I’ll be speaking briefly on the radio today on the 94.9 KUOW show The Conversation With Ross Reynolds with guest host Guy Nelson. The subject is the growing number of foreclosures. Here’s the segment teaser that they sent me:
Foreclosures are up in Washington State. What’s your experience with foreclosure in this housing market? You can call into the program today between 12:40 and 1 pm at 206.543.KUOW (5869) / 800.289.KUOW. Or call our listener line to leave a message before the show: 206.221.3663.
The show’s producer asked me what my take is “on the foreclosure problem / solutions,” to which my succinct response was that “it is a regrettable mess, but unfortunately one that must play out in order for the housing market and the economy as a whole to return to a healthy state of sustainable growth.”
Guy’s other guest will be Linda Taylor, Housing Director at the Urban League, who I am told has a “different perspective.”
Update: Here is the audio from the segment. I come in about 7:45 into it.
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Sweet. I’ll be tuning in.
Linda Taylor says someone with a foreclosure on their record will be knocked out of the housing market for 10 years…..That sounds innacurate.
Jumbo/Subprime call-in borrower says he got $15K in principle reduced and a 3% rate on a loan mod.
The Tim now being interviewed.
Just caught the last ten minutes, you came across well Tim, and you and Linda seemed to be in agreement most of the time!
More good publicity for seattlebubble.com (as opposed to potential new name . . . hint hint)
That “different perspective” didn’t turn out to be too different after all. I was ready for heated debate. Nice job Tim.
RE: singliac @ 6 – Yeah I was a bit surprised. At the beginning before I came on she was talking about how people should never ever “walk away” from their homes, but then when I suggested that that plan might make the most economic sense for some people, she agreed.
I thought it was a nice interview. Tim was very balanced and did a good job at highlighting the pros and cons of staying in your home or walk away.
“If you are only 5% under water and can afford it to make the payments, it might be an option to stay in the house. Others might want to walk away and become responsible renters for the next 5 to 10 years.”
I liked the work “responsible”.
By Jillayne @ 2:
It is inaccurate under the current rules, but who knows what the future rules will look like.
Dang………….Tim, couldn’t you have gotten me on the show! I would love to discuss with her financial commonsense and strategic default.
Anybody keeping track of Steve Tytlers broker friend who continues to pay on his 500k mortgage with a value of 200k? I will assume by now hes initiated short sale or stopped payments. If he hasn’t I would just love to meet the guy to see what makes him tick.
Read this a while back about walking away.
Ditch the mortgage payment and rent for less
California homeowners find strategic default and becoming renters the new American dream.
http://articles.moneycentral.msn.com/SmartSpending/blog/page.aspx?post=1422649&_blg=1,1422649
Posted by Teresa Mears on Friday, December 11, 2009 5:02 PM
Is defaulting on your underwater mortgage and then renting a better house for less money the new American dream?
The Wall Street Journal this week wrote about several families in California who did just that and are happier for it.
RE: shawn @ 11 –
I don’t quite get it . They bought the house for $430,000 and they sold it in a short sale for $195,000. They are still left with a debt of $235′000. Was the remaining debt simply waived?
RE: Kary L. Krismer @ 9 –
I’m sure that those seeking to sell homes, handle the buying/selling of homes, lend money for homes, provide other closing/transaction services, and/or collect taxes on the transaction will soon enough modify their “standards” so that their interests and paychecks remain safe. Maybe the government will come up with a program where you have to take a class, but then your credit is cleared, kind of like taking a defensive driving class to clear a traffic ticket? At a minimum, a transgression more than 18 months old will be ignored.
Does that make me a cynic? Does it matter?
RE: HappyRenter @ 12 –
In some states or situations a short sale doesn’t clear the deficiency/debt. But just because it isn’t cleared doesn’t mean the banks have a chance in hell of ever collecting it. Possession being 9/10ths of the law, how are the banks going to get the money from you if you really don’t want to pay?
…
RE: Scotsman @ 13 – yes, I don’t see how our system would allow a large number of potential borrowers to be out of action for very long. Defaults between 2006-2009 will be overlooked by future lenders as an anomoly.
RE: shawn @ 11 –
You gotta love the paragraph…….The WSJ story also noted that the family had bought a $1,800 dining set, season tickets to Disneyland and were planning a cruise to Mexico with the money they were no longer spending on mortgage payments.
Ohhh, how soon we forget the lesson.
RE: HappyRenter @ 12 – What I found of interest was that walking away from a mortgage and renting was being called the “New American Dream”. The reasons were because they now felt free and were able to do and buy things that otherwise they were deprived of due to having to spend 57% of their income on a property that was greatly underwater.
By HappyRenter @ 12:
This would depend in part on state law. For example, I believe in California if the debt is purchase money (the original loan on the house) the lender cannot collect a deficiency. In Washington they can typically collect, absent waiving the deficiency being part of the agreement. There willingness to do so depends on the bank and the situation. In the case of an 80/20 chances are the 20 wouldn’t release.
Also, there’s some new government policy going into effect aimed to expedite short sales, where to participate in the program the first has to agree in advance to waive the deficiency.
By Cheap South @ 17:
Well at least the dining set is probably still worth about $400. ;-)
RE: Scotsman @ 13 –
That’s likely what is going to happen.
Credit dents in general will be like the Snuggies of the future. They won’t be all that bad because everyone will have one…
Strategic Defaults….coming to a neighborhood near you soon.
My opinion is that nothing should be done to help those whom foolishly purchased more home than they could reasonably afford. I did not get myself into unmanageable debt. So, where’s my free down payment and 3% interest rate for the time when I might purchase a home in the future.
“Oh, I see that you’ve spent more than you can afford. Well, we’ll just have to reduce your interest rate and maybe drop off some of the original principle.” What a bunch of buell"chocolate"e.
Hmm. The audio seems to cut off just after you come in. Any chance we could get a link to the whole thing for those of use too lazy to search the interwebs?
RE: RoommatesTennant @ 24 – The link in the post that is on the text “The Conversation With Ross Reynolds” goes to the page for that specific show which has an mp3 download link for the entire show on the right side.