Author Topic: Pay on a 2nd mortgage for a home I no longer own?  (Read 16037 times)

NumberJohnny5

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Re: Pay on a 2nd mortgage for a home I no longer own?
« Reply #50 on: October 03, 2013, 07:25:43 PM »
I don't think that is exactly a square comparison. People went into those mortgages knowing that they would have to pay at the end of those periods... and then they couldn't.

Yes, the homeowners knew (or should have known) what they were getting into. So did the banks. The homeowners knew (should have known) the associated risks, the odds that it might not work out, and what would happen. Same with the banks. Except...the banks are the ones who wrote the contracts, so they most definitely know, without a doubt, what's in it (and if not...ohmyfreakingosh!). The homeowner is told to just sign here, here, and here. You don't know how many times I've made someone really nervous because I sat there, and just read. Sometimes they start babbling "oh, it's just standard...um...stuff...this part just means...um, is there a problem?" They're the same people you see on the various courtroom reality shows saying "It's not MY fault he/she didn't read it, I gave him/her the opportunity to read it, and if he/she didn't before signing, too bad!" Or some variation of that.

Anyways, the bank had at least as much, if not more, information as the homeowner about what may or may not happen, the risks involved, etc.

It was all agreed to up front. I was asking about a different scenario where the Homeowner was accosted by legal means that existed outside of the contract. Thoughts on that?

Murky at best. I see your point; it's what's specifically in the contract that matters, regardless of laws that may or may not give extra protection. I see the agreement as including the contract, but not solely based on the contract. If the contract says "You will pay" and the law says "unless X happens", then I take the agreement to mean "You will pay, unless X happens." A subtle, but very important difference.

Where are the judgement discrepancies here? I clearly stated that I would judge the Individual by the same standard as the Company and visa-versa. I can't control how other people judge things, that is their call. Society as a whole as never been able to 100% agree on things like this and that isn't going to change any time soon. As long as you accept that then its only a matter of whether the individuals doing the judge are judging everyone by the same standard.

Then I guess I'd ask how you feel about businesses making "smart financial decisions" in regards to layoffs, bankruptcy, etc. If you hold them to the same moral standards as normal everyday individuals, then I can understand your position. In this situation I was speaking more to how the average person perceives it, i.e. society. Society thinks nothing of Donald Trump declaring bankruptcy on one of his businesses, and thinks it was a smart move that KMart filed for bankruptcy, fixed their problems, and came out better than ever. But if an individual does so...they're bad, evil, morally bankrupt, etc.

I just have a real problem with double-standards. If you're applying the same (or at least, similar) standards across the board...then I have no problem with that. I may disagree with your opinion, but we're cool. :)

You keep saying "by signing the documents you agreed to pay and if you don't pay, you agree that the bank gets the house back" but I'm fairly certain that is not how it works. If it was that simple then it would be an option built in the loan. You could just choose to give the house back, but you can't. You can only choose to stop paying and then they can choose to do something about it. If the contract was written that way they also wouldn't be able to come after you for the remainder of the debt or require you to claim it on your taxes, etc.

I believe a much lawyer-ed up version of what I wrote is indeed in the standard mortgage contract. I.e. homeowner agrees to pay, and if they don't, the bank can take certain steps including, but not necessarily limited to, foreclosing on the property, evicting the homeowner out of the bank's house (because it now belongs to the bank), and selling it. I will also agree that, far as I know, nowhere in the contract does it say "Feel free to stop paying at anytime, we'll gladly take care of the rest."

And those Pinky Swears are No-Joke...

True that. Anytime one of my kids comes toward me with their pinky out, I run.

(I'm trying to explore the nuances in your thought processes at this point)
Would you still feel the same way if it was an unsecured personal loan?

Good question. I think, overall, yes. But not completely. Even an unsecured loan is somewhat secured by things you own. So if I don't pay a $5k credit card bill, they can sue me and get a judgment against me. If I work, they can (depending on state law) garnish my wages. They could possibly "force" me to sell some of my possessions, though that's somewhat iffy (side-note, if you use a store card, often there's language that goods purchased are to be used as collateral; i.e. you buy a new washer from Sears on a Sears card and stop paying, they could repossess that washer). Put a lien on my house. Stuff like that.

So...all the stuff about "agreement is more than just the contract" and "the banks knew what they were getting into" still stands. But, for whatever reason...yeah, I'd view someone who did a strategic default on their mortgage (or car loan, or other secured loan where the bank gets the item back) in a better light than someone who racks up $50k in credit card debt, then walks away from that. This is of course assuming that neither actually expected to default, and that at the time the loan was taken (in the case of credit card debt, this means each time you made a purchase) they were at least fairly sure they'd be paying it back.

There is nothing wrong with it being approached as a "business decision", people will make decisions based on whatever priorities they feel most prevailed upon by. However this brings me to the definition of "Business Decision". If by "Business Decision" you mean "Make a decision based on nothing but numbers" then I think that is wrong way to go about it no matter what the decision is. However if by "Business Decision" you mean, "Make a smart decision based on informed priorities" then ya, every decision should be a "Business Decision"!

Yep, I'm starting to see where you're coming from. You seem to hold business to the same standards as individuals...but treating the business more like an individual. I'm treating the business (or at least, the standard big bad corporation) as just interested in numbers, which is not necessarily a bad thing. If you say that businesses should be held to a certain moral standard outside of pure numbers, then it makes sense to hold individuals to the same standard (at least, in their dealings with said businesses). And if I say businesses can make decisions based purely on what's best from a financial standpoint, with no emotions involved; then individuals should be held to the same standard when dealing with those businesses.

I agree that getting "Overly Emotional" either way is not the right call. Approaching the situation with Calm Logic will (almost) always lead you to a better outcome. Calm Logic would require that you look at the situation and then look at your priorities and make an informed decision. I see nothing wrong with looking at a decision like this and deciding that based on your priorities it is more important to you to pay off the debt, even if it isn't going to get you every last penny from a financial perspective.

I'll agree with that, and add that sometimes based on your priorities it may be more important to NOT pay off the debt. You may have a moral obligation to repay the bank, but you may also have a moral obligation to your family (buying decent food and healthcare for the kids, take care of an ailing parent, take care of your own emotional needs occasionally, etc.).

Thanks for the replies. Has definitely given me something to think about.
« Last Edit: October 03, 2013, 07:41:39 PM by josetann »

suntailedshadow

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Re: Pay on a 2nd mortgage for a home I no longer own?
« Reply #51 on: October 03, 2013, 08:38:27 PM »
Then I guess I'd ask how you feel about businesses making "smart financial decisions" in regards to layoffs, bankruptcy, etc. If you hold them to the same moral standards as normal everyday individuals, then I can understand your position. In this situation I was speaking more to how the average person perceives it, i.e. society. Society thinks nothing of Donald Trump declaring bankruptcy on one of his businesses, and thinks it was a smart move that KMart filed for bankruptcy, fixed their problems, and came out better than ever. But if an individual does so...they're bad, evil, morally bankrupt, etc.

I just have a real problem with double-standards. If you're applying the same (or at least, similar) standards across the board...then I have no problem with that. I may disagree with your opinion, but we're cool. :)

I would. I'd look at "Smart Financial Decisions" by a small business the same way I would look at "Smart Financial Decisions" by a corporation. Its all in the motive for me.

Double Standards are one of the plagues of society.

Yep, I'm starting to see where you're coming from. You seem to hold business to the same standards as individuals...but treating the business more like an individual. I'm treating the business (or at least, the standard big bad corporation) as just interested in numbers, which is not necessarily a bad thing. If you say that businesses should be held to a certain moral standard outside of pure numbers, then it makes sense to hold individuals to the same standard (at least, in their dealings with said businesses). And if I say businesses can make decisions based purely on what's best from a financial standpoint, with no emotions involved; then individuals should be held to the same standard when dealing with those businesses.

Beyond the condemnation of Double Standards, to me, businesses are nothing but large groups of individuals. It is up to the people running them to choose to act morally. Business or Individual, it's always a choice.

I'll agree with that, and add that sometimes based on your priorities it may be more important to NOT pay off the debt. You may have a moral obligation to repay the bank, but you may also have a moral obligation to your family (buying decent food and healthcare for the kids, take care of an ailing parent, take care of your own emotional needs occasionally, etc.).

Absolutely. As I said to the OP, you have to look at your situation and decide what is most important to you.

Thanks for the replies. Has definitely given me something to think about.

Ditto, this has been quite the enlightening experience.

Ps. I think this pretty well concludes our discussion, so SORRY OP! for Sudo hijacking the thread ;-)

Mega

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Re: Pay on a 2nd mortgage for a home I no longer own?
« Reply #52 on: October 04, 2013, 10:34:19 AM »
I just want to add a very short thought.

The OP already defaulted on a loan, the first mortgage. For reasons unknown, the OP only defaulted on the first mortgage, but not the second.
There is no moral argument about paying back the second mortgage, unless you are also arguing that the OP should pay back the first mortgage as well.

suntailedshadow

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Re: Pay on a 2nd mortgage for a home I no longer own?
« Reply #53 on: October 04, 2013, 11:10:53 AM »
I just want to add a very short thought.

The OP already defaulted on a loan, the first mortgage. For reasons unknown, the OP only defaulted on the first mortgage, but not the second.
There is no moral argument about paying back the second mortgage, unless you are also arguing that the OP should pay back the first mortgage as well.

Its called Spilled Milk, you don't cry over it. There is nothing gained by discussing what has already passed. The question posed was about what is happening right now.

If you are just talking about the grand scheme of things then I think the basis for that was already thoroughly covered in that last X number of posts.