My job is to watch dreams die (2011)
361 points by eezurr 10 months ago | 176 comments- hunter-gatherer 10 months agoI've had a handful of lemons thrown at me during my life. One of the most impactful ones as far as I can tell is that through a weird chain of coincidences I ended up first in line to purchase a foreclosed home. From what I understood, the couple was going through a nasty divorce and couldn't agree on who would get the house and ultimately didn't pay anything for a while, so I picked it up for 80k, which back then was probably 50% of what the market value was. This was hige for kme because as a kid my family was actually evicted from the house we were renting (not for financial-related reasons) but it was sudden so home security has always been important to me.
Having been able to pay off my house has had the most tremendous postive impact on my mental health I think. Sure, it's a small house, and it's old, and the kitchen is small, and so on... but man, I'm so glad I never have to worry about making a house payment.
- dmd 10 months ago> a handful of lemons
I'm having trouble parsing this. A lemon is a bad thing that happens to you, but this seems like it was a good thing for you?
- mcphage 10 months ago> A lemon is a bad thing that happens to you, but this seems like it was a good thing for you?
Probably referencing "when life gives you lemons, make lemonade", not like a car is a lemon.
- tacitusarc 10 months agoI assume the previous owners stopped by to pelt him with lemons.
- Bluestein 10 months agoYou know what they say, "make lemonade" and all that :)
- Bluestein 10 months ago
- valval 9 months agoI also found it funny the amount of verbal gymnastics GP did in order to convey the message of “I’m not actually a dick who hunts foreclosure homes”
- mcphage 10 months ago
- rufus_foreman 10 months ago>> Having been able to pay off my house has had the most tremendous postive impact on my mental health I think
Agree on that. I own my house with no mortgage since before the pandemic and it doesn't make much financial sense to pass up a 3% mortgage but it makes mental health sense.
Yes, I owe property taxes. Yes, the city could raise them. If I completely stopped paying them today, it would take them a decade to kick me out. It's nice from a mental health perspective to have a 10 year runway to plan your next move.
- fred_is_fred 10 months agoI'm at 2%, no reason to pay extra (and not much left anyway). But I am curious, where do you live that property tax foreclosure is 10 years? Most places do NOT mess around. They sell your liens for 3 years at auction and then you're done. Counties are ruthless in general I've found, especially in some states.
- Borg3 10 months agoHoly shit... That property tax is awfull thing. It should never ever happen. Not to simple people, owning one property, aka home. So much freedom, country of dreams...
- perilunar 10 months agoLand tax is better than income tax, accordion to Georgism at least.
- sangnoir 10 months agoWithout property tax, who pays for the infrastructure and first responders? The no taxes, no rules, and no local government services thing was tried many times without success: in one New Hampshire town, they got overran by bears[1] - who could have guessed regulations on trash handling and animal control might be good for something?
1. https://www.vox.com/policy-and-politics/21534416/free-state-...
- toomuchtodo 10 months agoWith taxes we buy civilization.
- BobaFloutist 10 months agoJust wait until you hear what happens if you stop paying rent.
- perilunar 10 months ago
- fred_is_fred 10 months ago
- veunes 9 months agoThe fact that you've paid off your house at a young age is an incredible achievement, regardless of its size or condition
- nunez 10 months agoDamn.
if the house was in good condition and an area that you wanted to live in, then consider yourself insanely blessed!
- immibis 10 months agoIt's amazing what we as a society could accomplish if the government stopped blackmailing us with homelessness for profit.
- dmd 10 months ago
- analyte123 10 months agoDuring this same time period I had a project at a part-time gig which involved updating document templates and adding a few fields here and there for a legal application. The application was used by a law firm which specialized in mortgages. So I saw the details of various documents one is served in these situations: notice of default, acceleration notices, notice to vacate, and ultimately evictions and foreclosure auctions. And of course you could see thousands of these documents being generated and mailed out. For a guy like the one in the post to show up, you probably would have had to completely ignore probably a dozen of these documents for at least 6 months, not paying your mortgage all along.
Sometimes I feel like this experience, especially the idea that the entire principal balance can be accelerated if you don't make your payments regardless of the value of the house, left a bit of a scar on me that caused me to miss out on the ZIRP real estate boom II. But I am still happy with the way things are turning out overall.
- 0cf8612b2e1e 10 months agoThere was a Planet Money story about Zombie Mortgages. Home owners thought a second mortgage had been annulled, sometimes even being explicitly told that. Years of no statements being sent and suddenly collections was asking for money on what the home owner thought was a done deal. Even the bank was claiming it was some weird fraud attempt. So of course you could feel safe ignoring that paperwork. Until they came and sold her house out from under her.
https://www.npr.org/2024/05/10/1197959049/zombie-second-mort...
- ToucanLoucan 10 months ago> For a guy like the one in the post to show up, you probably would have had to completely ignore probably a dozen of these documents for at least 6 months, not paying your mortgage all along.
I find it interesting that in all of these discussions it's treated as known that the person at hand is ignoring the notices and just pretending they aren't in danger of losing their home, just like in issues of evictions for rent, it's treated that for some reason the tenant has decided they don't need to pay. When IMO, in both of these, it's much more reasonable to assume they can't pay.
Maybe it's just a reflexive self-protection thing in people. It's easier to watch/envision a family being forced out of their home via state violence if you assume they were just stupid/inept in some way, that they did something wrong. That the very same thing couldn't happen to you because you would never just not pay your mortgage. And I mean, same. I would never not pay my mortgage. But I can easily conjure all kinds of nightmares that would render me unable to pay my mortgage.
Maybe people just don't like thinking about that.
- analyte123 10 months agoI'm aware that many of these people couldn't pay, mostly for lamentable reasons outside of their control, but pretending nothing is wrong usually doesn't help a bad situation. Ignoring letters from the IRS doesn't make you not owe them taxes. Ignoring letters from your lender or their lawyer doesn't make you owe less money. You still owe the money and it costs you interest and time that you could use to negotiate a settlement or forbearance. Perhaps if you make your situation bad enough, it's easier to file for bankruptcy and start over, but I doubt that people are thinking that far.
In any case, it's a big stretch to call eviction "state violence". When they're even involved, the sheriff is mostly helping to enforce a private contract between the homeowner and their lender. The only conceivable alternative to this situation that still allows lending or private property to exist at all is for the police to not exist and everyone enforces their own contracts with their own violence.
- rufus_foreman 10 months ago>> In any case, it's a big stretch to call eviction "state violence"
No, it's not, that's exactly what it is. A guy with a gun and a badge coming to your residence to enforce a contract is "state violence".
To me that's a legitimate use of state violence, but let's call it what it is. No, not everyone gets to enforce their contracts with violence, that's called "The state monopoly on violence".
- rufus_foreman 10 months ago
- naming_the_user 10 months agoI think it's a bit less dramatic than that really - most people accept that the world we live in has both rights and responsibilities.
One of those responsibilities is that by paying for the loans you take out, in exchange you get to keep the things that you've bought using them, permanently once you've paid it off.
I might, one day, be unable to pay my mortgage. That's a risk I'm taking.
People tend to get super emotional about this stuff but at the end of the day it's just business, you have lived somewhere else and you can live somewhere else again.
- frmersdog 10 months agoThis is an incredibly heartless take, and also one not aligned with the nuances lurking beneath the surface of what "most people accept" (banality of evil and all that). The rent you "agreed" to pay may have been set or raised under circumstances ranging from ethically-fraught to soon-to-be-illegal-but-not-yet-litigated. Your income stream, likewise, might have been disrupted by someone else's malfeasance. Neither the law nor landlords care that you fully intend to - in fact, will have the means to, when everything comes out in the wash - live up to your responsibilities. If the eviction proceedings are carried out before the others, you will lose the home you, by all means except a dysfunctional system that has mistimed just order, have the rights to.
Access to a stable domicile is what defines modern civilization. Philosophically, and ironically, that we have a standardized and systematized method for depriving large numbers of our population of that stability suggests a breakdown in civil order. It's reasonable to have an issue with this system without being "super emotional", but let me be clear in stating that it's also a perfectly reasonable subject to be "super emotional" over. Circumstances outside your control depriving you of a home, even temporarily, is not "just business", it's massive disruption families and communities with material ramifications for their well-being, and in a better-organized society would not happen as often as it does here.
Your flippancy also isn't without its own consequences. It turns what could be a problem with a collaborative, mutually-agreeable solution into one where it's accepted that one party is going to get thrown under the bus. The circumstances currently favor landlords. This can be changed. Careful not to let that cannonball hit you.
- hirvi74 10 months ago> One of those responsibilities is that by paying for the loans you take out
Sure, if one is a commoner.
If one is a large bank, then the American taxpayers can be forced to foot the bill for the government-funded bailout.
Take an out student loan? One is on the hook until the loan is paid or severely disabled/dead.
Take out a PPP loan? Ah Hell, just keep it. No worries.
- topkai22 10 months agoI think you underestimate how painful moving is to some people.
Any house I lived in for more than a year or two I miss. It can be really painful to remember I can’t take my kids to my childhood home because my parents moved. Heck, I occasionally miss living in the first house I bought and I’m just renting that one out.
I don’t disagree that people need to pay their mortgages, but we also should recognize that there are real externalities involved. Thinking you had stability and then losing it hurts. Being forced to relocate hurts. Feeling like you failed your family hurts. Those undergoing that deserve grace, compassion, and understanding. Sometimes they also deserve our charity.
It will still often be necessary for those people to move, but it’s not just a financial transaction for those being forced to leave their home.
- immibis 10 months agoAnother thing to accept about the world is that "just business" kills millions of people every year, and maybe we should stop accepting it as an excuse.
- frmersdog 10 months ago
- 10 months ago
- yieldcrv 10 months agothe reddit post doesn't assume that.
- analyte123 10 months ago
- DaiPlusPlus 10 months ago> you probably would have had to completely ignore probably a dozen of these documents for at least 6 months, not paying your mortgage all along.
Fun-fact: thems the benefits of being a mortgage holder.
If you're a tenant that's renting, you get no such legal protections - let alone discretion from whichever faceless entity actually owns the property: where I am in King County WA, I think, at most you can get 30 days' notice tops (and that's if nonpayment is the only thing they allege; it's trivially straightforward to make it a 3-day nuisance eviction, honestly).
The whole thing doesn't feel right (I don't want to say "class warfare", but I haven't heard a better explanation for this double-standard).
- BobbyTables2 10 months agoIndeed. When I lived in an apparent, got a very angry knock at the door. Before I even got up, manager already was unlocking the door without asking, with a formal eviction notice in hand.
Every month I faithfully put my rent check in an envelope, deposited the slot at the office.
That month they accidentally threw away the check after opening the envelope.
They really didn’t believe I had paid, despite being a good tenant for years, always on time. Never caused any trouble.
Marched me to the office and they discovered they had photocopied my check but didn’t deposit it (threw it away).
That all happened in one month — no prior notice/warning/call about being late on rent.
I’m still shocked at this treatment many many years later. Can’t even chalk it up to any type of prejudice… just utter stupidity.
- jopsen 10 months agoNo amount of laws can protect renters from a stupid landlord :)
I could certainly see places where using a master key without authorization is a stupid move.
- _DeadFred_ 10 months agoI think this is part of the reason people don't want to live in big city condo buildings with co-ops or communal fees/maintenance. Even if you own your place you don't really own it and these other entity that care nothing about, your bill situation, etc you can impact your housing situation.
If I have a place in the burbs I only have to worry about the soulless local government.
- jopsen 10 months ago
- bgnn 10 months agoThat sounds indeed not right.
Here in the Netherlands the renters have the right, but mortgage holders do not. I was renting a place the owner had mortgage. For some reason the bank wanted to sale the place but couldn't evict me. Since this was the owners fault the bank's lawyers helped me to get like 6 months of rent back to agree to leave. The bank even offered me to buy the place, which in the hindsight, I should have done.
Long story short, what you guys have in US feels wrong and it's not always like that in the rest of the world.
- brigade 10 months agoI don’t think it’s obviously “wrong” that renters don’t automatically get the right to occupy a property indefinitely once they move in, but rather only have that right for an agreed-upon term. Or that the owner has the right to decline to renew a lease after said term with a notice period (well maybe the standard 30 or 60 days notice is a little short…)
The “3-day eviction” is that if you break the law in specific ways, the landlord can immediately terminate the lease and start court proceedings with 3 days notice. It still takes months for the eviction to grind through the courts just like it would in the Netherlands.
- ghaff 10 months agoIt's very local location dependent. You can find lots of horror stories from both the renter and the landlord side. And, in a lot of cases, renters can probably get off with a lot unless the landlord is willing to take extreme illegal measures (which they may).
- brigade 10 months ago
- bombcar 10 months agoThis is why the "if you have a loan you're just renting from the bank" people aren't right - sure, in a way it's true but there really IS a legal difference, and it DOES come into play when things go south.
- santoshalper 10 months agoYes, of course, there is a huge difference between having a mortgage (you are the owner but the investor has a lien on your property) and renting.
- Enginerrrd 10 months agoYeah and it goes both ways. When someone gets hurt in your front yard or something you're the one that's liable, not the bank.
- santoshalper 10 months ago
- Denvercoder9 10 months ago> If you're a tenant that's renting, you get no such legal protections
In the USA. Many countries in Europe have renters protection similar to that of mortgage holders.
- rayiner 10 months agoDepends on where you are in the U.S. Some places have extreme renter protections. Tenants can refuse to pay rent for months before you can even start an eviction proceeding. Then it takes months more. E.g. New York. https://www.reddit.com/r/Landlord/comments/15nn6o0/landlordu.... Landlords may forgo six months of back rent just to get the tenant out of the unit.
- pkaye 10 months agoHow long can renters go without paying their rent in those countries?
- rayiner 10 months ago
- klik99 10 months agoFor a bank, evicting someone from a house is expensive and the departments they have to handle it are very understaffed, their risk is so spread out that not getting 6 months payment is barely a blip. For a landlord, any loss of income for 6 months could be catastrophic, so there is much more urgency behind their action, and many act rashly and without compassion.
While there are certainly asshole landlords, I don't think this situation happened because of a systematic class warfare, it's just landlords tend to be smaller institutions that have a much higher risk profile than banks. Add to that that renters tend to have less political power, and you end up with a situation that greatly prefers mortgage owners.
- nullindividual 10 months agoDepends on where you live in King County and on the property. In Seattle, certain property owners must inform the City 90 days prior to sale (“Intent to Sell” city ordinance).
These laws are hyperlocal and making a sweeping statement about the County, State, or the US will ultimately be providing incorrect information.
- DaiPlusPlus 10 months agoYes, you are correct; though I got my info from the King County website; there wasn’t any indication it varies.
- DaiPlusPlus 10 months ago
- closeparen 10 months agoThe bank will recover the money it lent you at the foreclosure sale; there's only the time-value-of-money element to whether they see it sooner or later.
The landlord will never be reimbursed for the months of rent not paid, and is paying the mortgage out of their own pocket during this time.
- lacker 10 months agoTLDR: You pay for the benefits of being a mortgage holder, when you make the down payment.
Think of it from the bank's point of view. A bank can afford to be patient with mortgage holders because there's an underlying asset. There's a $300,000 house and the owner still owes you $150,000. If you repossess right now as opposed to a few months from now, either way you're getting repaid from the value of the asset, minus the cost of dealing with everything.
Whereas when renting, if someone misses rent one month, if you evict them immediately you're out a month's rent. If you wait two more months before evicting, now you're out three months' rent. The longer you delay, the more it costs you.
- BobbyTables2 10 months ago
- 0cf8612b2e1e 10 months ago
- sandspar 10 months agoI've seen a few sides of money. Raised upper class, lost it all and became underclass, then made it back. I'm always amazed at how limited rich people's worldview is. The average software developer, coastal liberal etc. They've never felt terror, the visceral feeling of being terrified. They've never been predated upon. They've never been used and discarded. The underclass lives with this stuff every day, 24/7, and rich people never experience it even once in their whole lives. And the rich people presume to talk down to and lecture the poor. I have a great deal of contempt for people of my class, the rich.
- silisili 10 months agoI was just discussing this with a friend last week. In my case at least, it was too easy to forget. I grew up low end of middle class at best, and after high school was dirt poor.
Getting overdrafts weekly, in that era where they reorder transactions to really turn the screws. Sleeping early because it's cheaper than eating. Working two jobs and still not getting ahead. The shame of having to ask to borrow a few bucks, but trying to hide it so you didn't seem ingenuous. Having better off people talk to you like a child, giving you unsolicited one liner advice that they probably read on a motivational poster at work that morning, like they're doing me a life favor.
The thing is, I got a lucky break in my mid 20s and haven't struggled a day since. Now it's been almost 20 years, and I find myself acting like the rich person you describe. I guess like all things, appreciation wears off with age and becomes the new normal.
I don't ever want to struggle like that again, but I'd love to experience the feeling and appreciation I had for the first couple years after climbing out of it. It's easy to forget.
- ryandrake 10 months agoUnfortunately the Cruelty Industry is huge and there is a lot of money to be made putting the screws to the most financially vulnerable people.
Banks, the lending industry (including credit card companies, mortgage and student loans), debt collectors, repo men, payday loan stores and check cashers, not to mention the entire legal system, ugh... To me it's sick that they can upend someone's life just because they didn't pay a bunch of bills. Society collectively has the wealth to treat the less fortunate with grace and dignity, with compassion and forgiveness, but it's more profitable to find fault, then squeeze everything out of them and leave them by the side of the road.
A lot of people fold their arms and smugly say "Well, they made bad choices and deserve it all." Whatever lets you sleep at night, I guess.
- frmersdog 10 months agoIt is really a problem that so many people in America make a living - what they consider a decent, respectable, fulfilling living - in positions where it's their job to make someone else's life worse. I don't think we've fully considered the deleterious social effects this has. It's not just rent-seeking, with all the perverse incentives that entails. It's rent-seeking on widespread suffering, with all the perverse incentives that THAT entails.
- frmersdog 10 months ago
- Sohcahtoa82 10 months ago> in that era where they reorder transactions to really turn the screws
I cannot come up with the words about how absolutely evil someone had to be to make transactions work that way.
How utterly fucked up and sociopathic do you have to be to steal money from the poor?
- Aeolun 10 months agoOf course they weren’t stealing from the poor. It was their boss doing that when they told them to ‘increase profit at any cost’. The only thing they were doing was secure that promotion.
If the world needs to burn to make that happen? Well… that’s too bad.
- nunez 10 months agoI mean, it's complicated.
On one hand, payday loan services and buy here pay here auto dealers are providing capital and transport to people that can't afford it and absolutely need it.
On the other hand, the risk of not seeing their money or vehicle back is insanely high.
That said, the transaction reordering that BoA/other banks did was insanely cruel. I was affected all of the time by this during college before I got my first job. Learning how to overdraft "correctly" was an insanely useful skill back then!
- klyrs 10 months ago[flagged]
- ThunderSizzle 10 months agoWelcome to the entire system. The entire purpose of income tax is to keep the poor poorer while pretending it's a tax on the rich. That and inflation. Constant inflation really targets the have-nots, who have to figure out how to save faster than asset inflation to be able to buy an asset.
It's all orchestrated by evil people, while they try to get political warfare to hide behind.
- Aeolun 10 months ago
- ryandrake 10 months ago
- TheAlchemist 10 months agoSimilar feelings here - started rather pretty low, a bit of family problems, all that. While I make very decent money, that is considered upper class, my net worth is still way lower than somebody with average job, but who had richer parents who helped them buy a house quickly, or pay for studies, etc.
For me, the biggest difference money make, is the freedom to choose better options. When you don't have money, or family backup, you quite often choose poorly not because you're dumb, but the choices you can really make are very limited. You end up taking a job that's good but not that great. You are renting, and even if the job is not good, you know there would be a huge risk to try to change the job, as you could end up unable to rent something new if you don't have a stable proven job...
These are things a lot of people never ever experienced in their life. It's not their fault of course, ideally nobody should. But yeah, you just don't judge people for poor choices that much, if you've ever been in a position where those poor choices are actually often the only real choices you have.
- naming_the_user 10 months agoI think that you're mixing up a few things here to be honest.
I grew up poor and I don't have the faintest clue what you're talking about. Terror? Predation? Being used and discarded? No, we just didn't have that much money, every penny had to be counted, our horizons were quite low, we lived in cheap areas.
Now, if we talk about things like bad parenting / broken families, dodgy immigration status, etc, I think I can understand what you're talking about. But that's a whole different (and much more complicated) issue.
- solarmist 10 months agoThere's being stable, but poor and there poor without the stability of being able to consistently afford housing. Even without the added curse of bad parenting unstable parents.
- solarmist 10 months ago
- spamizbad 10 months agoOne sad element of society is the expectation that a poor person has a duty to rise above poverty and if they don’t it’s their personal moral failing. The middle class have no such obligation to jump to a higher tax bracket.
- bartonfink 10 months ago> no such obligation to jump to a higher tax bracket
...the gospel of graham to the contrary
- bartonfink 10 months ago
- leobg 10 months agoCurious: How does that make you feel about JD Vance as potential vice president? From what I read (I’m German), he “was there”.
- lobsterthief 9 months agoVance lies a lot. And changes his political stance to adapt to whatever gets him power. So take his story with a grain of salt.
- lobsterthief 9 months ago
- nunez 10 months agoRich people discussing how the poors are lazy failures while getting their food/drinks from a server who's working their second or third job during working hours; a meme as old as time.
- jarsin 10 months agoThere's a reason the second or third generation rich kids tend to lose it all.
They're soft.
- silisili 10 months ago
- fisherjeff 10 months ago“And so I listen. I feign dispassion but I'm not fooling anybody. Somehow they can tell that I care and thank me even as they admit that it isn't my fault, that it isn't my responsibility to listen. I've stood inside another's dream for an hour as they spoke, not really to be heard but to say goodbye - to leave the ghosts behind.”
A nice reminder that, in literally every possible situation, even just a little bit of kindness and humanity can go a long way.
- dhosek 10 months agoWhen my ex-wife and I were first house shopping in Chicago, we looked at a handful of short sales¹ and I am still haunted by the site of one defeated homeowner sitting on the sofa of his home as we looked around his home deciding if we wanted to buy it.²
⸻
1. For those who don’t know, a short sale is one step up from foreclosure: The homeowner and lender agree to a sale for less than the outstanding balance on the mortgage. The buyer must not be related to the seller and the seller does receive a few thousand dollars of the sale proceeds. On the flipside, the amount of the mortgage that is not paid off is considered income and the seller must pay taxes on that.
2. We ended up not buying any of the short sale homes in the community where we were looking, but instead purchased a home that was a traditional sale.
- firesteelrain 10 months agoDuring the mortgage crisis, taxes were waived.
Mortgage Forgiveness Debt Relief Act of 2007 allowed for the exclusion of taxes on forgiven mortgage debt. Many people used that law in conjunction with HAFA or HAMP. Myself in particular conducted a short sale during this time and did not pay taxes on the difference.
- dhosek 10 months agoI went through a short sale in 1996 and as it turned out, the taxes that I ended up owing were identical to how much I was behind on my mortgage. One of the things that I had been told over and over back then was that I didn’t want to declare bankruptcy, but in retrospect, it turns out that declaring bankruptcy would have been exactly what I wanted to do.
I remember thinking during the mortgage crisis when folks were often underwater by $100K or more that the taxes would end up killing them on short sales. I wasn’t paying enough attention to know about the 2007 debt relief act since I was a renter at that point.
- firesteelrain 10 months agoThat period of time was very rough. We bought our first home in 2006 for $134k and by 2007 it was worth about $59k. Even after adding on to it by converting our porch to another room, we ran out of room fast with the birth of our second child. I had one bedroom for one child who was about 5 or 6 and the second shared it with us. Since we couldn’t sell it with that much difference - we simply didn’t have the money to make up that difference - we ended up conducting a short sale in 2012. I rented until 2014 then used the VA Home Loan to buy my home which I have lived in for the past 10 years. It took 7 years to clear my credit report. But VA was very forgiving and the banks were OK to provide a mortgage at that time with VA backing. So it was less of a risk.
- firesteelrain 10 months ago
- dhosek 10 months ago
- firesteelrain 10 months ago
- howard941 10 months agoI worked the other side of this thing, as a debtors' bankruptcy attorney. Sometimes I could save the house but usually it wasn't in the cards: The income wasn't there and the bankruptcy laws were skewed by GWB. Fortunately there were many times when - if a house wasn't an issue - the debtor was much better off without an albatross around his neck. Overall it was a rewarding occupation - not monetarily, the rules kept debtor's attorneys on a very short leash - but morally.
- throwaway2037 10 months agoThank you to share your first hand experience.
Can you explain this more, including "GWB"?> bankruptcy laws were skewed by GWB
- jaggederest 10 months agoGWB is George W. Bush, president from 2000 to 2008.
Relevant wiki article about the act he signed that changed bankruptcy laws:
https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an...
- jaggederest 10 months ago
- throwaway2037 10 months ago
- santoshalper 10 months agoI have spent about 20 years in the mortgage and housing industry, a decent amount of that in servicing and default. I have seen some shady shit including borrowers who committed mortgage fraud and lenders who made loans they knew would ultimately blow up in someone's face (not theirs!).
That said, 99% of defaults are very simple: At the time of the loan, the borrower could afford to make the mortgage payment. Later down the road, something changes in their circumstance, and they can no longer afford to make the monthly payment (or anything close enough to work out a deal). The most common reasons are a loss of income or severe medical issues.
Mortgage servicers and investors almost never want to foreclose on a home. An extended default leading to a foreclosure is very costly, and the servicer is usually fronting the money to the investor the entire time. Everyone loses when a foreclosure happens (though only one party doesn't have a home anymore).
I am profoundly sympathetic to anyone who gets evicted, but lenders only make mortgage loans because the property is collateral. How else would someone front a normal borrower hundreds of thousands of dollars?
- Sohcahtoa82 10 months agoMaybe you have some insight over something that's always confused me.
During the 2008 crash, I heard of a lot of people seeing their home value plummet, end up underwater on their mortgage, and decide to just abandon it. I've never understood why someone would do that, rather than ride it out and keep paying while the value recovers?
I could MAYBE understand going "Nope, I'm out" if you had an adjustable-rate mortgage and your rate skyrocketed and now you can't afford the payments, but every housing bubble pop is temporary.
But like...I see my mortgage payment as more than just a payment on a loan, it's simply the cost of having a roof over my head. Whether I'm paying $2,000 to the bank, or $2,000 to some landlord (Really, I'd be looking at $2,800/month for a house like what I have now), I'm paying $2k/month. So why not just keep paying my mortgage, even if the value is less than what I paid?
- dredmorbius 10 months agoBalloon mortgages and an inability to refinance on attractive terms.
It wasn't a matter of holding the property. Most simply couldn't make payments.
Walkaways worked because real estate debt (in most of the US) is non-recourse debt. You leave the mortgage, the bank (or present mortgage holder) gets the property. Debt is settled.
(Lender in this case, or the present mortage holder, itself a rather complex question given mortgage-backed securities and fast-and-loose assignments of title, gets stuck holding the bag. Eventually values climbed again, at least outside economically-blighted zones.)
- throwaway2037 10 months ago
It is rare this simple. You will likely be required to file bankruptcy, or something equally disruptive to "walk away". And, it will trash your personal credit rating. What is the incentive for banks to allow walk aways? It is very low. The administrative burden of taking ownership of a home, then trying to sell it will nearly guarantee losses for the lender. In most US states, if you cannot pay your mortgage, the bank will sell the home. Most of the time, any shortfall can be forgiven, but not easily. If there is a gain, you will be repaid, minus expenses, but this is exceptionally rare.> Walkaways worked because real estate debt (in most of the US) is non-recourse debt. You leave the mortgage, the bank (or present mortgage holder) gets the property. Debt is settled.
- Sohcahtoa82 10 months ago> Balloon mortgages
I remember seeing those. As far as I was concerned, I thought they were an absolute scam and I can't believe anybody chose one.
> It wasn't a matter of holding the property. Most simply couldn't make payments.
I know that was the case for most people, but I certainly heard about people that still could, but chose not to, simply because they were underwater. I was trying to understand those people.
> Walkaways worked because real estate debt (in most of the US) is non-recourse debt. You leave the mortgage, the bank (or present mortgage holder) gets the property. Debt is settled.
Wait, really?
This is actually news to me. I had assumed that you would still owe the bank the difference between the remaining balance and the value of the home. ie, if you bought the house for $500K, made payments for a few years, then walked away when the house dropped to $400K value, but you still owed $450K, then if the bank foreclosed, you'd still owe $50K to the bank.
- throwaway2037 10 months ago
- nunez 10 months agoARMs were insanely popular before the GFC and were what most lenders pushed onto customers, if I understand the history correctly. This + many customers budgeting for the bottom of the ARM = hurricane of foreclosures.
- hervature 10 months ago@dreadmorbius already mentioned nonrecourse loans but even recourse loans it should be obvious that if something made your property worth $0 (say Chernobyl real estate) then paying any amount of money to the bank is just a waste. Now, it may not be worth it to declare bankruptcy to absolve yourself of the loan, but the example is meant to illustrate that if the value loss is large enough, the recovery slow compared to other investments, and the payment is large relative to your income, then walking away can be the right choice.
> Whether I'm paying $2,000 to the bank, or $2,000 to some landlord (Really, I'd be looking at $2,800/month for a house like what I have now), I'm paying $2k/month. So why not just keep paying my mortgage, even if the value is less than what I paid?
I think you're missing the point that in a crash like 2008 the market rents would go from $2,800 to $1,400. Also, a reminder to anyone reading this that you cannot compare mortgage payments to rents. The down payment could have gone into another investment (like a tax-advantaged 401k) and so you need to take into account the opportunity cost of not getting S&P 500 returns. In the US, this is normally offset by the fact that the government tries to make mortgage rates very close to the Fed rate and the fact that the system allows you to lever up 4x (20% down) to 99x (1% down) to minimize the opportunity cost of other investments. In general, if you plan to live a house for at least 5 years, you should probably put it on a mortgage.
- BehindBlueEyes 9 months ago> if something made your property worth $0 (say Chernobyl real estate) then paying any amount of money to the bank is just a waste.
depends why the value goes down too: chernobyl real estated has a cost on health probably giving it a negative value, whereas if the economic value drops but the place doesn't actually poison you, the house is still the same house to live in. That's not value of 0 regardless what the price tag says.
The problem there is we use housing as an investment which is at odds with basic needs of having a roof over one's head/a safe place to live.
- throwaway2037 10 months ago
I assume you are talking about Fannie Mae, Freddie Mac, and Ginnie Mae. To me, there true purpose is the allow US home loans to be predominantly fixed rate. That is exceptionally rare in the world. In most countries, it is hard to get a fixed rate for longer than 10 years. In the US, 30 year fixed is normal. Part of the magic is unwritten gov't guarantees and clear rules that allow commercial banks to sell risky (fixed rate) loans to them. Mind you: This isn't free. It requires expert level interest rate risk management by those big three orgs. As we saw during 2008 GFC, they failed.> In the US, this is normally offset by the fact that the government tries to make mortgage rates very close to the Fed rate
- BehindBlueEyes 9 months ago
- jarsin 10 months agoFactor in the fact as the years go by you will see coworkers and neighbors buy houses for way less than you paid.
In my area those that bought the top in 07 are now just back to break even. Think about that for 15+ years everyone around them is making equity while they just dig out of the hole.
- dredmorbius 10 months ago
- Sohcahtoa82 10 months ago
- honkycat 10 months agoMy parents build a big ass house in the middle of nowhere around the year 2000
It was a nice place! rooms for the kids, a pool, etc.
Then 2008 hit. WOW. We went from a prosperous family to NOTHING incredibly fast.
This asset was so toxic the bank wouldn't even fucking take it. It was an albatross for YEARS and my parents had to liquidate their 100 year old family business, and all other assets before they could wiggle out from under it in 2014.
For little podunk rust belt towns, there was no "recovery." The car parts plant was gone. The tire plant was gone. The steel casting plant was gone. EVERYTHING went to Mexico. Why buy a nice place if there is no job to support it?
That house now sits empty out on a lot next to a closed down golf course. So it goes
- nunez 10 months agoBasically the story of most of the Midwest. Suburbanization and the auto industry globalizing their supply chains was the one-two punch that sent most of those big cities into downward spirals. I'm reminded of this every time I fly into STL, MCI or CVG. (These were two massive hubs for Braniff, then Delta. Huge, huge airports, both of which are shells of their former selves.)
- pram 10 months agoOof, that sucks. My parents managed the exact opposite. We had a house in the middle of nowhere. Their business was slowly going under so they decided to sell and move in with my mothers father (lol) and did this at the absolute top of the market (2006)
The person who bought it is still holding the bag if Zillow is any indication, it’s still about $30k under what he bought it for. I often think about how many people are still screwed from that time.
- ThunderSizzle 10 months agoIts an interesting tale, because we might be in a very similar bubble. Or not. It's hard to tell, because the dollar has been so devalued, while housing is over-inflated, and money is expensive.
It's a cruel joke when money is worthless and expensive at the same time.
- throwaway2037 10 months ago
Can you explain? The USD vs EUR FX rate has barely changed in 10 years. If you believe the US dollar has been "so devalued", then you must believe the same for Euro.> because the dollar has been so devalued
- throwaway2037 10 months ago
- ThunderSizzle 10 months ago
- nunez 10 months ago
- yonran 10 months agoThe tragedy is even sadder when you find out that the foreclosure crisis and Great Recession were self-inflicted by the Federal Reserve and CFPB after 2007, not the inevitable result of reckless borrowers. Kevin Erdmann has been studying this for about a decade and gives examples of cities such as Atlanta that had no housing boom at all but were forced into foreclosure crisis. Here is his most recent op-ed: https://www.washingtonpost.com/opinions/2024/09/05/housing-c...
- _rm 10 months agoActually they were inflicted by the Fed dropping rates to zero following the tech bubble bursting (2000), blowing up a real estate bubble.
You'd think the USSR would've been enough to stop people believing in central planning. But this is unlikely, since the desire for central planning is actually an innate instinct - a child wanting parents to handle everything for them.
- yonran 10 months agoThere wasn’t much of a bubble. The price bubble that people cited is mostly explained by exclusionary zoning driving up rents in Closed Access cities (e.g. New York, San Francisco, Boston) and migration from those cities to Contagion cities (e.g. Phoenix, Las Vegas, Seattle). There was no reason for the government to destroy home values nationwide in cities that had no boom at all (e.g. Atlanta). And given that since the Great Recession, rents and prices have risen even higher than the peak of the “bubble” in Closed Access cities, we now can see that the entire Recession was pointless since the Fed killed the homebuilding industry in Contagion cities but didn’t address the root of the problem in Closed Access cities.
- yonran 10 months ago
- _rm 10 months ago
- ChrisArchitect 10 months ago(2011)
Some discussion then: https://news.ycombinator.com/item?id=2959137
- zzzbra 10 months agowe've been online for so long now...
- zzzbra 10 months ago
- nunez 10 months agoMan, Reddit used to be amazing before it got TikTok-ified. Super high quality content (like this); a lot of which was real. Why can't we have nice things?
- mrguyorama 10 months agoNice things are fundamentally less profitable than trash. Everything that makes a thing "nice" costs money, eats into your profit margins, takes more work, while making more profit on something with a fixed "nice"ness is much much easier.
- mrguyorama 10 months ago
- christkv 10 months agoReminded me of this story that makes me chuckle when i first read it where the tables were turned. https://abcnews.go.com/Business/bank-america-florida-foreclo...
- coding123 10 months agoThere needs to be some standard addendum attached to homes as an option that anyone selling a home can attach to the sale. Something like:
This house cannot be used as an investment vehicle. It cannot be sold by a real-estate agent with a contract of more than 1%. It cannot be used as a rental. It cannot be sold for more than inflation would allow.
Anyone found violating this addendum may be sued. All proceeds from the lawsuit (after fair lawyer fee of 40%) shall be used to build new homes (as in it can only be used to fund actual building materials, not generic non-profit companies).
This might not be the best approach, but we need a home renaissance that redefines home ownership across the world so that no one has to be homeless anymore.
- peterldowns 10 months ago(Ignoring the obvious problems of how such an addendum could be written and enforced.)
Why? When would it make sense for someone to attach this addendum to a sale? All these penalties and restrictions would only mean getting paid less for the same property. On the buyer side, why would anyone want an asset like you've described?
I live in a home that I enjoy in part because it is a fantastic investment that is highly-leveraged (through a mortgage) in a way not possible for other types of assets. If I need to I can rent out rooms or the entire property. I can sell it to whoever I want, whenever I want. I can borrow against my partial equity in the property. My mortgage is 30-year fixed, but I can always refinance (with no prepayment penalty) if rates go down below my locked rate.
I wouldn't want to buy a house without these benefits, and I don't know who else would. If this became standard it would reduce demand for this asset class, and therefore make it less profitable to build new housing, which is exactly the opposite of what you want.
- photonthug 10 months agoBuyers might want an asset like that because they could afford it and because they don’t have to gamble about whether the smoke and mirrors keep going for the 30 year duration of their mortgage.
Congrats on your fantastic investment and other high octane adulting, but even if you’re winning, look around, a huge chunk of the “wealth” of nations is tied up in real estate nonsense that represents a vast and willful collective kind of madness. This should freak everyone out in aggregate even if they like the idea of their own position.
But more concretely.. everyone pays the “investment vehicle” premium even if they aren’t trying to invest, and even if the home or area definitely can’t deliver a ROI. After pricing lots of the more thoughtful and plan oriented people out of the ability to have children, we are probably well on our way towards pricing single people out of the ability to have a home, even after some market crash that cuts those prices drastically. And yet western society in the northern hemisphere is too individualistic to dwell together collectively in larger family clans or even friend groups long term. To put it mildly, housing as “investment” is a really bad idea, and we’d be better off if people that are interested in that just stay busy with stocks instead. Less mild, we’ve moved past the point where it’s merely unsustainable.. it’s actively destabilizing judging from the rise in populism everywhere.
- krisoft 10 months ago> Buyers might want an asset like that because they could afford it
Sure! As a buyer i’m happy to buy your house for tenth or twentieth of its value. I can afford that! You can add any silly stipulations to the contract for that price. When are we signing?
- krisoft 10 months ago
- photonthug 10 months ago
- krisoft 10 months ago> that anyone selling a home can attach to the sale
Why would anyone attach that to a sale? I bet that such terms would reduce the money you can get for the house to at least a tenth of the unencumbered value. Simply because it will make all future sales so much more complicated and risky. It would reduce flexibility for the person who now owns the home. (Especially the no-renting rule.) Banks would not touch such transaction with a 20 feet pole so the buyer better has the whole sale price in cash. Which means only wealthy people can buy your house.
You might be grinning about all of these consequences and thinking “yes, this is exactly what i want to achieve”. But what is the incentive here for the home owner? From their perspective choosing this option loses them a lot of money, so who would do this? And why?
Sounds like the home owner could just douse their home with gasoline and light it on fire. From a value perspective it has about the same effect. I predict it would be similarly popular too (that is not popular at all). Which means very few happless people would be stuck with this weird situation, while at the same time the option would have about 0 effect on the wider market. (Maybe it would add some extra legal checks to buying normal unencumbered property increasing the legal costs for everyone. Just to verify that nobody had added such an agreement to that particular property in any point in the past.)
- jolmg 10 months ago> It cannot be used as a rental.
It's not just the home-buying market where prices are high. It's also the home-rental market.
> so that no one has to be homeless anymore.
People that can't buy may no longer be able to rent either because of the supply you constrained. Homelessness would probably go up.
- BehindBlueEyes 9 months agoYeah I agree with this.
Rental is not necessarily the problem compared to leaving houses empty because they're worth more as investment than putting in the work to rent them out. And the number of Vacation rentals in my area is a bigger issue than rentals or empty houses. Why house community members for $2000 a month when you can charge that per week to tourists part of the year and make more money, right?
- BehindBlueEyes 9 months ago
- jopsen 10 months agoVariations of this concept exists many places.
It's not bad.
But does lead to people unable to move. Because they don't earn enough from the sale to buy a new house. And buyers can't get a property nobody is selling (so you risk corruption too).
Could also cause a bit of market distortion. Probably not a huge problem.
- throwaway2037 10 months agoAre there any highly industrialised economies in the world where real estate agents get only 1% fee? I find it hard to believe. That would mean a 500K USD home would result in an agent fee of only 5,000 USD. Even if they sell one per month (unlikely), their revenues would only be 60K per year. It seems impossible, as expenses (company car and small office) would eat up a lot of that revenue.
Also: Take a look at housing in France (outside Paris), Germany (outside Berlin), and Italy (outside Milan). It hardly changes faster than inflation. How do they do it? Low population growth, combined with careful community planning (new housing starts, etc.)
- crooked-v 10 months agoOr, you know, just actually build enough houses for people to live in. I feel like that would be a better start than suing people into bankruptcy because they made 5% off a house sale instead of of 4.5%.
Houses are only an attractive investment vehicle in the first place because there is a massive shortage of housing.
- pfdietz 10 months agoYIMBY. Preach.
- Sohcahtoa82 10 months agoSome local residents were fighting against some new apartment building being built, claiming that the area wouldn't be able to handle the extra traffic, it wouldn't have enough parking, etc...
Meanwhile, not only was there going to be 1.5 parking spots per unit, but the main entrance is literally 500 feet from the metro line. Many residents there were likely to not even have cars. And it was just one building with 40 units placed next to a major throughfare. Plenty of traffic handling capability.
I imagine everyone fighting it was a homeowner worried about increased housing availability lowering the home's value.
I own a house, and there's a new complex being built about half a mile from me. Judging by the size of the plot of land and the poster showing what it's going to look like, I imagine it's probably gonna have ~200 units. I'm all for it being built. My house has gone up in value by ~62% in 9 years and that's ridiculous.
- Sohcahtoa82 10 months ago
- fragmede 10 months agoWhich, like, subsidies for building housing is the way out.
- pfdietz 10 months agoNo, just getting rid of obstacles. Zoning is a cancer.
- pfdietz 10 months ago
- pfdietz 10 months ago
- BobaFloutist 10 months agoOr we could just build so much housing that it becomes a buyer's market.
- coding123 10 months agoI love how no one replied to the last sentence, almost like that doesn't matter, the part where you restrict my right to rent matters more than anything.
- BehindBlueEyes 9 months agoI don't have a magic bullet solution to what a home renaissance could look like. In some ways it might require re-thinking what home is. Maybe taking inspiration from indigenous long houses with 10 families sharing a space would be a good step forward. It could be more sustainable in terms of energy requirements, solve for some of the loneliness issues that are prevalent nowadays, as just 2 top of mind things.
But our culture is very individualistic and values greed and puts exploitation of others on a pedestal. I don't believe this would really work with the predominant mindset of meritocracy or even be appealing to most as we feel entitled to our own space, ways of doing things, property etc.
We see community and the related obligations as a burden and put the individual at the top. I think changing this would be a preliminary requirement to solving homelessness.
Not that I have thought this through from all angles, but I believe this is a major blocker.
- BehindBlueEyes 9 months ago
- frmersdog 10 months agoI think that would be a restrictive covenant.
- coolspot 10 months agoHomelessness is mostly caused by drugs and/or psychiatric illness.
- dredmorbius 10 months agoExpensive and/or insufficient housing doesn't help.
Rich drug addicts tend to remain housed, at least to a greater extent than the poor.
Getting forced onto the streets tends to compound any preexisting tendencies to poor mental health and/or addictive tendencies.
- specialist 10 months agoIf one first excludes PTSD, domestic violence, health issues, loss of job, and being a homosexual (youth), then -- yes -- the top two causes are in fact the two television tropes which most confirm one's priors.
Well spotted.
- coding123 10 months agoWhich is caused by falling deep into debt and realizing you won't have a home in a bit.
- dredmorbius 10 months ago
- peterldowns 10 months ago
- UberFly 10 months agoMany of the comments in that Reddit thread are heartbreaking. Ouch.
- csours 10 months agoI helped a co-worker evict a guy who had been missing and short rent payments on and off for over a year. Less than a year later the evictee passed away living rough on the street and unsheltered.
His wife had divorced him a while earlier, and by the time he was evicted the carpet was filled with dog poop and pee, some partially cleaned up, some not.
The guy was an accountant. One would assume that a professional like that would be able to get access to help; would be able to figure out what's going on and change course.
I don't know or remember enough of his story to really make a point. It sucks that he died. It sucks that I'm part of a chain of events that accelerated that. It sucks that people get drawn into things like gambling and drugs. It sucks that people are unhoused in a country with access to a surplus of resources.
By the time someone gets to intensive care in a hospital, a nurse can 'save their life' 5 times in a night, just for them to die the next day. This guy could have lived more years, but it's really hard to know what those years would have been.
- joko42 10 months agoHe reminds me of Death from Discworld. He is the Dream Reaper.
- firesteelrain 10 months agoI have become cynical on Reddit to the point that I don’t know if these stories are real or just really good creative writing
- nunez 10 months agoFake stories were way less common on Reddit back then, IMO. It wasn't a super popular site back then.
- lnsru 10 months agoIt might be good creative writing. But a businessman who I knew got stroke and died around the time. His real estate projects became worthless basically in one week. So from the timing I would say, that the writing might be real.
- nunez 10 months ago
- locallost 10 months agoTerrific writing even if difficult to read. This hits close to home, my family and relatives left our homes because of a war, we were on the wrong side of the fence. The experiences of these people are not much different. Maybe we can do better in the 21st century.
- 10 months ago
- nothercastle 10 months agoThis reads like way before 2011. Just the mention of phone books puts the time frame into the late 90s early 2000s. I haven’t seen a phone book for at least 20 years.
- albrewer 9 months agoI grew up in a poor "rural" area (it was a 5 min drive to a 300k pop. city). Most technology is about 10-15 years behind "the times" when you leave the city. Most people I knew didn't have cellphones until ~2007-08. Home broadband was an extravagance until ~2009 when landline DSL prices came down enough.
- BehindBlueEyes 9 months agoStill using phone books today in rural canada.
- albrewer 9 months ago
- DrNosferatu 10 months agoIn Portugal, you can take a mortgage with an optional insurance to exempt you from payments if unemployed up to 6 months.
- positr0n 10 months agoEvery time I get a new mortgage (in the US) I get a bunch of spam physical mail hawking this type of insurance. So it's a thing here too.
- positr0n 10 months ago
- michaelcampbell 10 months agoThe subject is heartbreaking, but the writing is superb.
- karaterobot 10 months agoThat was an unexpectedly well-written post.
- 10 months ago
- commandlinefan 10 months ago[flagged]
- istjohn 10 months agoAfter Uvalde, that Texan braggadocio looks sillier than ever.
- optimalsolver 10 months agoDon't mess with Texas (unless you have a gun).
- ThunderSizzle 10 months agoDon't mess with Texan citizens.
Feel free to make a fool out of Texan police officers.
- ThunderSizzle 10 months ago
- Sohcahtoa82 10 months agoIt's exceptionally rare for me to watch sports, but when I do (usually just because it's on a TV at a restaurant), I always root against Texas if they're playing, no matter who they're playing against, just because I think people from Texas need to be taken down a couple notches.
Texas has the best BBQ in the country, I'll give them that, but everything else about their state pride is just weird to me. Especially their ridiculously stupid power grid that I don't understand why the voters haven't done something about.
- optimalsolver 10 months ago
- idlewords 10 months agoYeah, because more than likely the power is out.
- tomrod 10 months agoYep, the robbers just shoot you or wait for you to be asleep.
Or smile at you through the kitchen window while they disconnect the running air conditioner.
Despite our bravado and ammosexuality, it turns out Texans are people like everywhere else.
- istjohn 10 months ago
- RGamma 10 months agoSo this must be (one of the undoubtably many reasons) why our transatlantic friends are trying to push the self-destruct button since 2016. Reads like dystopian fiction. Canis canem possidet.
- mminer237 10 months agoWhere do you live that you don't have foreclosure sales?
- RGamma 10 months agoIt's not about foreclosure sales. It's about the desperation, the ruthlessness, the intense pressure, the instant legal armament. Some other commenter here mentioned 3 day eviction notices (when renting) are a thing. Come on...
- Sohcahtoa82 10 months agoYou obviously read other comments, so you'd know that people talk about foreclosures taking 6 months. That's far from "instant legal armament". I wouldn't even call it ruthless.
The 3-day eviction notices on renting are a red herring. We're not talking about renting from an owner, we're talking about foreclosures.
- Sohcahtoa82 10 months ago
- RGamma 10 months ago
- mminer237 10 months ago