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Emergency Bail Out Question

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T

Tinster

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Maybe an odd question, maybe not.

Like many retired folks, our home is paid for and
we carry no mortgage. Our home has also lost 40%
of it's market value in the past 18 months and
still going lower.

If we get a loan on 70% of the present value, kept the
cash but walked away from making any payments we would
be whole again. The bail out plan could then pay off our
defaulted mortgage.

Is this a viable option to get my piece of the $700 billion
government bail out and recover some of our losses?

d
 
tinster, if you do that ill be coming to beautiful p.r. to "bail" you out of jail. ah what the heck go ahead and do it i need an excuse to get away for a while. :lol:
 
I have witnessed the very thing of which you speak!
a neighbor of mine home went into forclosure and he supposedly lost it to what ever comapny he has his loan with.
Come to find out in a roundabout way he did exactly what dale mentioned. He now has a beautiful home on the other side of town that is worth much more than the one in my neighborhood was worth and a few acres to boot!
The only difference is he did this transaction before the housing market collapse.!. No he isnt in jail!
Maybe because he is one of the citys finest police officers, I couldnt say.
I thought seriously about doing the very same thing and moving to New Zealand But my wife is just too darned honest and would have none of it.
Besides I too own my own home free and clear now!
So I guess I will just wait for my next stimulis and/or tax break {Said with just a hint of sarcasm}
Maybe I then can afford an ice cream cone! *SMILE*
 
If the bail out applies to PR!!

Here's the thing: a house is NOT an investment!! Lemme say that again: a house is <span style="text-decoration: underline">NOT an investment</span>.

It is a major purchase necessary for life. When I built my house, I built what I wanted within the budget I had created for it to live in....whether it goes up or down in value is of no consequence to me....I built it to live in until I die! So, whatever it's worth, my estate gets that & I could care less what that amount is.

Why do you think states give us homestead exemptions that lower taxes on our primary residence? Because they are NOT investments!

Now, a summer or winter home, on the other hand, is an investment.

Everything is a matter of building a workable portfolio...I don't worry about the house or land on which it sits....I worry about those things I buy & sell to make a profit or capital gain.
 
tony barnhill said:
If the bail out applies to PR!!

Here's the thing: a house is NOT an investment!! Lemme say that again: a house is <span style="text-decoration: underline">NOT an investment</span>.

<span style="font-style: italic"><span style="font-weight: bold">That is an opinion , not a fact! It depends on your point of view</span></span>

<span style="font-size: 8pt"><span style="font-weight: bold"><span style="font-style: italic">From Business 101 </span>
Residential real estate</span>
The most common form of real estate investment as it includes the property purchased as other people's houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Herein the lender is the investor as only the lender stands to gain returns from it. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.</span>
Click to expand...
 
Your home is an investment. Many around here, upon retirement, have sold their homes and moved to other locals (Nevada), where they bought better homes for less money then they got for the one they left(plus less taxes). Others are taking reverse mortgages. As for our paid off house, we consider it our nursing home insurance policy.
 
tony barnhill said:
Why do you think states give us homestead exemptions that lower taxes on our primary residence? Because they are NOT investments!
Click to expand...

Maybe some, or even most, states, but not New York!.......... :nonod: :frown:
 
The sin of it all is it doesn't really apply to us fortunate folks that have no mortgage payment and have had time in the past to set ourselves up for the future. But it's very damaging to those who don't have that advantage. Especially the young folks who have tried to provide a nice home for their families, who work very hard everyday to provide. Along with school loans coming due, job markets drying up, more and more layoffs, they are loosing their homes to an industry that has no feelings other than their own pockets. I truly feel sorry for those in this predicament. I think all we can hope for is that we have a turn around in our job market. I know that this is only a small scratch on a large sore, but we have to have hope and pray for that glimmer of light at the end of the tunnel. Because of the rules and respect of the owner of this forum, I won't go and hit where I'd like to. Let's just hope for something to happen to get these folks back on their feet and living the life they and their family's deserve. Sorry for rambling on, even though I've been biting my tongue the whole time.
 
angelfj said:
tony barnhill said:
If the bail out applies to PR!!

Here's the thing: a house is NOT an investment!! Lemme say that again: a house is <span style="text-decoration: underline">NOT an investment</span>.
Click to expand...

<span style="font-style: italic"><span style="font-weight: bold">That is an opinion , not a fact! It depends on your point of view</span></span>

<span style="font-size: 8pt"><span style="font-weight: bold"><span style="font-style: italic">From Business 101 </span>
Residential real estate</span>
The most common form of real estate investment as it includes the property purchased as other people's houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Herein the lender is the investor as only the lender stands to gain returns from it. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.</span>
Click to expand...
Absolutely correct! I'll accept that premise because it says the same thing I was saying in a different way: A house is not an investment for the person who buys it & lives in it! Its an investment for the lender to whom it actually belongs!!

Now, in my case, I don't have a mortgage & am not planning on selling to move to another clime so to me its just a major purchase. Were it part of my portfolio that I planned on for retirement living that would be another thing....&, call me irrational, I don't know why any retired person would use their home as an investment because of exactly what you said: it doesn't belong to him if he has a loan; or, if it belongs to him, he can't do anything to control its value.

I can see the guy living in, say, Michigan, using his home as a means for buying his retirement home - sure, if he purchased it with the intention of selling at a later date....but, if he's already at his retirement location, why would he consider his home an investment....I mean, if he sells it, where's he gonna live?

Way back when I was working on my MBA this was a topic of discussion that took several classes to cover & those of us in the classroom never agreed which position was correct - it depends, I suppose, on each person's financial position.

TR6oldtimer said:
As for our paid off house, we consider it our nursing home insurance policy.
Click to expand...
I wouldn't! I have no control over how the value of my home increases or decreases thus I can't depend on it at all. I can control my 'temporary' investments such as the stock market, CD's, T-Bills, bonds, etc. because I manage them & can decide when to buy or sell. Those & my savings accounts are my nursing home insurance policy because I can liquidate them when needed to cover any medical or 'nursing home' expenses...I can't guarantee I'll be able to do the same with a house.

Heck, I can't even depend on my 401K's or 403B's because I don't control them. They are outside my 'investment' strategy. I got into them to defer taxes, not to retire on - but that is definitely a secondary use for them...however, the primary use, for me, is to defer taxes to a time when my tax rate is substantially lower than when I was earning at my peak.
 
Tinster said:
Maybe an odd question, maybe not.

Like many retired folks, our home is paid for and
we carry no mortgage. Our home has also lost 40%
of it's market value in the past 18 months and
still going lower.

If we get a loan on 70% of the present value, kept the
cash but walked away from making any payments we would
be whole again. The bail out plan could then pay off our
defaulted mortgage.

Is this a viable option to get my piece of the $700 billion
government bail out and recover some of our losses?

d
Click to expand...

It sounda like a nice plan EXCEPT for ooooooonnnnnneeee little detail. The mortgage company (or WHOEVER buys the mortgage) WILL sue you for the amount you didn't pay. "Walking away" from a mortgage is impossible. It WILL follow you around the "REST OF YOUR LIFE". :nonono:
 
That is true...and we all have to live somewhere. Also, don't expect getting credit of any kind to be as easy as it has been for the past 10 years. Here's hoping it is never that easy again...or this whole thing will be repeated.

...Oh yeah, one more thing- you don't lose anything until you sell.
 
lawguy said:
That is true...and we all have to live somewhere. Also, don't expect getting credit of any kind to be as easy as it has been for the past 10 years. Here's hoping it is never that easy again...or this whole thing will be repeated.

...Oh yeah, one more thing- you don't lose anything until you sell.
Click to expand...
Amen on that last statement!!

However, I've gotta disagree with the fact that credit's getting harder to get - that depends on each person's situation....lemme give you an example: My bank had told me sometime ago that if I found a vacation home in Florida, Alabama, Mississippi or Louisiana that I wanted to buy to just write a check & stop by to sign the paperwork when I got back in town - of course, we had agreed to a high end to that offer......when I stopped by the bank today to move some funds around, I asked the president if that offer still stood - it does! There's a relationship and trust that goes beyond down turns in the economy....he knows me & my history and he's still willing to loan me money & I'll bet there's a lot of you here on the BCF who can do the same thing if you want to.

...& reverse mortages? Who's the investor there? The guy who holds the mortage, not the guy getting the check each month....do you really think the guy buying the house is gonna give top dollar? No way! He's looking to make a profit when he fuly owns the house or he's looking to sell the paper on it at a gain.....so, you lose on a reverse mortgage just as you lose in this market if you try to sell outright.

A house is not an investment to the person who 'thinks' he 'owns' it! & if a person thinks it is, then its not a very good investment....but, this is just my opinion & I could be backasswards....
 
I think you're confusing the idea of an investment as an asset (like stocks and bomds) bought only to yield a financial gain with assets (like plant & equipment) bought for use.

A company can "invest" in a factory and occupy it for years gaining benefit from that occupation without any primary concern over any capital gain it might subsequently enjoy from the disposition of that property. That is no different to a person's owning and using a home without any primaary concern with its eventual sale and possible gain. Both are investments.

A house is an asset (so too is a LBC) whether you primarily use for yourself, or rent it out to generate income, or leave it idle.

And all assets may readily be seen as investments, regardless of who uses them or not. Assets may yield capital gains (or losses) as their market values fluctuate, homes are no different.
 
Tony, for people with good credit histories, there will always be credit opportunities. Banks make no money unless they let some of it outside their walls. Example: in the middle of all this, I got a loan on some vacant land at very favorable rates- but I have a decent income and the payment on my house and the land do not add up to $1,000 a month, taxes and insurance included (PMI, what's that?). Live well within your means and life is immeasurably easier.

What I was referring to is the fact that in the past 10 to 15 years people could do all kinds of goofy things to their own credit and still be able to get more credit. I am hoping that those days are gone.

...I haven't even brought up the morality of signing your name to an obligation with no intention of fulfilling it...but I guess I'm old fashioned.
 
Yes, my house is an asset to be used to house my family & protect us from the environment - but I did not buy it as an investment that I would plan/depend on using its growth as part of a retirement plan....thus, to me, its not an investment....my investments are things I buy for their growth potential and the benefits that growth gives me.....yes, LBC's could be an investment (my 1953 TD is) but most are too common to be considered a good one!
 
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