Having been able to pay off my house has had the most tremendous postive impact on my mental health I think. Sure, it's a small house, and it's old, and the kitchen is small, and so on... but man, I'm so glad I never have to worry about making a house payment.
I'm having trouble parsing this. A lemon is a bad thing that happens to you, but this seems like it was a good thing for you?
Probably referencing "when life gives you lemons, make lemonade", not like a car is a lemon.
Agree on that. I own my house with no mortgage since before the pandemic and it doesn't make much financial sense to pass up a 3% mortgage but it makes mental health sense.
Yes, I owe property taxes. Yes, the city could raise them. If I completely stopped paying them today, it would take them a decade to kick me out. It's nice from a mental health perspective to have a 10 year runway to plan your next move.
if the house was in good condition and an area that you wanted to live in, then consider yourself insanely blessed!
Sometimes I feel like this experience, especially the idea that the entire principal balance can be accelerated if you don't make your payments regardless of the value of the house, left a bit of a scar on me that caused me to miss out on the ZIRP real estate boom II. But I am still happy with the way things are turning out overall.
https://www.npr.org/2024/05/10/1197959049/zombie-second-mort...
I find it interesting that in all of these discussions it's treated as known that the person at hand is ignoring the notices and just pretending they aren't in danger of losing their home, just like in issues of evictions for rent, it's treated that for some reason the tenant has decided they don't need to pay. When IMO, in both of these, it's much more reasonable to assume they can't pay.
Maybe it's just a reflexive self-protection thing in people. It's easier to watch/envision a family being forced out of their home via state violence if you assume they were just stupid/inept in some way, that they did something wrong. That the very same thing couldn't happen to you because you would never just not pay your mortgage. And I mean, same. I would never not pay my mortgage. But I can easily conjure all kinds of nightmares that would render me unable to pay my mortgage.
Maybe people just don't like thinking about that.
In any case, it's a big stretch to call eviction "state violence". When they're even involved, the sheriff is mostly helping to enforce a private contract between the homeowner and their lender. The only conceivable alternative to this situation that still allows lending or private property to exist at all is for the police to not exist and everyone enforces their own contracts with their own violence.
One of those responsibilities is that by paying for the loans you take out, in exchange you get to keep the things that you've bought using them, permanently once you've paid it off.
I might, one day, be unable to pay my mortgage. That's a risk I'm taking.
People tend to get super emotional about this stuff but at the end of the day it's just business, you have lived somewhere else and you can live somewhere else again.
Fun-fact: thems the benefits of being a mortgage holder.
If you're a tenant that's renting, you get no such legal protections - let alone discretion from whichever faceless entity actually owns the property: where I am in King County WA, I think, at most you can get 30 days' notice tops (and that's if nonpayment is the only thing they allege; it's trivially straightforward to make it a 3-day nuisance eviction, honestly).
The whole thing doesn't feel right (I don't want to say "class warfare", but I haven't heard a better explanation for this double-standard).
Every month I faithfully put my rent check in an envelope, deposited the slot at the office.
That month they accidentally threw away the check after opening the envelope.
They really didn’t believe I had paid, despite being a good tenant for years, always on time. Never caused any trouble.
Marched me to the office and they discovered they had photocopied my check but didn’t deposit it (threw it away).
That all happened in one month — no prior notice/warning/call about being late on rent.
I’m still shocked at this treatment many many years later. Can’t even chalk it up to any type of prejudice… just utter stupidity.
Here in the Netherlands the renters have the right, but mortgage holders do not. I was renting a place the owner had mortgage. For some reason the bank wanted to sale the place but couldn't evict me. Since this was the owners fault the bank's lawyers helped me to get like 6 months of rent back to agree to leave. The bank even offered me to buy the place, which in the hindsight, I should have done.
Long story short, what you guys have in US feels wrong and it's not always like that in the rest of the world.
In the USA. Many countries in Europe have renters protection similar to that of mortgage holders.
While there are certainly asshole landlords, I don't think this situation happened because of a systematic class warfare, it's just landlords tend to be smaller institutions that have a much higher risk profile than banks. Add to that that renters tend to have less political power, and you end up with a situation that greatly prefers mortgage owners.
These laws are hyperlocal and making a sweeping statement about the County, State, or the US will ultimately be providing incorrect information.
The landlord will never be reimbursed for the months of rent not paid, and is paying the mortgage out of their own pocket during this time.
Think of it from the bank's point of view. A bank can afford to be patient with mortgage holders because there's an underlying asset. There's a $300,000 house and the owner still owes you $150,000. If you repossess right now as opposed to a few months from now, either way you're getting repaid from the value of the asset, minus the cost of dealing with everything.
Whereas when renting, if someone misses rent one month, if you evict them immediately you're out a month's rent. If you wait two more months before evicting, now you're out three months' rent. The longer you delay, the more it costs you.
Getting overdrafts weekly, in that era where they reorder transactions to really turn the screws. Sleeping early because it's cheaper than eating. Working two jobs and still not getting ahead. The shame of having to ask to borrow a few bucks, but trying to hide it so you didn't seem ingenuous. Having better off people talk to you like a child, giving you unsolicited one liner advice that they probably read on a motivational poster at work that morning, like they're doing me a life favor.
The thing is, I got a lucky break in my mid 20s and haven't struggled a day since. Now it's been almost 20 years, and I find myself acting like the rich person you describe. I guess like all things, appreciation wears off with age and becomes the new normal.
I don't ever want to struggle like that again, but I'd love to experience the feeling and appreciation I had for the first couple years after climbing out of it. It's easy to forget.
Banks, the lending industry (including credit card companies, mortgage and student loans), debt collectors, repo men, payday loan stores and check cashers, not to mention the entire legal system, ugh... To me it's sick that they can upend someone's life just because they didn't pay a bunch of bills. Society collectively has the wealth to treat the less fortunate with grace and dignity, with compassion and forgiveness, but it's more profitable to find fault, then squeeze everything out of them and leave them by the side of the road.
A lot of people fold their arms and smugly say "Well, they made bad choices and deserve it all." Whatever lets you sleep at night, I guess.
I cannot come up with the words about how absolutely evil someone had to be to make transactions work that way.
How utterly fucked up and sociopathic do you have to be to steal money from the poor?
For me, the biggest difference money make, is the freedom to choose better options. When you don't have money, or family backup, you quite often choose poorly not because you're dumb, but the choices you can really make are very limited. You end up taking a job that's good but not that great. You are renting, and even if the job is not good, you know there would be a huge risk to try to change the job, as you could end up unable to rent something new if you don't have a stable proven job...
These are things a lot of people never ever experienced in their life. It's not their fault of course, ideally nobody should. But yeah, you just don't judge people for poor choices that much, if you've ever been in a position where those poor choices are actually often the only real choices you have.
I grew up poor and I don't have the faintest clue what you're talking about. Terror? Predation? Being used and discarded? No, we just didn't have that much money, every penny had to be counted, our horizons were quite low, we lived in cheap areas.
Now, if we talk about things like bad parenting / broken families, dodgy immigration status, etc, I think I can understand what you're talking about. But that's a whole different (and much more complicated) issue.
...the gospel of graham to the contrary
They're soft.
A nice reminder that, in literally every possible situation, even just a little bit of kindness and humanity can go a long way.
⸻
1. For those who don’t know, a short sale is one step up from foreclosure: The homeowner and lender agree to a sale for less than the outstanding balance on the mortgage. The buyer must not be related to the seller and the seller does receive a few thousand dollars of the sale proceeds. On the flipside, the amount of the mortgage that is not paid off is considered income and the seller must pay taxes on that.
2. We ended up not buying any of the short sale homes in the community where we were looking, but instead purchased a home that was a traditional sale.
Mortgage Forgiveness Debt Relief Act of 2007 allowed for the exclusion of taxes on forgiven mortgage debt. Many people used that law in conjunction with HAFA or HAMP. Myself in particular conducted a short sale during this time and did not pay taxes on the difference.
I remember thinking during the mortgage crisis when folks were often underwater by $100K or more that the taxes would end up killing them on short sales. I wasn’t paying enough attention to know about the 2007 debt relief act since I was a renter at that point.
> bankruptcy laws were skewed by GWB
Relevant wiki article about the act he signed that changed bankruptcy laws:
https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an...
That said, 99% of defaults are very simple: At the time of the loan, the borrower could afford to make the mortgage payment. Later down the road, something changes in their circumstance, and they can no longer afford to make the monthly payment (or anything close enough to work out a deal). The most common reasons are a loss of income or severe medical issues.
Mortgage servicers and investors almost never want to foreclose on a home. An extended default leading to a foreclosure is very costly, and the servicer is usually fronting the money to the investor the entire time. Everyone loses when a foreclosure happens (though only one party doesn't have a home anymore).
I am profoundly sympathetic to anyone who gets evicted, but lenders only make mortgage loans because the property is collateral. How else would someone front a normal borrower hundreds of thousands of dollars?
During the 2008 crash, I heard of a lot of people seeing their home value plummet, end up underwater on their mortgage, and decide to just abandon it. I've never understood why someone would do that, rather than ride it out and keep paying while the value recovers?
I could MAYBE understand going "Nope, I'm out" if you had an adjustable-rate mortgage and your rate skyrocketed and now you can't afford the payments, but every housing bubble pop is temporary.
But like...I see my mortgage payment as more than just a payment on a loan, it's simply the cost of having a roof over my head. Whether I'm paying $2,000 to the bank, or $2,000 to some landlord (Really, I'd be looking at $2,800/month for a house like what I have now), I'm paying $2k/month. So why not just keep paying my mortgage, even if the value is less than what I paid?
It wasn't a matter of holding the property. Most simply couldn't make payments.
Walkaways worked because real estate debt (in most of the US) is non-recourse debt. You leave the mortgage, the bank (or present mortgage holder) gets the property. Debt is settled.
(Lender in this case, or the present mortage holder, itself a rather complex question given mortgage-backed securities and fast-and-loose assignments of title, gets stuck holding the bag. Eventually values climbed again, at least outside economically-blighted zones.)
> Whether I'm paying $2,000 to the bank, or $2,000 to some landlord (Really, I'd be looking at $2,800/month for a house like what I have now), I'm paying $2k/month. So why not just keep paying my mortgage, even if the value is less than what I paid?
I think you're missing the point that in a crash like 2008 the market rents would go from $2,800 to $1,400. Also, a reminder to anyone reading this that you cannot compare mortgage payments to rents. The down payment could have gone into another investment (like a tax-advantaged 401k) and so you need to take into account the opportunity cost of not getting S&P 500 returns. In the US, this is normally offset by the fact that the government tries to make mortgage rates very close to the Fed rate and the fact that the system allows you to lever up 4x (20% down) to 99x (1% down) to minimize the opportunity cost of other investments. In general, if you plan to live a house for at least 5 years, you should probably put it on a mortgage.
In my area those that bought the top in 07 are now just back to break even. Think about that for 15+ years everyone around them is making equity while they just dig out of the hole.
It was a nice place! rooms for the kids, a pool, etc.
Then 2008 hit. WOW. We went from a prosperous family to NOTHING incredibly fast.
This asset was so toxic the bank wouldn't even fucking take it. It was an albatross for YEARS and my parents had to liquidate their 100 year old family business, and all other assets before they could wiggle out from under it in 2014.
For little podunk rust belt towns, there was no "recovery." The car parts plant was gone. The tire plant was gone. The steel casting plant was gone. EVERYTHING went to Mexico. Why buy a nice place if there is no job to support it?
That house now sits empty out on a lot next to a closed down golf course. So it goes
The person who bought it is still holding the bag if Zillow is any indication, it’s still about $30k under what he bought it for. I often think about how many people are still screwed from that time.
It's a cruel joke when money is worthless and expensive at the same time.
You'd think the USSR would've been enough to stop people believing in central planning. But this is unlikely, since the desire for central planning is actually an innate instinct - a child wanting parents to handle everything for them.
Some discussion then: https://news.ycombinator.com/item?id=2959137
This house cannot be used as an investment vehicle. It cannot be sold by a real-estate agent with a contract of more than 1%. It cannot be used as a rental. It cannot be sold for more than inflation would allow.
Anyone found violating this addendum may be sued. All proceeds from the lawsuit (after fair lawyer fee of 40%) shall be used to build new homes (as in it can only be used to fund actual building materials, not generic non-profit companies).
This might not be the best approach, but we need a home renaissance that redefines home ownership across the world so that no one has to be homeless anymore.
Why? When would it make sense for someone to attach this addendum to a sale? All these penalties and restrictions would only mean getting paid less for the same property. On the buyer side, why would anyone want an asset like you've described?
I live in a home that I enjoy in part because it is a fantastic investment that is highly-leveraged (through a mortgage) in a way not possible for other types of assets. If I need to I can rent out rooms or the entire property. I can sell it to whoever I want, whenever I want. I can borrow against my partial equity in the property. My mortgage is 30-year fixed, but I can always refinance (with no prepayment penalty) if rates go down below my locked rate.
I wouldn't want to buy a house without these benefits, and I don't know who else would. If this became standard it would reduce demand for this asset class, and therefore make it less profitable to build new housing, which is exactly the opposite of what you want.
Congrats on your fantastic investment and other high octane adulting, but even if you’re winning, look around, a huge chunk of the “wealth” of nations is tied up in real estate nonsense that represents a vast and willful collective kind of madness. This should freak everyone out in aggregate even if they like the idea of their own position.
But more concretely.. everyone pays the “investment vehicle” premium even if they aren’t trying to invest, and even if the home or area definitely can’t deliver a ROI. After pricing lots of the more thoughtful and plan oriented people out of the ability to have children, we are probably well on our way towards pricing single people out of the ability to have a home, even after some market crash that cuts those prices drastically. And yet western society in the northern hemisphere is too individualistic to dwell together collectively in larger family clans or even friend groups long term. To put it mildly, housing as “investment” is a really bad idea, and we’d be better off if people that are interested in that just stay busy with stocks instead. Less mild, we’ve moved past the point where it’s merely unsustainable.. it’s actively destabilizing judging from the rise in populism everywhere.
Why would anyone attach that to a sale? I bet that such terms would reduce the money you can get for the house to at least a tenth of the unencumbered value. Simply because it will make all future sales so much more complicated and risky. It would reduce flexibility for the person who now owns the home. (Especially the no-renting rule.) Banks would not touch such transaction with a 20 feet pole so the buyer better has the whole sale price in cash. Which means only wealthy people can buy your house.
You might be grinning about all of these consequences and thinking “yes, this is exactly what i want to achieve”. But what is the incentive here for the home owner? From their perspective choosing this option loses them a lot of money, so who would do this? And why?
Sounds like the home owner could just douse their home with gasoline and light it on fire. From a value perspective it has about the same effect. I predict it would be similarly popular too (that is not popular at all). Which means very few happless people would be stuck with this weird situation, while at the same time the option would have about 0 effect on the wider market. (Maybe it would add some extra legal checks to buying normal unencumbered property increasing the legal costs for everyone. Just to verify that nobody had added such an agreement to that particular property in any point in the past.)
It's not just the home-buying market where prices are high. It's also the home-rental market.
> so that no one has to be homeless anymore.
People that can't buy may no longer be able to rent either because of the supply you constrained. Homelessness would probably go up.
Rental is not necessarily the problem compared to leaving houses empty because they're worth more as investment than putting in the work to rent them out. And the number of Vacation rentals in my area is a bigger issue than rentals or empty houses. Why house community members for $2000 a month when you can charge that per week to tourists part of the year and make more money, right?
It's not bad.
But does lead to people unable to move. Because they don't earn enough from the sale to buy a new house. And buyers can't get a property nobody is selling (so you risk corruption too).
Could also cause a bit of market distortion. Probably not a huge problem.
Also: Take a look at housing in France (outside Paris), Germany (outside Berlin), and Italy (outside Milan). It hardly changes faster than inflation. How do they do it? Low population growth, combined with careful community planning (new housing starts, etc.)
Houses are only an attractive investment vehicle in the first place because there is a massive shortage of housing.
But our culture is very individualistic and values greed and puts exploitation of others on a pedestal. I don't believe this would really work with the predominant mindset of meritocracy or even be appealing to most as we feel entitled to our own space, ways of doing things, property etc.
We see community and the related obligations as a burden and put the individual at the top. I think changing this would be a preliminary requirement to solving homelessness.
Not that I have thought this through from all angles, but I believe this is a major blocker.
Rich drug addicts tend to remain housed, at least to a greater extent than the poor.
Getting forced onto the streets tends to compound any preexisting tendencies to poor mental health and/or addictive tendencies.
Well spotted.
His wife had divorced him a while earlier, and by the time he was evicted the carpet was filled with dog poop and pee, some partially cleaned up, some not.
The guy was an accountant. One would assume that a professional like that would be able to get access to help; would be able to figure out what's going on and change course.
I don't know or remember enough of his story to really make a point. It sucks that he died. It sucks that I'm part of a chain of events that accelerated that. It sucks that people get drawn into things like gambling and drugs. It sucks that people are unhoused in a country with access to a surplus of resources.
By the time someone gets to intensive care in a hospital, a nurse can 'save their life' 5 times in a night, just for them to die the next day. This guy could have lived more years, but it's really hard to know what those years would have been.