Loan Modification VS Mailing The Keys To Bank

One of my favorite blogs about the housing crisis in California (with data similar in many markets) talks often about the homeowners who are Upside-Down on their mortgage: ie: owing more than the house is worth. And, for many home owners it isn't just `a little' upside-down -- it's to the tune of 100's of thousands of dollars. And, like most Americans - so far - they have tried to keep up with payments and to keep their homes.

But, what is the likely outcome of doing so? Well, this link http://housing-kaboom.blogspot.com/2009/06/loan-mod-vs-walking-away.html explains the problem in realistic terms that - for sure - your bank doesn't want you to hear, read, or think about. From this article:

"Family 1, has a 500k ARM and wants to do a loan mod. They get a mod locking the rate at 4% for 5 years. Payments are $2400 plus tax and insurance for a total of around $3000 per month. In 5 years they will have paid $144,000 with little of that being principal. At the end of five years they will still owe $452k and the payments will reset to 7% taking it to $3007/mo, plus tax and insurance for a total of roughly 3600/mo. At the end of 5 years, family # 1 is still $200k upside down, trapped and unable to sell, and unless their income rose they still might be facing foreclosure.Family #2 also has a $500k loan on a house worth $250k. They however choose to send the keys to the bank and move into a recently purchased foreclosure rental. They rent a similar home for $1800/mo. The net difference in total monthly payments between family 1 and family 2 is roughly $1200/mo. Family 2 saves this $1200/mo and after 5 years has $72k in the bank. After 5 years their credit is good and they can once again buy. They purchase a home similar to family one's home for $250k using 20% down (50K), they finance $200k at 7% for monthly payment of $1350 plus tax and insurance or roughly $1900/mo.After 5 years both families own similar homes:Family 1 owes $450k and has a payment of $3600/mo.Family 2 owes $200k and has a payment of $1900/mo. That's $1700/mo less and they owe $250k less on the home. If they were to apply that extra $1700 to their monthly payments they would pay off the home in about 7 years!!"

As he goes on in the article - this isn't even the worst case scenario - as prices could continue to slide even further. Now, shouldn't the Bank - the one who sold you a bill of goods that the house was `worth' the inflated amount take the hit - rather than yourself?

More links for today:

The website, Chikii.com, surveyed hundreds of women nationwide between the ages of 25 and 60 years old. Out of that group, 52% admitted to using marijuana at least ten times a year. 27% smoked between one and seven times a week. And 78% of those women knew someone who got high on a regular basis http://www.momlogic.com/2009/06/marijuana_mamas.php?adid=aolws_062609&icid=mainhtmlws-maindl3link5http%3A%2F%2Fwww.momlogic.com%2F2009%2F06%2Fmarijuana_mamas.php%3Fadid%3Daolws_062609 High Moms --- will female activists be the ones that finally turn the laws around?

Sine Wave Google Searches - http://cryptogon.com/?p=9526 A very interesting read about a search on Google Trends that turned out to look like a sine-wave -- problem is -- there is no reason it should look that way. Two minute read.

http://en.wikipedia.org/wiki/Sheeple Find out the origin of this political term.

http://en.wikipedia.org/wiki/2009_Shishou_riot OMG. Did you know that China has had some VERY recent - full scale - RIOTS? Could the reason you haven't heard of this is because THEY HAVE ALL OUR MONEY AND OUR GOVERNMENT IS IMPOTENT TO DO ANYTHING OR SAY ANYTHING?

http://theheavystuff.com/ My esoteric blog.