4 ms·

> If the property value changes, the loan doesn't That works both ways. Google "underwater mortgage"

by sixstringtheory 4y ago

verall 4y ago
Obviously, which is why you are the homeowner and the bank isn't.
- sixstringtheory 4y ago
  Depends on your definition of "own" I suppose. If you have a mortgage, the bank has a mortgage lien on the home, which gives them a legal right to take it from you if you don't pay. I.e. you will get kicked to the curb on an underwater mortgage if you can't make the payments any longer, but also can't afford to bridge the gap in order to sell.
  - dragonwriter 4y ago
    > If you have a mortgage, the bank has a mortgage lien on the home, which gives them a legal right to take it from you if you don't pay. I.e. you will get kicked to the curb on an underwater mortgage if you can't make the payments any longer, but also can't afford to bridge the gap in order to sell. In a non-recourse state (or, to a lesser extent, even in a recourse state) foreclosure on an underwater mortgage loans isn't a great deal for the bank; it either eliminates any chance on recovering part of the mortgage (non-recourse), or turns the amount above what can be realized in a foreclosure sale into a non-secured debt (recourse). Depending on circumstances, there's a chance they'll just choose not to do that for a very long time (much longer than would be the case either with an "above water" mortgage that wasn't being paid, or than a landlord would float a tenant that wasn't paying.) They also have a pretty big incentive to approve a short sale on an underwater mortgage, since you'll probably get a better price than a foreclosure sale and cost them less money than foreclosing and trying to sell. (Have I been underwater, gone an extended period of time withput paying a mortgage both while living in the home and then after moving out, getting a buyer, and proposing and waiting for approval for a short sale, in a non-recourse state? Yes, yes I have.)
    - sixstringtheory 4y ago
      Dang, that sounds stressful. Hope you came out the other end of that ok! And thanks for the extra context and sharing your experience.

> If the property value changes, the loan doesn't That works both ways. Google "underwater mortgage"

verall 4y ago

Obviously, which is why you are the homeowner and the bank isn't.

sixstringtheory 4y ago
Depends on your definition of "own" I suppose. If you have a mortgage, the bank has a mortgage lien on the home, which gives them a legal right to take it from you if you don't pay. I.e. you will get kicked to the curb on an underwater mortgage if you can't make the payments any longer, but also can't afford to bridge the gap in order to sell.
- dragonwriter 4y ago
  > If you have a mortgage, the bank has a mortgage lien on the home, which gives them a legal right to take it from you if you don't pay. I.e. you will get kicked to the curb on an underwater mortgage if you can't make the payments any longer, but also can't afford to bridge the gap in order to sell. In a non-recourse state (or, to a lesser extent, even in a recourse state) foreclosure on an underwater mortgage loans isn't a great deal for the bank; it either eliminates any chance on recovering part of the mortgage (non-recourse), or turns the amount above what can be realized in a foreclosure sale into a non-secured debt (recourse). Depending on circumstances, there's a chance they'll just choose not to do that for a very long time (much longer than would be the case either with an "above water" mortgage that wasn't being paid, or than a landlord would float a tenant that wasn't paying.) They also have a pretty big incentive to approve a short sale on an underwater mortgage, since you'll probably get a better price than a foreclosure sale and cost them less money than foreclosing and trying to sell. (Have I been underwater, gone an extended period of time withput paying a mortgage both while living in the home and then after moving out, getting a buyer, and proposing and waiting for approval for a short sale, in a non-recourse state? Yes, yes I have.)
  - sixstringtheory 4y ago
    Dang, that sounds stressful. Hope you came out the other end of that ok! And thanks for the extra context and sharing your experience.