Are You in an Up-side-down Mortgage?

Last summer in 2007, I announced during a conversation at a dinner party “that the 150 foreclosures per day in Los Angeles were about to rise to four times that level.” I also predicted that property values would drop by at least 40%. At this point in the conversation several of the guests thought I should be committed and a few accused me of having “one-too-many” during the cocktail hour—but I was stone sober and most of the other successful business guests thought my doom and gloom remarks were intended to get them to list their property with me as a Realtor.  They were too smug with their success to realize I was giving them sound warning of things to come. 

I live in one of the most affluent zip codes in Los Angeles and when I look over my daily foreclosure list it is shocking that I am surrounded by dozens of foreclosures and properties with major tax liens in some of the most luxurious high-rise property in Southern California.  The mortgage meltdown was believed to only affect the financial ignorant and irresponsible homeowners.  But this crisis is proving to be an “equal opportunity” destroyer of lives and families. No one is immune to bad business investing and poor judgment, or worse, mortgage schemes.

If you believe that we have an oil shortage then you have succumb to the dumbing down in America.  There is enough oil in Alaska and off shore in the United States to last 300 years.  Equally abhorrent is how fast our government came up with $30 billion to rescue Bear Stearns but not $30 billion to save strapped homeowners.  This betrayal of U.S. taxpayers revealed that our political leaders were more interested in saving Wall Street than Main Street.

The newly enacted bill signed by President Bush at the end of july alleged to rescue homeowners is a joke.  I predict that less than 350,000 homeowners will actually qualify for this piece of legislative junk.   As for the remaining 5 million homeowners in trouble the House and Senate passed this bill for obvious election year reasons.  Senators Dodd and Obama both got sweetheart loans on their homes that none of us are able to obtain. If you feel you have been screwed by your mortgage lender, then hold your nose as the American taxpayers who are not in mortgage trouble and who pay their bills will now be strapped with paying the bills of those who should never have gotten those loans in the first place.  This is nothing but political smoke and mirrors in this presidential election year.

If you are in an UpSideDown Mortgage in which you now owe far more than the property is worth then walk away!  Yes, you read me right.  If your lender or Loss Mitigation department will not honestly negotiate a resolution to your problem mortgage, walk away!  And tell them you will walk.  We read in the newspapers that “lenders do not want your property;” it costs them an average of $60,000 to dispose of an empty house.  What they do not tell you is that most of those houses have been stripped of their sinks, bathtubs, toilets and anything that can be removed and sold from the structure.  The really ugly aspect of any foreclosure transaction is that the unsuspecting buyer at a foreclosed sale are left to rebuild the property at their expense.  The foreclosed deal turns out to be a financial albatross to the new owner that can be financially pushed into yet another foreclosure in the near future.

Too many shortsighted lenders threaten homeowners and pretend they win in foreclosure but it usually cost them more to foreclose then to negotiate a reduction in the balance of your mortgage.  Therefore, instead of begging and pleading you might consider threatening to walk away… it might bring about honest negotiating.

If your interest rate is going to continue to escalate through the roof… walk away!  If your financial circumstances are going to be further complicated with late fees, and various penalties, then walk away.  Irresponsible advice, maybe, but if I were in this position I would run, not walk to my local court house and file a “Quit-Claim” deed giving title back to the lender.  Then, I would mail the lender the keys.  It might take the lender weeks or months to evict you but at least you will spend what little money you have left to get your life in order and stop playing the part of victim. Lenders cannot foreclose on something they now own.

If tens of thousands of homeowners start walking, the problem will be solved quickly as Wall Street and corporate criminals cannot survive if you start out-smarting them and their mortgage schemes that were used to victimize you and your family in the first place—especially when these mortgage brokers knew full well that you did not qualify for the loan on which you would eventually default. Just keep in mind that the CEO of Countrywide made billions and walks away with tens of million in benefits from a company he nearly destroyed.  He should be in prison not flying around in the Countrywide corporate jet with all expenses paid as you struggle to make your next payment. It's time we prosecute all corporate criminals who are ripping us off and destroying the capitalists system.

When tens of thousands of homeowners walk away from their mortgages and their credit card debt maybe our irresponsible government officials will start to uphold consumer laws already on the books that truly protect the consumers instead of giving lip service to the hoodlums in corporate America and Wall Street who continue to charge illegal “usury rates” of interest that suck the life-blood out of this economy and American consumers. For more information on how to stop foreclosure visit www.EraseForeclosures.com.