Not being arugmentative Matt, but if "Da Gubmint" is setting those Mkt Rates, you can be assured our tax dollars will be squandered with glee. iow,...Million dollar house? $1000 a month rent, and subsidized to boot! The United States Marines can't compete with Congress when it comes to destroying things.
Any property owner upside down is better off not paying any mortgage, property taxes, insurance and let them foreclose. No different than trading... cut your losses... The foreclosure process is not expedient and the cash saved actually allows the property owner to take equity out in cash. The home owner can buy another's distressed home for 50 cents on the dollar in the future. There are some interesting property liabilities that transfer to the bank and/or lien holder. Foreclosed properties come with expenses: legal fees, back and current property taxes, insurance, utilities, assessments etc. Plus a 1 - 2 year foreclosure proceeding. These banks are already sitting on a 25% loss and are forced to pony up additional cash and exposure to liabilities as the owner of the property in two years they have 40% - 50% loan losses plus mark to market accounting... SOL The distressed home owner takes equity out in cash saved each month plus he gets to live rent free. If the home owner stalls it out for 2 years he takes more equity out in saved cash than he could possibly have in the property in 10 years. If you are upside down owing more than your house is worth and your house is going down in value... Stop your losses... Pay no one and pocket the monthly mortgage, insurance, taxes... suck out every cent of equity you can and let them go through the courts. Do not negotiate any settlement, your objective is simply to minimize your loss on a bad investment.
Simple question: Who besides the dumb fu(k govt would enter into a lease with somebody who has already reneged on a previous contract (the mortgage)? One answer: Nobody! The dumb fu(k govt does it, because it is "playing" with taxpayer money! Oh, wait, almost forgot...some jackass will chime in that Fannie isn't "the govt" Yeah, right, our bailout didn't buy us ownership...and our govt guarantees of loans mean nothing. -gastropod
Fannieâs Draws From Emergency Treasury Fund Reach $60 Billion http://www.bloomberg.com/apps/news?pid=20601087&sid=aTtl8uiGkfxc&pos=6
in certain spots, quite possibly sure. But for your average, "regular" home the rents work out in favor for the homeowner who was stuck either upside down or in a lousy loan to begin with. Of course the other point was made...why do such a thing if they can't afford their mortgage or even a loan mod? Oh wait if an investor or someone else tried that (short sold/bought the home then leased it back), that might be construed as mortgage fraud