Got an amazing call yesterday. Need a venting moment…

“Legitimate buyer” referred from a Realtor rings me up. Person was upset, wondering why they were having trouble getting a loan. They had several past homes they paid off on time, but the last one was a short sale in August. The bank ate about 100k when they exited the property. “It was a bad investment, but that shouldn’t reflect on my ability to make a new house payment”.... There was such a disconnect between reality and responsibility it was jarring to say the least.

It got a bit weirder from there. The down payment funds were in gold. Yes, gold coins, scrap, and a few bars. This person asked if there was some way to use this asset for cash down without putting it in the bank “so I don’t have to pay taxes on it”. The conversation devolved from there about how her Attorney was going to try and remove the short sale from her credit report. I suggested that I was unable to help and that they continue with their attorney with any future questions.

One would think that if you capsized on your home in August, the last thing your going to do is try for a new home purchase with untraceable down payment resources. There was no shame or remorse that I would have expected from anyone in a similar situation. Why this Realtor was even working with them is a separate discussion as well. The Agent was a Jr assistant to a more experienced Realtor I’ve worked with for years so I’ll chalk it up to naivete

Is zero remorse for short sellers / intentional walk away’s the new norm or is this experience an aberration?

Soylent Green Is People

I know a guy who assumes no responsibility, and instead is upset with the bank for not giving him a loan mod.  Making the bank eat the loss is the bank’s fault for not working with him.  Around the same time frame as him walking away (probably just before I would guess), he bought a brand new $3x,xxx car.

That seems a little bizzare he would tell you that. Possibly part of an (amateur) expose investigation into mortgage lenders?

As a practical matter, assuming a bank accepted a downpayment in gold, cattle or cash, there would still be a record of the value that was put down. No need that it go in the bank to trigger IRS issues.

SGIP, can anonymously turn this person in to the IRS?

anyone can turn anyone in to the IRS.

SGIP-  thanks so much for sharing this story with us.  I’m beginning to think that all these lunatics are getting away with their selfishness-  nice to see that an insider is saying “No Way”.

furious sugar - 18 November 2009 10:12 PM

SGIP-  thanks so much for sharing this story with us.  I’m beginning to think that all these lunatics are getting away with their selfishness-  nice to see that an insider is saying “No Way”.

I feel the same way. I’ve been feeling like an idiot for trying to follow the rules, while other people seem to be rewarded for their greedy and irresponsible real estate decisions. I’m glad at least one person is having to deal with the consequences.

furious sugar - 18 November 2009 10:12 PM

SGIP-  thanks so much for sharing this story with us.  I’m beginning to think that all these lunatics are getting away with their selfishness-  nice to see that an insider is saying “No Way”.

I think walking away is now socially accepted and seen as the smart financial move and socially not an indication of whether a borrower can or can’t pay. Plus, maybe they assumed you’ve seen it all in your line of work and helped others that were much worse offenders then them. You also came as a recommendation and maybe was told you were fantastic and could get anyone a loan. who knows, but most of these people don’t think it’s their fault is the perception I get.

qwerty - 18 November 2009 10:05 PM

anyone can turn anyone in to the IRS.

And you may get a reward for your trouble.  And, oddly enough, you may get audited.

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse.  One of them is actually just leaving his place vacant, screwing the bank even more.  He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s too hard to put a blanket reason over every ones “walk away” circumstance. I’d guess most on this board are sympathetic to anyone who has a legitimate reason for getting out of their debt - job loss, death of family member - and other natural causes of hardship. It’s the entitlement mentality that frosts me to no end.

“It’s not my fault I signed a 100 page document explaining what happens if I over leverage a property I couldn’t afford anyway. It’s YOUR fault for being so responsible with your income that forces, no, compels me to keep up with you. YOU made me buy that Hummer. YOU made me reach ever higher until the crushing weight of responsibility pushed me over the edge.

Bleh…

I forgot to add another part of the conversation. This person went down the usual path as their options narrowed: “What if my parents buy the house and I make the payments?”. OK. It’s legitimate. I ask where they live: Chino… What they do: they’re retired.. Where the funds would come from (this is where the gold conversation started).... eventually the conversation terminated as it should have of a half hour ago. I know this sounds somewhat made up. I wish I had recorded it.

Using your 70 year old parents to re-inflate your faux lifestyle adds even more sting to the story.

My .02c

Soylent Green Is People.

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I can accept fault….I broke the dam!

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cant embed?

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RoLar_USC - 19 November 2009 12:08 AM

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I keep thinking it is about time for the pyramid schemes to come back.

awgee - 18 November 2009 11:48 PM

qwerty - 18 November 2009 10:05 PM

anyone can turn anyone in to the IRS.

And you may get a reward for your trouble.  And, oddly enough, you may get audited.

The phrases “out of sight, out of mind” and “leave a sleeping dog alone” comes to mind when thinking about the IRS.  Staying out of their radar screen = a good thing.

awgee - 19 November 2009 12:20 AM

RoLar_USC - 19 November 2009 12:08 AM

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I keep thinking it is about time for the pyramid schemes to come back.

Come back? Where have they gone? I guess your circle of friends may not be involved in them but I have one particular friend who has tried to drag everyone he knows into a few of them in just the last year (internet travel programs and organic teas and supplements). He has become increasingly more angry with those of us that just can’t see what a “great opportunity” they are. He is also my only real estate agent friend outside of the IHB. Not hard to figure out how business is going.

tmare - 19 November 2009 12:53 AM

awgee - 19 November 2009 12:20 AM

RoLar_USC - 19 November 2009 12:08 AM

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I keep thinking it is about time for the pyramid schemes to come back.

Come back? Where have they gone? I guess your circle of friends may not be involved in them but I have one particular friend who has tried to drag everyone he knows into a few of them in just the last year (internet travel programs and organic teas and supplements). He has become increasingly more angry with those of us that just can’t see what a “great opportunity” they are. He is also my only real estate agent friend outside of the IHB. Not hard to figure out how business is going.

I am not refering to multi level marketing or anything else which has an actual product attached to it.
The pyramid schemes I am thinking about are those where you put in a $1000 and get back $15,000 or how ever much.  Remember those?

awgee - 19 November 2009 01:26 AM

The pyramid schemes I am thinking about are those where you put in a $1000 and get back $15,000 or how ever much.  Remember those?

What, speculation in CA real estate wasn’t good enough for you?

I have a customer who is the goat in an ongoing ponzi scheme.

awgee - 19 November 2009 01:26 AM

tmare - 19 November 2009 12:53 AM

awgee - 19 November 2009 12:20 AM

RoLar_USC - 19 November 2009 12:08 AM

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I keep thinking it is about time for the pyramid schemes to come back.

Come back? Where have they gone? I guess your circle of friends may not be involved in them but I have one particular friend who has tried to drag everyone he knows into a few of them in just the last year (internet travel programs and organic teas and supplements). He has become increasingly more angry with those of us that just can’t see what a “great opportunity” they are. He is also my only real estate agent friend outside of the IHB. Not hard to figure out how business is going.

I am not refering to multi level marketing or anything else which has an actual product attached to it.
The pyramid schemes I am thinking about are those where you put in a $1000 and get back $15,000 or how ever much.  Remember those?

Yes, I remember those well. I think so many people got burned that they had to add little products in to make it seem legit. It’s still the same idea. You may be right, though, people might become just desperate enough to buy into those again. I still can’t figure out who is still responding to all of those foreign e-mails about winning a lottery or not having anywhere to put an inheritance, they must be out there because I’ve received at least 10 of them in the last few weeks in my spam box.

But, once again I am totally off topic. Back to the topic. The most recent foreclosure family in the neighborhood moved out about 2 months ago. As they left to move in with family members they told another neighbor that they were going to use the savings they had (from not paying the mortgage for 18 months) to buy another house by using another family member’s name and credit. Unbelievable.

tmare - 19 November 2009 01:42 AM

awgee - 19 November 2009 01:26 AM

tmare - 19 November 2009 12:53 AM

awgee - 19 November 2009 12:20 AM

RoLar_USC - 19 November 2009 12:08 AM

trrenter - 18 November 2009 11:49 PM

I know half a dozen people that have either turned the keys over to the bank or are waiting out the extended foreclosure process.

Only one of them shows an ounce of remorse. One of them is actually just leaving his place vacant, screwing the bank even more. He moved out of state and hasn’t payed the mortgage in 18 mos. but just left the house.

One of these people turned two houses back to the banks at a loss while driving their lexus and keepign the timeshare and exotic vacations.

The stigma is gone.

It’s a sad reality we are heading into an era of lack of accountability. It’s not just real estate. It’s obvious in all aspects of life; the general population is no longer capable of accepting fault. And, because of that, there will be a growing number of ponzi/financial schemes, because people do not take the necessary time to fully understand situations/deals that they are entering into and the government supports the lack accountability.

I keep thinking it is about time for the pyramid schemes to come back.

Come back? Where have they gone? I guess your circle of friends may not be involved in them but I have one particular friend who has tried to drag everyone he knows into a few of them in just the last year (internet travel programs and organic teas and supplements). He has become increasingly more angry with those of us that just can’t see what a “great opportunity” they are. He is also my only real estate agent friend outside of the IHB. Not hard to figure out how business is going.

I am not refering to multi level marketing or anything else which has an actual product attached to it.
The pyramid schemes I am thinking about are those where you put in a $1000 and get back $15,000 or how ever much.  Remember those?

Yes, I remember those well. I think so many people got burned that they had to add little products in to make it seem legit. It’s still the same idea. You may be right, though, people might become just desperate enough to buy into those again. I still can’t figure out who is still responding to all of those foreign e-mails about winning a lottery or not having anywhere to put an inheritance, they must be out there because I’ve received at least 10 of them in the last few weeks in my spam box.

But, once again I am totally off topic. Back to the topic. The most recent foreclosure family in the neighborhood moved out about 2 months ago. As they left to move in with family members they told another neighbor that they were going to use the savings they had (from not paying the mortgage for 18 months) to buy another house by using another family member’s name and credit. Unbelievable.

And the cycle continues…

Homeownership can be stronger than meth addiction.

Soylent Green Is People - 18 November 2009 11:49 PM

It’s too hard to put a blanket reason over every ones “walk away” circumstance. I’d guess most on this board are sympathetic to anyone who has a legitimate reason for getting out of their debt - job loss, death of family member - and other natural causes of hardship. It’s the entitlement mentality that frosts me to no end.

“It’s not my fault I signed a 100 page document explaining what happens if I over leverage a property I couldn’t afford anyway. It’s YOUR fault for being so responsible with your income that forces, no, compels me to keep up with you. YOU made me buy that Hummer. YOU made me reach ever higher until the crushing weight of responsibility pushed me over the edge.

Bleh…

I forgot to add another part of the conversation. This person went down the usual path as their options narrowed: “What if my parents buy the house and I make the payments?”. OK. It’s legitimate. I ask where they live: Chino… What they do: they’re retired.. Where the funds would come from (this is where the gold conversation started).... eventually the conversation terminated as it should have of a half hour ago. I know this sounds somewhat made up. I wish I had recorded it.

Using your 70 year old parents to re-inflate your faux lifestyle adds even more sting to the story.

My .02c

Soylent Green Is People.

The fault shirking is an epidemic that the country may never be able to cure from. However I still want to believe in the responsible of America and have hope for the future. My problem is I have too much sense to not have participated in the house buying craziness (despite everyone around me telling me I was throwing away my money renting), and to continue to wait the unwinding out but with the government creating a false floor to prices my patience is being tried. I think some on the board may have a problem with people walking away from their underwater homes and may even think that it is immoral. However after reading from a variety of financial and real estate bubble blogs, I’ve decided that despite the risk of ending up with thousands of people that are like the person SGIP described (walked away and now don’t think they should be punished for it) I think walking way en-mass should be encouraged. Even with record defaults there are still too many people that are paying money to the banks on underwater assets and this cash flow along with the ability to borrow money at zero % has allowed the banks to continue to “kick the can.” The only way things are actually going to get back to fundamentals is if the banks hand is forced. Since we can’t get the FED to raise interests rates the only thing left is to cut off the banks cash flow. This could be accomplished if more and more people walk from their homes and then the banks would be forced to foreclose, offer a short sale etc which they are doing now but there doesn’t seem to be any urgency.

childplease - 18 November 2009 10:43 PM

furious sugar - 18 November 2009 10:12 PM

SGIP-  thanks so much for sharing this story with us.  I’m beginning to think that all these lunatics are getting away with their selfishness-  nice to see that an insider is saying “No Way”.

I think walking away is now socially accepted and seen as the smart financial move and socially not an indication of whether a borrower can or can’t pay. Plus, maybe they assumed you’ve seen it all in your line of work and helped others that were much worse offenders then them. You also came as a recommendation and maybe was told you were fantastic and could get anyone a loan. who knows, but most of these people don’t think it’s their fault is the perception I get.

I think walking away is now socially accepted and seen as the smart financial move and socially not an indication of whether a borrower can or can’t pay. Plus, maybe they assumed you’ve seen it all in your line of work and helped others that were much worse offenders then them. You also came as a recommendation and maybe was told you were fantastic and could get anyone a loan. who knows, but most of these people don’t think it’s their fault is the perception I get.

Is it really socially acceptable? There is part of me that understands that if you are $200K underwater on your home because you bought at the wrong time, then it really does make sense to walk away. However, I think that the people who paid way too much for a house are truly stupid, so I’m not sure I’m really socially accepting it. Only the other people who were stupid enough to think that they should buy a house when the prices were ridiculous would not look on someone else who did and not think they were stupid. Deliberate recklessness like Soy described is appalling to everyone and by no means socially acceptable. I think people like this stir up the same sentiment in most Americans as the AIGers partying it up after getting a bail out from the tax payers.