14 ms·

Foreclosure to Home Free, as 5-Year Clock Expires

29 points by jaynos 12y ago

MrZongle2 12y ago
Not too long ago, the fact that I've paid my mortgage every month for over a decade (even during times of unemployment) would have been considered a sign of responsibility and financial security. But reading this, I can't help but think that doing so simply makes me look like a chump.
- toomuchtodo 12y ago
  Conversely, I walked away from my townhome because it was ~$150K underwater. I lost my downpayment (~$20K), plus whatever principal was paid over ~4 years. After losing almost $60K-70K in a home I couldn't sell nor could I rent (HOA restrictions), why would I throw good money after bad? New mortgage guidelines stipulate only a 3 year waiting period from foreclosure date to get a new mortgage, even less if you document a financial hardship caused your foreclosure.
  - Domenic_S 12y ago
    Were there other circumstances, like you had to move for a job or something? Walking away in a downturn for its own sake seems like a bad decision, like selling stock because it took a hit.
    - toomuchtodo 12y ago
      I bought new construction, my builder went bankrupt, and Bank of America sold the land to a new builder for pennies on the dollar. When the new homes started going on sale for half what I paid, I did the math on how long it was going to take at historical real estate appreciation rates (roughly 3%/year). I stopped paying, tried to work out a modification to reduce the principal with Bank Of America (who completely botched it), they transferred it to a "specialty servicer" who specializes in modification (who also botched it), and then ended up just letting it go into foreclosure. Was 3-7 years of less than perfect credit worth it? It appears so. Houses in my old neighborhood are still significantly underwater. This isn't isolated though. ~17% of homeowners are underwater, and appreciation has slowed to a snail's pace, meaning those people aren't going to be able to sell for a long time [1]. From zillow: > In the fourth quarter of 2014, the U.S. negative equity rate – the percentage of all homeowners with a mortgage that are underwater, owing more on their home than it is worth – stood at 16.9 percent, unchanged from the third quarter. Negative equity had fallen quarter-over-quarter for ten straight quarters, or two-and-a-half years, prior to flattening out between Q3 and Q4 of last year. > While this may not seem very notable (after all, overall negative equity didn’t go up, merely flattened out), this represents a major turning point in the housing market. The days in which rapid and fairly uniform home value appreciation contributed to steep drops in negative equity are behind us, and a new normal has arrived. Negative equity, while it may still fall in fits and spurts, is decidedly here to stay, and will impact the market for years to come. [1] http://www.calculatedriskblog.com/2015/03/zillow-negative-equity-rate-unchanged.html http://www.calculatedriskblog.com/2015/03/zillow-negative-eq...
      - Domenic_S 12y ago
        Thanks for taking the time to type this up, it's really interesting. It is fascinating to me that being underwater in a house is such a big deal to people; almost every car you see on the street is underwater yet people don't care nearly as much about that. The computer I'm typing this on is definitely "underwater" in that it's worth less than I paid. Almost every investment transaction (stocks, etc) are underwater the moment you make them because of transaction fees. If your ability to pay is unchanged and you don't need the liquidity (ie, you don't need to move today), I don't see the problem. You got the short end of the stick, sure, but it was your deal to make or not make in the first place. Further, if you're considering a home purchase in financial/investment terms, you've got to consider the time scale - real estate operates in terms of decades. A lot of people got used to multi-digit yearly appreciation and to this day think anything else is a bad deal, when it's actually more on-par with other investment vehicles after the adjustment. > Negative equity is decidedly here to stay, and will impact the market for years to come. I wonder how much of this is because low-money-down lending (FHA, VA) has opened back up, with down payments barely (if at all) covering transaction costs. It could actually be a good indicator for affordability. Anyway, I assume you're at peace with your decision and I'm not trying to convince you otherwise. Just trying to understand the logic. No offense meant.
        toomuchtodo 12y ago
        > If your ability to pay is unchanged and you don't need the liquidity (ie, you don't need to move today), I don't see the problem. > Anyway, I assume you're at peace with your decision and I'm not trying to convince you otherwise. Just trying to understand the logic. No offense meant. None taken at all. I made a mistake, and I paid for it. Keep in mind, no one cares when their car is underwater because you can cough up a few thousand dollars to get out of it. When your house is underwater for tens of thousands of dollars you're effectively trapped in it, and can't move if you need to (whether its for work or personal reasons). Those homeowners underwater are limited in their mobility now, thereby reducing their earning potential if they could possibly move for a better opportunity (either pay or experience). While that might contribute to keeping wage inflation in check, it also limits any economic growth we might realize from those people having more mobility. TL;DR Housing shouldn't be viewed as an investment, and we're going to feel the pain from the 2008-2009 crisis for many years to come.
- liveoneggs 12y ago
  you could also declare bankruptcy as a form of renegotiation or (like a really big company) stop paying all of your bills and wait for your creditors to accept lower offers. When you gamble you win some and you lose some. Do you have the stomach for it? Maybe this lady in the article is just better at playing hardball. -- If the banks fail to show up in court, fail to file the correct documents, etc etc etc, why should they be treated any better than a normal person who does the same thing?
  - MrZongle2 12y ago
    Do you have the stomach for it? Maybe this lady in the article is just better at playing hardball. Maybe I'm old fashioned, but it seems to me that making ends meet is the way hardball is played. The woman in the article looks like she just relied on running the clock out in order to get the game declared a tie. I have little sympathy for the banks. But I have little more for folks who choose not to meet their financial obligations.
    - liveoneggs 12y ago
      luckily neither party in this story is asking for sympathy, only money.
  - MCRed 12y ago
    It shows the inefficiencies of the courts... whether it helps or hurts businesses or individuals doesn't matter. Not providing an efficient and sufficiently staffed, well run court system is the crime here... and society pays the costs while never blaming the cause. Note the rapid rise in arbitration and arbitration agreements-- it's a private system that is far more efficient, and thus a lot cheaper to get issues decided. This is why billion dollar companies have arbitration agreements-- they can afford the lawyers for a court battle and are big enough to get heard, but they'd rather have it settled (even not in their favor) by arbitration.
    - Lawtonfogle 12y ago
      Arbitration is on the rise because one side has massive power in picking who does the arbitration, and being a private system that system has an incentive to keep the one who picks it happy so they won't change. Thus arbitration will favor the side who sets the terms of the contract.
- rayiner 12y ago
  Buying a house with a mortgage is just a market transaction. There is no moral dimension, and it's naive to inject one. These people went into the transaction in good faith. Now, the law gives them the right to invoke the statute of limitations, and the banks knew that when they made the loans. There is nothing wrong with their invoking the legal rights they have. If the shoe were on the other foot, the banks would do exactly the same thing.
  - mikeash 12y ago
    Why can't there be a moral dimension? It's a market transaction that involves making a promise. Lots of people think that fulfilling promises is a moral thing.
    - jackmaney 12y ago
      > Why can't there be a moral dimension? Because despite what too many capitalists would tell you, corporations are not living beings, much less people.
      - cma 12y ago
        Neither are families, what's your exact point here? Moral free reign against groups but not an individuals? I'm not arguing against using the statue of limitations to keep your house; I'm just wondering exactly what you have shown by reiterating that a corporation is not in fact an individual human being.
      - harryh 12y ago
        Corporations aren't people but they are groups of people and hence have some rights as an organization.
    - rayiner 12y ago
      The terms of the promise implicitly incorporate each party's extracontractual legal rights.
    - imgabe 12y ago
- mikeash 12y ago
  I sometimes feel the same way. But it passes. Think of it like this: there are a lot of stores out there that are pretty lenient on shoplifters. They believe, rightly or wrongly, that they're better off that way, either because coming down on shoplifters puts their workers in danger, or it scares off legitimate customers, or whatever reason they come up with. Does that make you a chump when you go into one of those stores and pay for your stuff like you're supposed to? No, that's just decent behavior. Thinking about it that way makes me feel better about it all.
zaroth 12y ago
Very hard to feel bad for the banks in this, since it's only the epic scale of foreclosures that allowed anything like this to happen, and the scale of foreclosures is a direct result of non-existent underwriting. However, the problem is, it's not the banks footing the bill, it's the taxpayers. As usual, the less you pay, the more you get, and now apparently that includes the wholesale American Dream of home ownership. What I don't understand from a legal perspective, is how statue of limitation can possibly apply. The time limit would have to be filing of the case, not conclusion right? I know there were issues with robo-signing and all that, but did the loan servicers really drop the ball so badly? (Edit: The answer is in the actual case PDF I found and linked to below -- the original foreclosure was dimissed without prejudice because the bank couldn't produce the necessary documents, namely an original copy of the mortgage.) Mortgage servicing is outsourced by the government in fairly lucrative contracts. The bank you get the loan from is almost never (credit unions are the obvious exception) the company that collects your payments each month. I would have guessed it's up to the loan servicer to handle the foreclosure... the article simply doesn't have enough details behind the catchy headline. Also so good to know they won't even have to pay tax on the income... </s> http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation- http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt... And here's the actual case... so much for "NOT FOR PUBLICATION": http://noonanandlieberman.com/media/pdfs/washington-11-6-2104.pdf http://noonanandlieberman.com/media/pdfs/washington-11-6-210... Secion I. Introduction: “No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment. Edit 2: The lawyers for the bank seem like complete neanderthals?! The statue of limitations is 6 years from the date of maturity, which was accelerated, so debtor claims it's been 6 years since the accelerated date. But the statue specifically says the bank can extend the date of maturity by written instrument. So... write a note de-accelerating the acceleration by 1 year, and re-file the foreclosure. It's also not even clear the statue in question was effective in this case. The judge assumes that based on a prior statue which did say it was to be effective for all foreclosures filed after that date, but the law in question says no such thing. And a final closing remark, as I just got to the last sentence in the PDF: "The Court will proceed to gargle in an effort to remove the lingering bad taste."
bradleyjg 12y ago
Homeowners, the most blessèd of all debtors. It's not enough that the government massively subsidies the interest rate and allows interest to be deductible. No, the government also has to sponsor all sorts of modification programs to shield borrowers from the horror of thier supposed-to-be one way bet going wrong. Heaven forbid someone pay a mortgage on a house that's underwater, why that'd be like expecting a college dropout to pay back his student loans!
- Arubis 12y ago
  So buy a house.
  - MCRed 12y ago
    Part of there problem is these programs incentivize financial bad behavior and punish those who are financially responsible with higher taxes to pay for it.
    - Lawtonfogle 12y ago
      This seems to be a growing trend with government intervention. Likely it is a byproduct of ill informed decisions that given perverse incentives. Consider workers who actually reject pay raises because they would lose more in benefits than the pay raise would give them.
      - thirdtruck 12y ago
        Similar to how some families have to actively avoid making too much money, lest they jump into a higher tax bracket and end up losing more than they gained (while the next-next bracket remains a distant dream).
        Lawtonfogle 12y ago
        Except that in that one case, at least in the US, only the income inside the new tax bracket is taxed at the higher rate. The tax brackets are actually something they have right (I'm not saying I agree with the tax rates, only that earning a dollar more in income will never cost you a dollar or more in tax).
happytrails 12y ago
I'm sure this an an exception to the rule. The housing market in Southern California is crazy overpriced based upon current wages.
carsongross 12y ago
Just another hammer-blow to the underlying element that makes any society work: trust. Given that we nuked contract law when GM bond holders got shafted in '08, any reaction is simply the twitching of a dead corpse. With high trust social environments, almost any government and financial system can work. In low trust social environments, none do.
- MCRed 12y ago
  I think I agree with you, but how do you see this playing out? Or maybe, how has it played out in the past? Certainly I lost trust in the US federal government when I saw that it wasn't obeying its own laws, and not prosecuting itself, and there was no method to bring it into compliance. I lost trust with state governments when I got "audited" for a business I never owned, assessed a tax liability for that business which never even existed in the state, based on an auditors assumptions about business done in the state, and was told that it was legally binding in a "guilty until proven innocent" way, and that I had to pay half a million dollars in order to appeal the audit (for a business, remember, that I have never had any connection to.) Needless to say I don't live in that state anymore. But I do have to live somewhere. I would like to buy a house. But how can I when I could lose it to imminent domain when the mayor's cousin's construction company gets a great opportunity to develop a multi-use master planned community on the land?
  - carsongross 12y ago
    My guess (and it is just a guess) is a continuing stagnation and transition into a south american situation, where everyone is either connected to power, poor or trying to look poor. As it becomes increasingly clear that the rules are unstable, subjective and enforced arbitrarily, people will turtle up. As far as what I'd recommend, well, first I'd recommend not listening to me. After that, I'd recommend getting as lean as possible. Mr. Money Moustache has some good tips on this, with two caveats: I think he is too optimistic about equities and I don't mind spending money on a few high quality things that I can give to my kids. For all his talk about mindless index-fund investing, he did pay off his house when the chance came up, so do as he did, not as he says. The nice thing about this minimalist approach is that it's probably the right thing to do anyway, when it comes to being happy.
bruceb 12y ago
"Instead of making her roughly $1,300 monthly mortgage payment, she pays her lawyer $500 a month to represent her in court." I see the winner in this situation.
- falcolas 12y ago
  I see two. She's effectively making $800 more a month.

29 points by jaynos 12y ago

Not too long ago, the fact that I've paid my mortgage every month for over a decade (even during times of unemployment) would have been considered a sign of responsibility and financial security. But reading this, I can't help but think that doing so simply makes me look like a chump.

toomuchtodo 12y ago
Conversely, I walked away from my townhome because it was ~$150K underwater. I lost my downpayment (~$20K), plus whatever principal was paid over ~4 years. After losing almost $60K-70K in a home I couldn't sell nor could I rent (HOA restrictions), why would I throw good money after bad? New mortgage guidelines stipulate only a 3 year waiting period from foreclosure date to get a new mortgage, even less if you document a financial hardship caused your foreclosure.
- Domenic_S 12y ago
  Were there other circumstances, like you had to move for a job or something? Walking away in a downturn for its own sake seems like a bad decision, like selling stock because it took a hit.
  - toomuchtodo 12y ago
    I bought new construction, my builder went bankrupt, and Bank of America sold the land to a new builder for pennies on the dollar. When the new homes started going on sale for half what I paid, I did the math on how long it was going to take at historical real estate appreciation rates (roughly 3%/year). I stopped paying, tried to work out a modification to reduce the principal with Bank Of America (who completely botched it), they transferred it to a "specialty servicer" who specializes in modification (who also botched it), and then ended up just letting it go into foreclosure. Was 3-7 years of less than perfect credit worth it? It appears so. Houses in my old neighborhood are still significantly underwater. This isn't isolated though. ~17% of homeowners are underwater, and appreciation has slowed to a snail's pace, meaning those people aren't going to be able to sell for a long time [1]. From zillow: > In the fourth quarter of 2014, the U.S. negative equity rate – the percentage of all homeowners with a mortgage that are underwater, owing more on their home than it is worth – stood at 16.9 percent, unchanged from the third quarter. Negative equity had fallen quarter-over-quarter for ten straight quarters, or two-and-a-half years, prior to flattening out between Q3 and Q4 of last year. > While this may not seem very notable (after all, overall negative equity didn’t go up, merely flattened out), this represents a major turning point in the housing market. The days in which rapid and fairly uniform home value appreciation contributed to steep drops in negative equity are behind us, and a new normal has arrived. Negative equity, while it may still fall in fits and spurts, is decidedly here to stay, and will impact the market for years to come. [1] http://www.calculatedriskblog.com/2015/03/zillow-negative-equity-rate-unchanged.html http://www.calculatedriskblog.com/2015/03/zillow-negative-eq...
    - Domenic_S 12y ago
      Thanks for taking the time to type this up, it's really interesting. It is fascinating to me that being underwater in a house is such a big deal to people; almost every car you see on the street is underwater yet people don't care nearly as much about that. The computer I'm typing this on is definitely "underwater" in that it's worth less than I paid. Almost every investment transaction (stocks, etc) are underwater the moment you make them because of transaction fees. If your ability to pay is unchanged and you don't need the liquidity (ie, you don't need to move today), I don't see the problem. You got the short end of the stick, sure, but it was your deal to make or not make in the first place. Further, if you're considering a home purchase in financial/investment terms, you've got to consider the time scale - real estate operates in terms of decades. A lot of people got used to multi-digit yearly appreciation and to this day think anything else is a bad deal, when it's actually more on-par with other investment vehicles after the adjustment. > Negative equity is decidedly here to stay, and will impact the market for years to come. I wonder how much of this is because low-money-down lending (FHA, VA) has opened back up, with down payments barely (if at all) covering transaction costs. It could actually be a good indicator for affordability. Anyway, I assume you're at peace with your decision and I'm not trying to convince you otherwise. Just trying to understand the logic. No offense meant.
      - toomuchtodo 12y ago
        > If your ability to pay is unchanged and you don't need the liquidity (ie, you don't need to move today), I don't see the problem. > Anyway, I assume you're at peace with your decision and I'm not trying to convince you otherwise. Just trying to understand the logic. No offense meant. None taken at all. I made a mistake, and I paid for it. Keep in mind, no one cares when their car is underwater because you can cough up a few thousand dollars to get out of it. When your house is underwater for tens of thousands of dollars you're effectively trapped in it, and can't move if you need to (whether its for work or personal reasons). Those homeowners underwater are limited in their mobility now, thereby reducing their earning potential if they could possibly move for a better opportunity (either pay or experience). While that might contribute to keeping wage inflation in check, it also limits any economic growth we might realize from those people having more mobility. TL;DR Housing shouldn't be viewed as an investment, and we're going to feel the pain from the 2008-2009 crisis for many years to come.
liveoneggs 12y ago
you could also declare bankruptcy as a form of renegotiation or (like a really big company) stop paying all of your bills and wait for your creditors to accept lower offers. When you gamble you win some and you lose some. Do you have the stomach for it? Maybe this lady in the article is just better at playing hardball. -- If the banks fail to show up in court, fail to file the correct documents, etc etc etc, why should they be treated any better than a normal person who does the same thing?
- MrZongle2 12y ago
  Do you have the stomach for it? Maybe this lady in the article is just better at playing hardball. Maybe I'm old fashioned, but it seems to me that making ends meet is the way hardball is played. The woman in the article looks like she just relied on running the clock out in order to get the game declared a tie. I have little sympathy for the banks. But I have little more for folks who choose not to meet their financial obligations.
  - liveoneggs 12y ago
    luckily neither party in this story is asking for sympathy, only money.
- MCRed 12y ago
  It shows the inefficiencies of the courts... whether it helps or hurts businesses or individuals doesn't matter. Not providing an efficient and sufficiently staffed, well run court system is the crime here... and society pays the costs while never blaming the cause. Note the rapid rise in arbitration and arbitration agreements-- it's a private system that is far more efficient, and thus a lot cheaper to get issues decided. This is why billion dollar companies have arbitration agreements-- they can afford the lawyers for a court battle and are big enough to get heard, but they'd rather have it settled (even not in their favor) by arbitration.
  - Lawtonfogle 12y ago
    Arbitration is on the rise because one side has massive power in picking who does the arbitration, and being a private system that system has an incentive to keep the one who picks it happy so they won't change. Thus arbitration will favor the side who sets the terms of the contract.
rayiner 12y ago
Buying a house with a mortgage is just a market transaction. There is no moral dimension, and it's naive to inject one. These people went into the transaction in good faith. Now, the law gives them the right to invoke the statute of limitations, and the banks knew that when they made the loans. There is nothing wrong with their invoking the legal rights they have. If the shoe were on the other foot, the banks would do exactly the same thing.
- mikeash 12y ago
  Why can't there be a moral dimension? It's a market transaction that involves making a promise. Lots of people think that fulfilling promises is a moral thing.
  - jackmaney 12y ago
    > Why can't there be a moral dimension? Because despite what too many capitalists would tell you, corporations are not living beings, much less people.
    - cma 12y ago
      Neither are families, what's your exact point here? Moral free reign against groups but not an individuals? I'm not arguing against using the statue of limitations to keep your house; I'm just wondering exactly what you have shown by reiterating that a corporation is not in fact an individual human being.
    - harryh 12y ago
      Corporations aren't people but they are groups of people and hence have some rights as an organization.
  - rayiner 12y ago
    The terms of the promise implicitly incorporate each party's extracontractual legal rights.
  - imgabe 12y ago
mikeash 12y ago
I sometimes feel the same way. But it passes. Think of it like this: there are a lot of stores out there that are pretty lenient on shoplifters. They believe, rightly or wrongly, that they're better off that way, either because coming down on shoplifters puts their workers in danger, or it scares off legitimate customers, or whatever reason they come up with. Does that make you a chump when you go into one of those stores and pay for your stuff like you're supposed to? No, that's just decent behavior. Thinking about it that way makes me feel better about it all.

zaroth 12y ago

Very hard to feel bad for the banks in this, since it's only the epic scale of foreclosures that allowed anything like this to happen, and the scale of foreclosures is a direct result of non-existent underwriting. However, the problem is, it's not the banks footing the bill, it's the taxpayers. As usual, the less you pay, the more you get, and now apparently that includes the wholesale American Dream of home ownership. What I don't understand from a legal perspective, is how statue of limitation can possibly apply. The time limit would have to be filing of the case, not conclusion right? I know there were issues with robo-signing and all that, but did the loan servicers really drop the ball so badly? (Edit: The answer is in the actual case PDF I found and linked to below -- the original foreclosure was dimissed without prejudice because the bank couldn't produce the necessary documents, namely an original copy of the mortgage.) Mortgage servicing is outsourced by the government in fairly lucrative contracts. The bank you get the loan from is almost never (credit unions are the obvious exception) the company that collects your payments each month. I would have guessed it's up to the loan servicer to handle the foreclosure... the article simply doesn't have enough details behind the catchy headline. Also so good to know they won't even have to pay tax on the income... </s> http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation- http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt... And here's the actual case... so much for "NOT FOR PUBLICATION": http://noonanandlieberman.com/media/pdfs/washington-11-6-2104.pdf http://noonanandlieberman.com/media/pdfs/washington-11-6-210... Secion I. Introduction: “No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment. Edit 2: The lawyers for the bank seem like complete neanderthals?! The statue of limitations is 6 years from the date of maturity, which was accelerated, so debtor claims it's been 6 years since the accelerated date. But the statue specifically says the bank can extend the date of maturity by written instrument. So... write a note de-accelerating the acceleration by 1 year, and re-file the foreclosure. It's also not even clear the statue in question was effective in this case. The judge assumes that based on a prior statue which did say it was to be effective for all foreclosures filed after that date, but the law in question says no such thing. And a final closing remark, as I just got to the last sentence in the PDF: "The Court will proceed to gargle in an effort to remove the lingering bad taste."

bradleyjg 12y ago

Homeowners, the most blessèd of all debtors. It's not enough that the government massively subsidies the interest rate and allows interest to be deductible. No, the government also has to sponsor all sorts of modification programs to shield borrowers from the horror of thier supposed-to-be one way bet going wrong. Heaven forbid someone pay a mortgage on a house that's underwater, why that'd be like expecting a college dropout to pay back his student loans!

Arubis 12y ago
So buy a house.
- MCRed 12y ago
  Part of there problem is these programs incentivize financial bad behavior and punish those who are financially responsible with higher taxes to pay for it.
  - Lawtonfogle 12y ago
    This seems to be a growing trend with government intervention. Likely it is a byproduct of ill informed decisions that given perverse incentives. Consider workers who actually reject pay raises because they would lose more in benefits than the pay raise would give them.
    - thirdtruck 12y ago
      Similar to how some families have to actively avoid making too much money, lest they jump into a higher tax bracket and end up losing more than they gained (while the next-next bracket remains a distant dream).
      - Lawtonfogle 12y ago
        Except that in that one case, at least in the US, only the income inside the new tax bracket is taxed at the higher rate. The tax brackets are actually something they have right (I'm not saying I agree with the tax rates, only that earning a dollar more in income will never cost you a dollar or more in tax).

happytrails 12y ago

I'm sure this an an exception to the rule. The housing market in Southern California is crazy overpriced based upon current wages.

carsongross 12y ago

Just another hammer-blow to the underlying element that makes any society work: trust. Given that we nuked contract law when GM bond holders got shafted in '08, any reaction is simply the twitching of a dead corpse. With high trust social environments, almost any government and financial system can work. In low trust social environments, none do.

MCRed 12y ago
I think I agree with you, but how do you see this playing out? Or maybe, how has it played out in the past? Certainly I lost trust in the US federal government when I saw that it wasn't obeying its own laws, and not prosecuting itself, and there was no method to bring it into compliance. I lost trust with state governments when I got "audited" for a business I never owned, assessed a tax liability for that business which never even existed in the state, based on an auditors assumptions about business done in the state, and was told that it was legally binding in a "guilty until proven innocent" way, and that I had to pay half a million dollars in order to appeal the audit (for a business, remember, that I have never had any connection to.) Needless to say I don't live in that state anymore. But I do have to live somewhere. I would like to buy a house. But how can I when I could lose it to imminent domain when the mayor's cousin's construction company gets a great opportunity to develop a multi-use master planned community on the land?
- carsongross 12y ago
  My guess (and it is just a guess) is a continuing stagnation and transition into a south american situation, where everyone is either connected to power, poor or trying to look poor. As it becomes increasingly clear that the rules are unstable, subjective and enforced arbitrarily, people will turtle up. As far as what I'd recommend, well, first I'd recommend not listening to me. After that, I'd recommend getting as lean as possible. Mr. Money Moustache has some good tips on this, with two caveats: I think he is too optimistic about equities and I don't mind spending money on a few high quality things that I can give to my kids. For all his talk about mindless index-fund investing, he did pay off his house when the chance came up, so do as he did, not as he says. The nice thing about this minimalist approach is that it's probably the right thing to do anyway, when it comes to being happy.

bruceb 12y ago

"Instead of making her roughly $1,300 monthly mortgage payment, she pays her lawyer $500 a month to represent her in court." I see the winner in this situation.

falcolas 12y ago
I see two. She's effectively making $800 more a month.