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Why are mortgage debtors referred to as home owners? Edit: I was being a bit facetious. With liar loans, no down payment mortgages, deferred interest, "prices

Why are mortgage debtors referred to as home owners? Edit: I was being a bit facetious. With liar loans, no down payment mortgages, deferred interest, "prices only go up," etc, it's been too easy to sell home "ownership" to people without their requisite understanding of the risks involved and the constantly changing market realities. I'm all for personal responsibility but the use of language is powerful.

brianwawok 11y ago
Why are people getting closer to death every day called living instead of dying?
- recursive 11y ago
  They're doing both. It's not a contradiction, like between "owning" and "not owning".
  - brianwawok 11y ago
    Except in the example above they are doing both. They both "Own "but not "Fully Own" their house. They are "Partial Owners".
dragonwriter 11y ago
Because the (home) mortgage debt is a liability assumed against a home that the debtor owns (either to fund purchase of the home or afterwards), and therefore being a home owner is a necessary (but not sufficient, as one can own a home free and clear of mortgage debt) condition to being a (home) mortgage debtor.
- jdmichal 11y ago
  Exactly. Mortgages work differently than, say, car loans. Car loans typically have the bank listed on the title until the loan is satisfied, then the title is rewritten to be in the buyer's name. This is why a car can be repossessed without a court order; the bank is quite literally the owner and you only have the right to use the car. A mortgage, on the other hand, is only secured by the property. The buyer is the owner, period; pulling up my house in the county property records shows my name. This is why banks must go through the courts in a foreclosure process in order to take ownership of the property, and cannot simply repossess it.
themagician 11y ago
Because in the US we like to sell people on the idea of "ownership", when the reality is that the bank retains all the real value. Only a fraction of so-called "homeowners" actually own more than 50% of their home. Most homeowners just rent from the bank. Many will rent from the bank for life. The way homeownership is sold in the US is nothing more than a way to get people to give up hundreds of thousands of dollars to the banks under the illusion that they are building wealth or equity. And when they finally sell their home 20 years after they bought it for twice the price, they don't even consider that after inflation and mortgage interest they basically broke even.
- cryoshon 11y ago
  Hm, I've never thought of it this way, but you're entirely right. This explains why many struggling families can "get" "reverse mortgages" in which they sell their earned equity back to the bank that has always owned the majority share. Until they have sold all their shares, and are evicted, that is.
  - toomuchtodo 11y ago
    Indeed. Being a mortgagee is simply a renter by another name, with tax breaks.
- Grishnakh 11y ago
  The problem with your analysis is that you're forgetting that renters have no control over the amount they pay in rent. You can only control your rent price for the first year; after that the landlord is able to jack up your price almost any amount they want (subject to local laws), and you can either pay the jacked-up rent or move out (which is expensive) and find a new place. When you buy a house (err, rent from a bank), your monthly "rent" is now fixed for the next 30 years, and will never go up (unless your property tax goes up, this is subject to local laws). Your principle and interest are fixed for that whole time, so your mortgage payment is stable. That's the big advantage with buying.
  - themagician 11y ago
kchoudhu 11y ago
Because in theory, they own the deed to the property, which can in a pinch be sold to pay off the debt. I know this is an unpopular opinion, but it is true: if done correctly, the purchase of a house should have zero effect on the buyer's net worth.
- dsp1234 11y ago
  if done correctly, the purchase of a house should have zero effect on the buyer's net worth. What is the hedge here against falling home prices? In other words, if you purchase a home a reasonable price of $500k, but changes outside of your control cause the market for that house to fall such that you could only sell it for $400k, how is your net worth not affected?
  - kchoudhu 11y ago
    Sorry, I should have been clearer: at the time of purchase, there should be a zero-impact on your net worth. As time passes, a delta opens up between the value of your house and the amount owed. This can be positive (your house went up in value, and you are now richer) or negative (you are underwater on your mortgage). If you are underwater, you have options. I wouldn't recommend it, but strategic default[1] ("jingle mail") was a huge problem for mortgage lenders during the 2008 crisis, and allows you to cut your losses if you deem your position to be untenable. [1]https://en.wikipedia.org/wiki/Strategic_default https://en.wikipedia.org/wiki/Strategic_default
AnimalMuppet 11y ago
Why are people who have to pay property taxes referred to as home owners? As a homeowner (even with a mortgage), I can do things to my house that as a renter I can't do to a rental unit. Yes, I can lose the place if I don't pay the mortgage (or the property tax). But (apart from eminent domain) I have to not pay in order to lose it. If I rent a place, I can lose it at the end of the lease at the landlord's sole discretion, even if I have paid my rent faithfully. So, yes, my control is not total, but it's a lot more than a renter's control. The difference matters.

brianwawok 11y ago

Why are people getting closer to death every day called living instead of dying?

recursive 11y ago
They're doing both. It's not a contradiction, like between "owning" and "not owning".
- brianwawok 11y ago
  Except in the example above they are doing both. They both "Own "but not "Fully Own" their house. They are "Partial Owners".

dragonwriter 11y ago

Because the (home) mortgage debt is a liability assumed against a home that the debtor owns (either to fund purchase of the home or afterwards), and therefore being a home owner is a necessary (but not sufficient, as one can own a home free and clear of mortgage debt) condition to being a (home) mortgage debtor.

jdmichal 11y ago
Exactly. Mortgages work differently than, say, car loans. Car loans typically have the bank listed on the title until the loan is satisfied, then the title is rewritten to be in the buyer's name. This is why a car can be repossessed without a court order; the bank is quite literally the owner and you only have the right to use the car. A mortgage, on the other hand, is only secured by the property. The buyer is the owner, period; pulling up my house in the county property records shows my name. This is why banks must go through the courts in a foreclosure process in order to take ownership of the property, and cannot simply repossess it.

themagician 11y ago

Because in the US we like to sell people on the idea of "ownership", when the reality is that the bank retains all the real value. Only a fraction of so-called "homeowners" actually own more than 50% of their home. Most homeowners just rent from the bank. Many will rent from the bank for life. The way homeownership is sold in the US is nothing more than a way to get people to give up hundreds of thousands of dollars to the banks under the illusion that they are building wealth or equity. And when they finally sell their home 20 years after they bought it for twice the price, they don't even consider that after inflation and mortgage interest they basically broke even.

cryoshon 11y ago
Hm, I've never thought of it this way, but you're entirely right. This explains why many struggling families can "get" "reverse mortgages" in which they sell their earned equity back to the bank that has always owned the majority share. Until they have sold all their shares, and are evicted, that is.
- toomuchtodo 11y ago
  Indeed. Being a mortgagee is simply a renter by another name, with tax breaks.
Grishnakh 11y ago
The problem with your analysis is that you're forgetting that renters have no control over the amount they pay in rent. You can only control your rent price for the first year; after that the landlord is able to jack up your price almost any amount they want (subject to local laws), and you can either pay the jacked-up rent or move out (which is expensive) and find a new place. When you buy a house (err, rent from a bank), your monthly "rent" is now fixed for the next 30 years, and will never go up (unless your property tax goes up, this is subject to local laws). Your principle and interest are fixed for that whole time, so your mortgage payment is stable. That's the big advantage with buying.
- themagician 11y ago

kchoudhu 11y ago

Because in theory, they own the deed to the property, which can in a pinch be sold to pay off the debt. I know this is an unpopular opinion, but it is true: if done correctly, the purchase of a house should have zero effect on the buyer's net worth.

dsp1234 11y ago
if done correctly, the purchase of a house should have zero effect on the buyer's net worth. What is the hedge here against falling home prices? In other words, if you purchase a home a reasonable price of $500k, but changes outside of your control cause the market for that house to fall such that you could only sell it for $400k, how is your net worth not affected?
- kchoudhu 11y ago
  Sorry, I should have been clearer: at the time of purchase, there should be a zero-impact on your net worth. As time passes, a delta opens up between the value of your house and the amount owed. This can be positive (your house went up in value, and you are now richer) or negative (you are underwater on your mortgage). If you are underwater, you have options. I wouldn't recommend it, but strategic default[1] ("jingle mail") was a huge problem for mortgage lenders during the 2008 crisis, and allows you to cut your losses if you deem your position to be untenable. [1]https://en.wikipedia.org/wiki/Strategic_default https://en.wikipedia.org/wiki/Strategic_default

AnimalMuppet 11y ago

Why are people who have to pay property taxes referred to as home owners? As a homeowner (even with a mortgage), I can do things to my house that as a renter I can't do to a rental unit. Yes, I can lose the place if I don't pay the mortgage (or the property tax). But (apart from eminent domain) I have to not pay in order to lose it. If I rent a place, I can lose it at the end of the lease at the landlord's sole discretion, even if I have paid my rent faithfully. So, yes, my control is not total, but it's a lot more than a renter's control. The difference matters.