America's house price time bomb - BBC

mr.broderick

mewbie wrote: »

Come on Mr. B - you're better than that. Carole posts a lot of useful stuff on here, and gets attacked for wearing her heart on her sleeve, and being an 'easy' target to some people's eyes. Yes, she's easy to wind up, and yes she does respond in full, but let's get a bit of perspective here.

Join in the lemon thread, or post some bullish links for debating, or have a go at me instead. In fact don't have a go at me coz I am not looking for trouble.

I don't have a problem with her. If she wants to live by the sword she is going to have to die by it too.

barnaby-bear

EdInvestor wrote: »

Unlike here of course. It's definitely not a good idea to walk away here.

That's a key differentiator to the US market - you can walk away from a repo and not owe the difference between the eventual sale value and the mortgage. It's quite scary seeing acres of abandonned houses in the US.
However in recessions the majority of people are ok and unless they are forced to sell/remortgage/lose a job people tighten belts and it doesn't register. The stories being used at the moment are all pretty weird at the moment, the really stupidly overstretched/lied-to-buy, people are psychologically affected and being careful but until the repo stories here go mainstream I don't think we're in full on credit crunch/house price crash territory.

We also have very restrictive planning laws and pent up supply, building houses is expensive here - in the US you can buy a field build a shack and live... LHA/HB will have effects too (basically limit how low rents, yields and house values can fall)... it might not be pretty but it's very different set of ingredients... in the US lose your job and a trailer in a field is all you'll be able to afford...

barnaby-bear

Dithering_Dad wrote: »

Where is the put down on women? Did you not read my post?

I'll say again because you're obviously so distracted with your Uncle that you didn't understand...

I called into question carol's ability to offer financial advice not because she was a woman but because of her job, which was not related to the Financial industry in any way.

Cheesecake-gate
http://forums.moneysavingexpert.com/showthread.html?t=952315&page=11&highlight=cheesecake

I'd just get on with paying the mortgage and doing the best for your own situation...

moanymoany

For goodness sake DD - get a grip! Why the need to be so unpleasant? I wonder if there is need for a thread where you and anyone else who wants to be so unpleasant can go and just post endless nasty posts to each other?

Pobby

DD old chap. We have exchanged the odd amusing bit of banter which I have enjoyed but for goodness sake can`t we just give it a rest now. It`s getting rather tiresome!

BobProperty

And there's more (on topic) http://www.nytimes.com/2008/08/04/business/04lend.html?pagewanted=1&_r=1&em

moanymoany

BobProperty wrote: »

And there's more (on topic) http://www.nytimes.com/2008/08/04/business/04lend.html?pagewanted=1&_r=1&em

Scenario - I own a house worth $400,000 (if I can sell it) - I owe $450,000 and rising.

If I walk, the mortgagee sells the house for $300,000 (if they can sell it) and I owe the mortgagee nothing.

Downside - I have a bad credit rating for 5 years.

Difficulty making this decision?

God Bless 'Merca!

Dithering_Dad

moanymoany wrote: »

Scenario - I own a house worth $400,000 (if I can sell it) - I owe $450,000 and rising.

If I walk, the mortgagee sells the house for $300,000 (if they can sell it) and I owe the mortgagee nothing.

Downside - I have a bad credit rating for 5 years.

Difficulty making this decision?

God Bless 'Merca!

5 years is no time at all, I'd imagine most people would prefer living a frugal life in rented accomodation with no access to credit for five years, then the alternative of spending the next 10 years or more trapped in negative equity trying to manage a huge mortgage and probably running up more and more debt on loans and credit cards.

While people might put forward arguments about the responsibility of paying back your creditors, in my book this is a very distant second place to the responsibility of taking care of your family.

In the UK, unless you want to have mortgage debt hanging over you for 12 years, the only alternative is to go bankrupt. Again, probably preferable to have 6 years of living frugaly and within your means than spending a decade struggling and getting further and further into debt. The damage to your health from stress should also be taken into consideration here.

When I see people on the DFW board with neg equ. and several thousand pounds of unsecured debt, I always suggest they look at going bankrupt. There are no prizes for living like a pauper for 20 years to pay back debt, much of which consists of fines, interest and legal fees.

BobProperty

moanymoany wrote: »

Scenario - I own a house worth $400,000 (if I can sell it) - I owe $450,000 and rising.

If I walk, the mortgagee sells the house for $300,000 (if they can sell it) and I owe the mortgagee nothing.

Downside - I have a bad credit rating for 5 years.

Difficulty making this decision?

God Bless 'Merca!

So long as the mortgage was for originally buying the place and/or some repairs, then you are OK. No re-mortgages for MEWing or HELOCs or anything like that. This is why I am careful when people raise this issue, it sounds good from the point of view of the government that they are helping "all" these people out, but when it comes to the small print, it won't help out anything like the numbers people may think. Technically, in the example given, the lender will issue you with a 1099 for $150,000 and the borrower will fill in form 982 section 1e claiming exemption for the 1099. (if I've got my IRS technicalities correct)
Other problem will be that your bad credit rating may last longer than 5 years. I don't think there's a limit like the 6 years we have in the UK. If things are still bad in 5 years and lending is still tight then it will be held against you.