from year-ago levels.

Canadian home sales reached a new record in October as record low interest rates and pent up demand brought buyers back into the market.

The Canadian Real Estate Association said seasonally adjusted home sales hit 45,818 units in October, two per cent higher than the previous record set in May 2007 and 74 per cent higher than in January when activity dropped to the lowest level in a decade. New records for the month were set in about a fifth of local markets, including Toronto, Montreal and Ottawa.

The average prices also reached a new high for the month, jumping 21 per cent over the same month last year.

The national residential average price rose to $341,079.

"New listings are still expected to rise in the coming months in response to headline average price increases," said CREA Chief Economist Gregory Klump. "New supply dropped dramatically in December last year and earlier this year in response to a difficult pricing environment. Sellers who moved to the sidelines should be drawn back to the market as prices rise further over the rest of the year and in early 2010."

The sharp rise in resale housing demand has shrunk inventories. There were 194,994 homes listed for sale on the MLS system at the end of October 2009. This is 20.8 per cent below the peak reached in October of last year, and the sixth month in a row in which inventories are down from year-ago levels.

[AirlinePilot]

We still have a good way to go to get to the bottom of the housing price downturn. IMHO another 20% or so. May take a few years but thats where it has to go for traditional norms.

UE is going to continue to increase without some major change in the current paradigm that is the US economy.

Currently there is a RECORD shadow inventory (properties banks decide not to send out NOD's or foreclose on due to the losses they incur by doing so) This "shadow" inventory is growing rapidly. IMHO this means that banks would rather you stay in the home and maintain their asset even for no money, while this crisis exists. When things begin to get better, if they ever do, that is the time they will start calling in notes and foreclose on things. Otherwise its likely you can remain in the home and either not pay or work out some new paymnet schedule which gets the bank something and allow them NOT to list the property as a loss/foreclosure.

The Loans will still exist, but my guess is there will be a government mandated moratorium on foreclosing and NOD. Otherwise you just add fuel to any collapse crisis with even more social unrest. Sounds ridiculous but welcome to the land of tinfoil reality. What was tinfoil stuff two years ago is now the norm.

[Dr. Ofellati]

Nop, house prices will keep falling,

Depends where you live.
Where I live, prices are up 15% this year to an all time high.
This recession didn't hit everywhere the same way.
No, it's not in the U.S.

This is an example of why you cornutrolls are all clones - you don't post here to make points that you believe are valid - you post to be contrary.

The five of you clones all remind me of an ex girlfriend. Truly the only person on the planet I ever wanted to strangle. Argue for the sake of arguing. I say "you go first," she says, "why me?" I say, "ok, I'll go first," she says, "what, you always have to be first."

I harassed a vegan forum for about 2 days. And a Buffalo Bills forum for a few posts.

I still done understand what drives you clones to post here constantly.

How empty is the rest of your life that you waste time posting in a forum just to be contrary.

[Maddog78]

So no comments on the housing boom in Canada?
Just a harangue against people who don't see doom everywhere?

My house is now worth $75000 more than it was a year ago.
Yeah, I've got a lot to be depressed about there.

How empty must your life be to go to forums that you seem to care nothing about just to harass people?

[PrestonSturges]

People need a place to live

People are moving in with their relatives or getting roommates. Demand is not as inflexible as it may seem.

Look at the movie "Shawn of The Dead" for the English response to the real estate bubble - three women share a flat, three guys share a house. Pushing 30 and living like college kids with slightly better furniture. The collapse of the bubble would lead to a similar outcome.

Home ownership seems to be an economic sweet spot that may never return.