why a strategic mortgage default may be your best option - 4

8/9/2019 Why a Strategic Mortgage Default May Be Your Best Option - 4

http://slidepdf.com/reader/full/why-a-strategic-mortgage-default-may-be-your-best-option-4 1/12

Here is an article posted recently in the economic section of our paper. This information

is provided for educational content only and is not guaranteed for accuracy or

correctness.

New home sales across the U.S. fell by more than 11% in January 2010. It was the third

consecutive monthly decline. Worse, the decline took out all the prior gains from last year.

Maybe it’s about time that you contacted us at www.PacificNWHousingSolutions.com to help

with your real estate needs.

Why a Strategic Mortgage Default May Be Your BestOption

Wednesday, February 24, 2010Posted in category Economics, housing bubble 6 Comments

Here is an interview that I did in early February 2010.

Many entities, from the White House to various mortgage banking leaders to self-professed pundits, are trying to put a shame element to borrowers who findthemselves with acute negative equity in their homes. Is it possible tosuccessfully shame these people into staying in their mortgage loans and notwalk away from their homes?

DeCoster: Federal officials like former Treasury Secretary Hank Paulson, along withpowerful special interests that profit from central planning policies, have an interest inkeeping people hogtied to the sinking housing market. They are trying to depictstruggling Americans as irresponsible scoundrels who are recklessly walking away fromtheir commitments. In fact, the multi-millionaire Hank Paulson, who was one of thearchitects of the Wall Street bailout, told the Wall Street Journal that borrowers “have aresponsibility to keep paying.” That’s a pretty broad statement to make that: 1) ignoresthe default option on the typical mortgage contract, and 2) disregards eachhomeowner’s unique options and financial situation.

The broad statement was intentional. The overall scheme calls for treating eachindividual debtor as one piece of a collective pool of citizens who shall be enslaved by

http://www.pacificnwhousingsolutions.com/

http://karendecoster.com/category/economics

http://karendecoster.com/category/housing-bubble


http://karendecoster.com/why-a-strategic-mortgage-default-may-be-your-best-option.html#comments




http://karendecoster.com/category/economics

http://www.pacificnwhousingsolutions.com/



the collapsing economy. The people who insisted, for years, that there was no housingbubble, no debt dilemma, and no recession on the horizon are the same people who arenow telling us that everything is fixed, the recession is over, and therefore we should goback to our old habits – buy more stuff we don’t need, take out more loans, and buyhouses and cars. The government has subsidized the purchase of both cars and

houses, in spite of the fact that an abundance of Americans are still saddled with debtand holding underwater mortgages.

The Obama administration, in its massive campaign to socially engineer America, ispressuring banks into renegotiating mortgage payments in order to keep people captivein their mortgages. The goal of the elites in power is to keep up the appearance ofprosperity and keep folks in debt to the big banks. Mass defaults will injure Wall Street – Washington D.C’s favorite constituency. Additionally, there’s John Courson, an FOB(Friend of Banksters) who runs all over the country trying to spread the moral messageto middle-class people who are pawns in this Bankster mess. Courson is the ChiefExecutive of the Mortgage Banker’s Association, so whose interests do you think he is

representing? Courson advising homeowners on their moral and financial strategies islike a crocodile telling the neighborhood children they should take a shortcut homethrough the swamp. These so-called “leaders,” unfortunately, have the necessarywealth, political power, and media access that enable them to introduce theirdisingenuous platform and influence the masses. For those who aren’t empowered bythe political establishment, there’s no equal opportunity for commanding the publicstage.

The schemers know they don’t have to deal with a level playing field, so yes, it ispossible to shame people into debt subservience. In fact, the masses are alreadysuccumbing to the morality message. The elites don’t give a damn about the plight of

average people who have little to no financial knowledge, feel trapped, and havenowhere to turn. That’s why those folks need to reach out to a local CPA or otherfinancial advisor they can trust. Furthermore, they need to tune out the moralizing thatflows from the fat cats and special interests that get wealthy by keeping them equitydeficient.

Why is it that strategic defaulting at a corporate level is not actively challenged,but it is being challenged at a consumer level?

DeCoster: The notion of approving business defaults while flogging one’s neighbor forwalking away from his mortgage is entirely irrational. One snag is that the generalmasses have no understanding of financial matters. No matter how “educated” theymay be in the college sense, they are financially ignorant and cannot conduct basicanalyses of their own financial matters, let alone weigh the costs and benefits of acomplicated situation that is unique to another individual. There are plenty of talentedand smart people who don’t have the skills to sort out budgets, expenses, debt, andinvestments. That is not a criticism – it is just a fact.



The condemnation of homeowner defaults is brought on by a knee-jerk, emotiveresponse. People feel – they don’t think. You can thank public schools for teaching self-esteem and groupthink as opposed to business and analytical/critical thinking skills. Thepublic schools are churning out a nation of drones, or trained monkeys, as I like to sayit. Welcome to the Oprahized nation where logic and reason are abandoned in favor of

emotionalizing hot-button issues for the purpose of “feeling better.”

Challenging other people on this issue, when you know nothing about their state ofaffairs, is something that is fired off from the gut level. The morality element is a greatfocal point for drawing out emotional energy. Focusing on other peoples’ behavior thatyou deem evil, while you avoid the objective aspects of the issue, is pathetic.

An individual’s financial options can be objectively assessed and the most favorablecourse of action can generally be determined. Businesses entrepreneurs and managersare constatntly analyzing and estimating various strategies, and that is how businessesbecome enduring and profitable. Individuals and households are no different in terms of

planning best course scenarios and minimizing waste and losses. Except individualsand households suffer personally and emotionally by bearing an unfavorable financialcondition. For that reason, they must take actions to alleviate uncertainty and keep theirfinancial house in order.

Do you expect to see more strategic defaults in the coming year?

DeCoster: The majority of American homeowners are delusional about the nature of thehousing bubble and the ensuing bust. They think the post-bubble housing crash is theaberration, and the housing market will return to “normal” at some point in the (near)future. They don’t understand that the bubble was the aberration, and those days are

over and dead. They thought the bubble prices were the new norm. And the strangething is that they liked it. They delighted in receiving a high price for their home, andnever seemed to be able to grasp the fact that they would also pay a higher price foranother home.

Moreover, new homeowners start off their purchase with a faulty – and dangerous – assumption. The word often used is “investment.” People have been sold on theerroneous view that their home is an investment. This defines the home as anappreciating asset. Real estate professionals and mortgage industry hacks help to sellthat idea to prospective buyers who don’t know any better.

This notion began when central planners and social engineers misappropriated the term“the American dream” and put it into use as a slogan to convey a sense of entitlementand equality as they began to shape and subsidize the home ownership nation that gotstarted with the creation of Fannie Mae in 1938. James Truslow Adams coined the term“American dream” in his 1931 book, The Epic of America , to describe his ideal socialorder based on one’s capabilities and merit. Post-WWII the term “American Dream”came to be a synonym for home ownership. During the bubble-boom years, the term“American dream” came to be defined as a McMansion for everyone with promises of



perpetually rising values. This turns every homeowner into an instant entrepreneur, asopposed to a sap who gets ripped off by overpaying for a durable good he can’t afford.

A home is not an investment – it is a durable consumer good. If it were an investment itwouldn’t be the primary family shelter. This is a dangerous perception that has been

hammered into the American culture, and this way of thinking will end in disillusionment.Why do folks want to see housing prices go up when that means they pay more forhousing? Because of the “investment” mentality – they want to see their “investment”rise in value, even while they pay higher prices for someone else’s “investment.” Makesense? No, but it makes homeowners feel more prosperous in the end. In general, themasses have bought into a system that makes them house poor and turns them intoslaves to perpetual debt.

It’s important to remember that for each individual there is an objective financial analysisthat can calculate the costs of various alternatives. That analysis determines whether ahomeowner is better off staying in the home or leaving the home and becoming a

renter. Furthermore, there are qualitative factors to consider that are subjective to thehomeowner. I think the attachment to home ownership will have people putting a heavyemphasis on those qualitative factors. Since walking away from a home is a hugelifestyle change, staying in the current home will be the most uncomplicated choice formany people. Consequently, many homeowners will remain in their homes unless theycan no longer make the payment. They will dig in their heels and ride out what theythink is a temporary storm while claiming the moral high ground. There is also theperception that it is somehow “superior” to own a home as opposed to rentingsomething similar, even if ownership keeps in you in a financially inferior condition.

Henry Blodget has been discussing consumer defaults in the media, and he takes the

proper position: don’t take the strategic default route just to stick it to the banks and WallStreet in a fit of anger. Don’t default to get back at the banksters, but only resort to thatstrategy when it’s the right business decision. All the same, the banksters, with muchassistance from the banking-congression al-corporate state complex, had a major rolein creating the housing bubble, engaged in reckless lending practices, defrauded scoresof borrowers, and later spent a ton of loot lobbying their favorite Washington D.C.politicians and agencies for multi-billion dollar bailouts. So why should Mom and Pop onMain Street care if the bank gets the rotten end of a mortgage deal that it agreed to afterassessing its potential risk?

Looking at the statistics on upside-down mortgages, there should be far more strategicdefaults above and beyond what is occurring. According to Deutsche Bank Securities,about 21 million U.S. households will be underwater on their mortgages by the end ofthis year. Plus, between 2010 and 2012, more adjustable rate mortgage (ARM) resetswill drive payments higher, making ownership even less desirable.

In reality, strategic defaults will help drive housing prices back down to market values. Ifthe economic/monetary policy planners within the government would abandon theirefforts to keep interest rates low, and if they stop pushing more debt onto American



consumers by lying to them about the future of housing and the economy, then perhapsthe correction will be able to occur, and the overpriced assets – houses – can becleansed from the market. Shedding debt and overpriced housing will help clear the wayfor economic recovery. Talk about a real stimulus!

————————————–

I agreed to do an interview that was just published on mortgageorb. com : “Why is Karen DeCoster Advocating Strategic Defaults?” The interview is different than the one I gave,which is always a risk any time you defer to someone else’s judgment on matters of your writing. It was heavily edited, perhaps for length considerations, but also, questions were added to the interview that I did not receive, and therefore they are questions I did not answer. I understand the author was trying to lead in to some of the lengthy content I sent him, yet I still expect that I should have final approval over substantial changes to content. So much is missing from the edited version that I have chosen to publish the interview here, in full, as it was originally conducted. I prefer this version to the one I

have up at mortgageorb. com. This interview was conducted shortly after I published this article on LewRockwell. com in January: “It May be Financially Irresponsible to Pay Your Mortgage.”

————————————–

Karen DeCoster, CPA, has a Master of Arts in Economics, and is an accounting/finance professional in Detroit. She recently published “ It May Be Financially Irresponsible to Pay Your Mortgage .” Her website is at Karendecoster.com .

Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific

NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says

-- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with

Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing

Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart

Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW

Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --








Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis BartBertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with

First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty

Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial

Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says --

Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart

Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with

First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty



Francis Bertholic with First Liberty Financial Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with


http://www.mortgageorb.com/e107_plugins/content/content_lt.php?content.5324

http://www.lewrockwell.com/decoster/decoster169.html




http://www.karendecoster.com/








http://www.mortgageorb.com/e107_plugins/content/content_lt.php?content.5324











Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NWHousing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --
















NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says-- Bart Bertholic with Pacific NW Housing Solutions says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic

with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First

Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial

Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says

-- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart

Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with

First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First




Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Bart Bertholic with Pacific






















NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says-- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with





Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Bart Bertholic with Pacific
















Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with PacificNW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says









Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Bart Bertholic with Pacific NW Housing







Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW HousingSolutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart
















Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Francis Bart Bertholic with First Liberty Financial Services

says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says --

Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart

Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr.

with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty

Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial





Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial

Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart





-- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic withPacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing























Solutions says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -

- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart




Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says --

Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart




Services says -- Francis Bertholic with First Liberty Financial Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart













Solutions says -- Bart Bertholic with Pacific NW Housing Solutions -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A

Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties --

BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A


















BB & A Properties -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart



Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with PacificNW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing So lutions says










Solutions says --Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says --











Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty FinancialServices says -- Francis Bertholic with First Liberty Financial Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart
















Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific











Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Francis Bart Bertholic with First Liberty Financial Services says --

Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis

Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic

with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First

Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial

Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services

says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says --

Francis Bertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart



Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial

Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart










Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with PacificNW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says



















Solutions says --Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart


Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific
















-- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic withPacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing



























-- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says --Francis Bart Bertholic

with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First




Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholicwith First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First





First Liberty Financial Services says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing
















Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW HousingSolutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions says -- Bart













Pacific NW Housing Solutions says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty



Francis Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- FrancisBertholic Jr. with First Liberty Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic

with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial Services says -- Francis Bertholic with First

Liberty Financial Services says -- Francis Bart Bertholic Jr. with First Liberty Financial Services says -- Francis Bertholic Jr. with First Liberty

Financial Services says – F. Bart Bertholic with First Liberty Financial Services says -- Francis Bart Bertholic with First Liberty Financial



Bertholic with First Liberty Financial Services says -- Francis Bertholic with First Liberty Financial Services says -- Bart Bertholic with Pacific














Bart Bertholic with Pacific NW Housing Solutions says -- Bart Bertholic with Pacific NW Housing Solutions -- BB & A Properties -- BB & A












BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & AProperties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A Properties -- BB & A P roperties --







BB & A Properties -- BB & A Properties -- BB & A Properties --

why a strategic mortgage default may be your best option - 4

Documents