The ethical issue would be the fact that your niece would be defrauding the next lender. When your niece is applying for the loan on the next house down in the land of no allergies (the Southwest?), if they don't disclose that they are about to default on their current house, that's fraud.
I feel for people in this situation, but what happens when you make a bad investment is that you pay off the money your borrowed, if you want to be ethical.
BilliRuben, being ethical is not a business its a charity. When prime rate goes up and the bank kicks up your payment by 2% as it did for a lot of poo saps, do they go to the bank and say owwww that is unethical?
This family needs to make a descision just like a lot of others is how to squeeze through this mess, and there is not that many options out there.
As far as Sniglet saying market will drop another 30-40% might be a bit in la la land as it already has for majority of the areas including the south where most likely this family moved to. If it drops another 30-40% then nobody will really be worried about buying a house, but instead worrying where they will find a food bank.
As far as Sniglet saying market will drop another 30-40% might be a bit in la la land as it already has for majority of the areas including the south where most likely this family moved to.
Even if you find my predictions of a further 40% drop difficult to accept, there is plenty of evidence that prices have a good 15% or 20% further to drop almost EVERYWHERE. Look no further than the increasing numbers of notices of default and foreclosures occuring in places like California, Florida, and Nevada. Despite the fact those regions have already experienced significant price declines, an increasing inventory of REOs (which is INEVITABLE given that we know they are already in the pipe-line) will only drive prices down further.
In any event, even if prices don't drop further in places like Sacramento, Phoenix, or Fort Meyers, it is virtually impossible they are going to rise significantly in the next few years. Thus, renting will be a good choice no matter what. If prices fall, then you've saved yourself a pile of money when you do buy. If prices have hit bottom you can buy a couple years from now after things have scraped along the bottom for a while. In the meantime, you will be saving money by renting since rental prices are still far lower than owning almost everywhere in the country.
The only caveat in the case of your relatives is that when they finally do go delinquent on their current home, their trashed credit might make it difficult to buy in a couple years, even if prices had fallen. Still, I suspect a blackened credit rating won't be a huge obstacle. There are going to be SO many people with foreclosures on their record that lenders will have to work with them anyway. Of course, it won't be possible to buy without significant down-payments and solid employment, but that will be the case for everyone (even those with impeccable credit).
If it drops another 30-40% then nobody will really be worried about buying a house, but instead worrying where they will find a food bank.
Ah, the good ol' "no matter what happens, YOU LOSE" argument. Prices won't come down much, but if they do there will be a zombie apocalypse rip in the space-time continuum and your biggest worry will be whether eating your own children's flesh will keep you alive long enough to find a rusty knife to slit your own throat in order to end the misery.
Prices can come down a lot without ending humanity as we know it. Look at Japan. Were they so poor that they couldn't afford food during their housing bust?
Prices can come down a lot without ending humanity as we know it. Look at Japan. Were they so poor that they couldn't afford food during their housing bust?
This is an EXCELLENT point. There are plenty of examples where real-estate prices dropped by 70% or even 90% without a general collapse of the nation, or society, in question. Japan is a great case study, but so is Hong Kong, or a variety of Asian countries in the '90s (Thailand, Indonesia, etc).
Even the US has seen plenty of situations where prices fell by 40% or more in particular markets. Manhattan saw prices drop in the 40% range in the early '90s, and Florida also saw 90% declines in commercial property in the '90s as well.
The fact that many people seem to have a problem getting their noggins around is that real-estate prices are actually quite volatile, and can make huge moves either up or down. This isn't anything to fear, it's just the way things are, and it does not mean that the world is coming to an end when prices make large declines.
Ah, the good ol' "no matter what happens, YOU LOSE" argument. Prices won't come down much, but if they do there will be a zombie apocalypse rip in the space-time continuum and your biggest worry will be whether eating your own children's flesh will keep you alive long enough to find a rusty knife to slit your own throat in order to end the misery.
What I find odd is that it sounds like the family is having allergies since they moved into this house. And that there are at least two members of the family suffering from them. The first thing that comes to my mind is mold. Have they investigated to see if mold could be the problem? Normally the Seattle area is pretty good for allergies in general, but in the spring we get ragweed, and mold can be a problem year round but especially in the winter when our houses are are closed up...then spring comes and we go outside and get hit with the ragweed. Ragweed is everywhere, pretty much, but mold is more common in wet climates like ours. However, it can be addressed within the home, in most cases, which would negate the need to move (I assume however, that this possibility has been explored).
If you want to protect your credit, and if you want to be able to buy a home again in the near future, then it's important to at least make a good faith effort to live up to the obligations that you enter into with a lender. I would not recommend to stop making payments before entering into a discussion regarding short sale or other options. Some lenders may not be willing to talk about it but I think it's outdated information to automatically assume that lenders aren't willing to talk. A lot has changed in the last 6 to 12 months and one of the things that has changed is that banks are no longer under the impression that they will get more out of the house by foreclosing than by working out an agreement with a borrower. Some still won't, but it's not universally true that you won't get anywhere. Ask S-Crow if you don't believe me, but short sales ARE happening and are becoming more common.
In a case like this, there are options but it's important to work from a place of good faith if you want future lenders to see you as a good risk. I think how borrowers handle themselves now is going to have a big impact on their ability to buy a home in the future. Yes, if you do a short sale, or any variation on that theme, your credit will take a hit but how big of a hit depends on how you work it out. If the home is able to be sold short (which depending on the loan servicer, this is a possibility), it's possible to work out a payment on the deficiency and maybe rent for a couple of years until that is paid off. As folks on this board are always pointing out, renting is not the end of the world and in some cases is the best option. Two years, or even five years, is not forever.
There are lots of ways to handle this, but almost all of them require talking to your lender about the situation and working from a place of wanting to make good on your obligations. And, I think we would all do well to remember that a mortgage IS an obligation--if you walk away from that obligation, the bank is legally entitled to go after you with all the tools at their disposal.
Also, regarding costs of sale, there are TONS of real estate companies that charge less than 6%. HelpUSell, MLS4Owners and Redfin are just a few. Many agents also take on cases like this to help out homeowners in need. And there is always the straight FSBO route, which, if the house is priced really well, can work.
The main thing is that you can't approach a situation like this from a position of hopelessness or it will always appear that you have fewer options than is the case. I don't mean to say that this is the case here, more that for anyone reading this thread, it's important to explore all the alternatives and not to discount any of them just because you heard somewhere that the option isn't available.
Prices can come down a lot without ending humanity as we know it. Look at Japan. Were they so poor that they couldn't afford food during their housing bust?
This is an EXCELLENT point. There are plenty of examples where real-estate prices dropped by 70% or even 90% without a general collapse of the nation, or society, in question. Japan is a great case study, but so is Hong Kong, or a variety of Asian countries in the '90s (Thailand, Indonesia, etc).
Even the US has seen plenty of situations where prices fell by 40% or more in particular markets. Manhattan saw prices drop in the 40% range in the early '90s, and Florida also saw 90% declines in commercial property in the '90s as well.
The fact that many people seem to have a problem getting their noggins around is that real-estate prices are actually quite volatile, and can make huge moves either up or down. This isn't anything to fear, it's just the way things are, and it does not mean that the world is coming to an end when prices make large declines.
Gee, how about we look at the good old US of A. Didn't prices plummet around 40% in housing during the depression? Wasn't that actually two depressions, one starting in '29 and the other in '34 (I think). Times were tough right? I've heard a lot of stories about how people had to make due with whatever clothes they had, how they lived without plumbing or electricity, and how they lost their jobs. We've seen pictures of people at soup lines and such. But I've never actually heard stories of people who just plain couldn't get food. We might be looking at less than stellar times, but don't believe those most dire predictions.
Well, just trying to make some perspective. We are so far removed from a true fight for survival now, that sometimes we elevate less serious catastrophies beyond where they belong.
Let me put it this way, I feel like I would have a better chance of living through a 2nd great depression than say a cyclone in Myanmar. If someone is worried they'd have to do without nice clothes because of a depression, they are right. If they say you might have to eat more beans and less meat, they are right. But if they suggest you'll be worried about even finding food, they are probably exaggerating the risks.
Putting aside the victims of tornadoes, hurricanes, monsoons, tsunamis and their little problems , having to live without a tall skinny half caff latte with hazelnut syrup heated to 160 degrees would be true suffering.
1) They may have to rent and will do so if necessary but if they can buy why would they not do so?
2) The remodeling started with Hardwood floors that they hoped would help with the allergies....Still over their two years here they kept getting sicker especially their youngest daughter....who is literally bed ridden cannot go to school. (they home school her...)
They have seen the top Doctors at Children's Hosp and the Best Private Physician in this area and still do not have a full diagnosis (Seattle's version of house)...They are getting worse...and will leave soon the husband just got a job in another state.
Just look at Willow and their Charts on specific Houses for sale....There was a huge bubble in housing prices beginning in 05 and going to the fall of 07....That bubble shows a rise of about 30% and it is across the board in just about everything I have looked at....
We have been very lucky in the past not to have gone through something like this...We have been lucky it has not gotten worse...YET....
If you read my comments on the entire thread I think you will have a different perspective.
I think all your comments will be answered. The kids always had allergies they are just far worse here in Washington State then they were where they moved from. Apparently different area's of the country have different effects on allergies. allergies are not their only problem but is an important element.
Comments
BilliRuben, being ethical is not a business its a charity. When prime rate goes up and the bank kicks up your payment by 2% as it did for a lot of poo saps, do they go to the bank and say owwww that is unethical?
This family needs to make a descision just like a lot of others is how to squeeze through this mess, and there is not that many options out there.
As far as Sniglet saying market will drop another 30-40% might be a bit in la la land as it already has for majority of the areas including the south where most likely this family moved to. If it drops another 30-40% then nobody will really be worried about buying a house, but instead worrying where they will find a food bank.
Business being business.
Even if you find my predictions of a further 40% drop difficult to accept, there is plenty of evidence that prices have a good 15% or 20% further to drop almost EVERYWHERE. Look no further than the increasing numbers of notices of default and foreclosures occuring in places like California, Florida, and Nevada. Despite the fact those regions have already experienced significant price declines, an increasing inventory of REOs (which is INEVITABLE given that we know they are already in the pipe-line) will only drive prices down further.
In any event, even if prices don't drop further in places like Sacramento, Phoenix, or Fort Meyers, it is virtually impossible they are going to rise significantly in the next few years. Thus, renting will be a good choice no matter what. If prices fall, then you've saved yourself a pile of money when you do buy. If prices have hit bottom you can buy a couple years from now after things have scraped along the bottom for a while. In the meantime, you will be saving money by renting since rental prices are still far lower than owning almost everywhere in the country.
The only caveat in the case of your relatives is that when they finally do go delinquent on their current home, their trashed credit might make it difficult to buy in a couple years, even if prices had fallen. Still, I suspect a blackened credit rating won't be a huge obstacle. There are going to be SO many people with foreclosures on their record that lenders will have to work with them anyway. Of course, it won't be possible to buy without significant down-payments and solid employment, but that will be the case for everyone (even those with impeccable credit).
Ah, the good ol' "no matter what happens, YOU LOSE" argument. Prices won't come down much, but if they do there will be a zombie apocalypse rip in the space-time continuum and your biggest worry will be whether eating your own children's flesh will keep you alive long enough to find a rusty knife to slit your own throat in order to end the misery.
Prices can come down a lot without ending humanity as we know it. Look at Japan. Were they so poor that they couldn't afford food during their housing bust?
This is an EXCELLENT point. There are plenty of examples where real-estate prices dropped by 70% or even 90% without a general collapse of the nation, or society, in question. Japan is a great case study, but so is Hong Kong, or a variety of Asian countries in the '90s (Thailand, Indonesia, etc).
Even the US has seen plenty of situations where prices fell by 40% or more in particular markets. Manhattan saw prices drop in the 40% range in the early '90s, and Florida also saw 90% declines in commercial property in the '90s as well.
The fact that many people seem to have a problem getting their noggins around is that real-estate prices are actually quite volatile, and can make huge moves either up or down. This isn't anything to fear, it's just the way things are, and it does not mean that the world is coming to an end when prices make large declines.
If you want to protect your credit, and if you want to be able to buy a home again in the near future, then it's important to at least make a good faith effort to live up to the obligations that you enter into with a lender. I would not recommend to stop making payments before entering into a discussion regarding short sale or other options. Some lenders may not be willing to talk about it but I think it's outdated information to automatically assume that lenders aren't willing to talk. A lot has changed in the last 6 to 12 months and one of the things that has changed is that banks are no longer under the impression that they will get more out of the house by foreclosing than by working out an agreement with a borrower. Some still won't, but it's not universally true that you won't get anywhere. Ask S-Crow if you don't believe me, but short sales ARE happening and are becoming more common.
In a case like this, there are options but it's important to work from a place of good faith if you want future lenders to see you as a good risk. I think how borrowers handle themselves now is going to have a big impact on their ability to buy a home in the future. Yes, if you do a short sale, or any variation on that theme, your credit will take a hit but how big of a hit depends on how you work it out. If the home is able to be sold short (which depending on the loan servicer, this is a possibility), it's possible to work out a payment on the deficiency and maybe rent for a couple of years until that is paid off. As folks on this board are always pointing out, renting is not the end of the world and in some cases is the best option. Two years, or even five years, is not forever.
There are lots of ways to handle this, but almost all of them require talking to your lender about the situation and working from a place of wanting to make good on your obligations. And, I think we would all do well to remember that a mortgage IS an obligation--if you walk away from that obligation, the bank is legally entitled to go after you with all the tools at their disposal.
Also, regarding costs of sale, there are TONS of real estate companies that charge less than 6%. HelpUSell, MLS4Owners and Redfin are just a few. Many agents also take on cases like this to help out homeowners in need. And there is always the straight FSBO route, which, if the house is priced really well, can work.
The main thing is that you can't approach a situation like this from a position of hopelessness or it will always appear that you have fewer options than is the case. I don't mean to say that this is the case here, more that for anyone reading this thread, it's important to explore all the alternatives and not to discount any of them just because you heard somewhere that the option isn't available.
Gee, how about we look at the good old US of A. Didn't prices plummet around 40% in housing during the depression? Wasn't that actually two depressions, one starting in '29 and the other in '34 (I think). Times were tough right? I've heard a lot of stories about how people had to make due with whatever clothes they had, how they lived without plumbing or electricity, and how they lost their jobs. We've seen pictures of people at soup lines and such. But I've never actually heard stories of people who just plain couldn't get food. We might be looking at less than stellar times, but don't believe those most dire predictions.
Only on Seattle Bubble:
"The Great Depression? Not so bad."
You rock, RCC!
Let me put it this way, I feel like I would have a better chance of living through a 2nd great depression than say a cyclone in Myanmar. If someone is worried they'd have to do without nice clothes because of a depression, they are right. If they say you might have to eat more beans and less meat, they are right. But if they suggest you'll be worried about even finding food, they are probably exaggerating the risks.
1) They may have to rent and will do so if necessary but if they can buy why would they not do so?
2) The remodeling started with Hardwood floors that they hoped would help with the allergies....Still over their two years here they kept getting sicker especially their youngest daughter....who is literally bed ridden cannot go to school. (they home school her...)
They have seen the top Doctors at Children's Hosp and the Best Private Physician in this area and still do not have a full diagnosis (Seattle's version of house)...They are getting worse...and will leave soon the husband just got a job in another state.
Just look at Willow and their Charts on specific Houses for sale....There was a huge bubble in housing prices beginning in 05 and going to the fall of 07....That bubble shows a rise of about 30% and it is across the board in just about everything I have looked at....
We have been very lucky in the past not to have gone through something like this...We have been lucky it has not gotten worse...YET....
I think we will go back to the 05 levels.
If you read my comments on the entire thread I think you will have a different perspective.
I think all your comments will be answered. The kids always had allergies they are just far worse here in Washington State then they were where they moved from. Apparently different area's of the country have different effects on allergies. allergies are not their only problem but is an important element.