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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: What if everyone stopped paying their mortgage? Posted by steve on June 01, 2010 at 11:26 AM In Reply to: What if everyone stopped paying their mortgage? posted by JK (the other JK) on May 31, 2010 at 11:07 AM : Three of my recent clients: : #1. Recently divorced female that is living in a "foremorely valued at" $1M house. She is not paying the mortgage, is collecting $1800 a month in unemployment, $2K a month in rent for the guest house and is doing contract under the table work for the movie industry to make another $3K a month. That's almost $8K a month in disposable income. What a country. : #2. Single male purchased a "foremorely valued at" $500K home in Moreno Valley with a $450,000 mortgage. The property is now worth $150K. His mortgage including taxes, insurance and a ridiculously high interest rate of over 9% on the first and 13% on second, comes out to over $4K a month. If he chose to simply save the money he would spend on the mortgage, he'd have enough to buy the house cash within 4 years. : #3. Guy has a $3.5M mortgage on an Ocean View home is having business problems. His mortgage is $20K a month. He hasn't paid in over 2.5years (is now >$500K in the hole). : Now I'm starting to think, why the hell I'm I paying my mortgages?. What if everyone decides to take a holiday from the mortgage. We could all drive a Lambo and take trips to Fiji. : Am I getting a warped view of the world because of our business or are you starting to see more and more people say "F it, I'm not paying the mortgage anymore"? . Depends on whether you have something to lose. If you have no equity in your house, why not? While many people are underwater, not everybody is, so to stop paying on a mortgage would be an unlikely/unwise strategy for someone with a significant equity stake. So I don't think everyone would do it. Also, if you rely on having credit get through life, then indeed stop paying on a mortgage would be a short term solution but could be very detrimental for the long term. Regarding your example #1, that lady is breaking the law on two fronts: 1) Collecting unemployment while working and 2) presumably not paying income taxes on the under the table cash. If you feel strongly about this, you may want to report her to the appropriate authorities, otherwise I think it is unlikely (unfortunately) that she would get caught. I also only calculate $5800 in monthly income, not $8K, but nevertheless you can still live a decent live on $70K / year, although presumably at some point the unemployment and rental income will run out and she'll have to survive on just $36K year and bad credit. In your example #2, not sure what the motivation would be to keep paying on that mortgage. Business / Finance 101 says to do as you suggest. Lastly, for your example #3, if he can't afford $20K/month anymore, how is he supposed to pay? If he has enough assets, I would think the bank would be able to go after them. Follow Ups: Re: What if everyone stopped paying their mortgage? steve 12:04 AM, 06/01/10 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : Three of my recent clients: : : #1. Recently divorced female that is living in a "foremorely valued at" $1M house. She is not paying the mortgage, is collecting $1800 a month in unemployment, $2K a month in rent for the guest house and is doing contract under the table work for the movie industry to make another $3K a month. That's almost $8K a month in disposable income. What a country. : : #2. Single male purchased a "foremorely valued at" $500K home in Moreno Valley with a $450,000 mortgage. The property is now worth $150K. His mortgage including taxes, insurance and a ridiculously high interest rate of over 9% on the first and 13% on second, comes out to over $4K a month. If he chose to simply save the money he would spend on the mortgage, he'd have enough to buy the house cash within 4 years. : : #3. Guy has a $3.5M mortgage on an Ocean View home is having business problems. His mortgage is $20K a month. He hasn't paid in over 2.5years (is now >$500K in the hole). : : Now I'm starting to think, why the hell I'm I paying my mortgages?. What if everyone decides to take a holiday from the mortgage. We could all drive a Lambo and take trips to Fiji. : : Am I getting a warped view of the world because of our business or are you starting to see more and more people say "F it, I'm not paying the mortgage anymore"? : : . : Depends on whether you have something to lose. If you have no equity in your house, why not? : While many people are underwater, not everybody is, so to stop paying on a mortgage would be an unlikely/unwise strategy for someone with a significant equity stake. So I don't think everyone would do it. : Also, if you rely on having credit get through life, then indeed stop paying on a mortgage would be a short term solution but could be very detrimental for the long term. : Regarding your example #1, that lady is breaking the law on two fronts: 1) Collecting unemployment while working and 2) presumably not paying income taxes on the under the table cash. If you feel strongly about this, you may want to report her to the appropriate authorities, otherwise I think it is unlikely (unfortunately) that she would get caught. I also only calculate $5800 in monthly income, not $8K, but nevertheless you can still live a decent live on $70K / year, although presumably at some point the unemployment and rental income will run out and she'll have to survive on just $36K year and bad credit. : In your example #2, not sure what the motivation would be to keep paying on that mortgage. Business / Finance 101 says to do as you suggest. : Lastly, for your example #3, if he can't afford $20K/month anymore, how is he supposed to pay? If he has enough assets, I would think the bank would be able to go after them. [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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