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Old 07-11-2010, 12:09 AM
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ARGOS ARGOS is offline
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Strategic Default

I lost a few customers through strategic default. All second homes.

Interesting how this real estate downturn has caused a paradigm shift in the perception of debt and/or mortgages obligations.

Article in NYT


Ps. Peter FYI I didn't read the article. Too many words.
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Old 07-11-2010, 12:49 AM
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1idejim 1idejim is offline
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Quote:
Originally Posted by ARGOS View Post

Ps. Peter FYI I didn't read the article. Too many words.
i like pictures too!

public radio had a segment on the rich defaulting at the drop of a hat, they look at a default as a bad investment, the not rich look at their life savings going down the tubes.
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Old 07-11-2010, 01:01 AM
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FIMCO-MEISTER FIMCO-MEISTER is offline
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Basically the rich have less scruples about defaulting on a loan. No surprise really. States that depend on the rich to fund everything are taking massive hits right now. If the rich aren't leaving they are certainly making a lot less money. The beauty to the sales tax over the income tax. Everybody contributes to running the state.
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Old 07-11-2010, 10:08 AM
Tom Tom Tom Tom is offline
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I'll bet those walking away are not losing a whole lot of equity. They bought houses with little or nothing down. It would be a different story if they had 20%+ equity invested.

Last edited by Tom Tom; 07-11-2010 at 10:17 AM.
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Old 07-11-2010, 08:59 PM
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After reading the article and listening to the NPR report on strategic default I noticed the constant in both articles is that the wealthy view a strategic default as a wise investment decision whereas the middle class feels the responsibility to pay the mortgage because of fiscal responsibility.

In the 1980's real estate bubble burst, mortgage holders felt that they were responsible for the debt they incurred.
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Old 07-11-2010, 09:13 PM
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FIMCO-MEISTER FIMCO-MEISTER is offline
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A 500,000 mortgage the bank owns you. A 5 mil mortgage you own the bank.
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Old 07-12-2010, 03:49 AM
irrig8r irrig8r is offline
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That was an interesting article. I've done a lot of business in Los Altos and Los Altos Hills over the years... No late payments from anyone I've worked for there. Some of those downtown businesses were recently leveled for a new project currently under construction.

Lots of residential remodeling still going on too. Also, to put it in perspective, 15 defaults in a town with a population of over 28,000....

OTOH, I did turn down a project recently in Saratoga where the couple was going through a divorce after 9 years of remodeling/ reconstruction work... she didn't seem to be employed, and asked for the work to be done, saying her husband didn't know she had already taken money out of their joint account to pay me, before I had even given her a quote... Just didn't feel right.

And another customer there was about to have her power turned off for lack of payment while I was working there the other day...
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