Almost half of Nevadans say it’s OK to default on a mortgage

/ Las Vegas Sun

Weeds surround a foreclosed house on Rock Cove Way in Southern Highlands.

Walking away a popular strategy in home foreclosures

Walking away a popular strategy in home foreclosures

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KSNV reports that walking away is the method of choice for homeowners facing foreclosure, July 26.

Strategic default

Is it OK to default on a home loan, if the borrower has the ability to pay?

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In foreclosure-wracked Nevada, residents are divided on whether it’s OK to willingly default on a mortgage loan. And many people who lost their homes during the recession say they still might buy another house.

Nevadans are “frustrated but oddly optimistic” about home ownership, a new report out today by the Nevada Association of Realtors found.

Almost half -- 45 percent -- said there is nothing wrong with “strategic default,” in which homeowners who are financially capable of paying a mortgage choose not to make payments instead. But an equal number disagreed, saying homeowners have a legal and ethical obligation to pay their mortgage if they can.

The report shows “how polarizing this issue has become,” Association President Blane Johnson said in a statement. He also said it shows that strategic default has become more socially acceptable.

The report also found that 55 percent of Nevadans believe government should play a role in addressing the foreclosure problem. However, only 9 percent of those experiencing foreclosure -- and 10 percent of all Nevadans surveyed -- said foreclosure-prevention programs have actually helped.

Meanwhile, the association said Nevadans remain relatively optimistic about home ownership. According to the report, 26 percent of people who have faced foreclosure said they are at least somewhat likely to buy another home within two years.

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  1. I guess it just depends on who was asked that question. If you asked that question of corp. CFO's then it's just a good sound business decision to maintain the solvency of the company. However if that same company holds your mortgage then you have a legal and ethical obligation to pay. People are corporations too!

  2. Your stats pretty much tell you why our state/county/city are in the problems that we are. Rating BOTTOM on most everything. 45% of the people have no ethics and only do what is right for them.

    These "strategic defaults" cost everyone of us that do pay our bills.

    To many live for today and the hell with the future, theirs or ours.

    Vegas is a great place, it can be anything you want it to be if you treat it right, it treats you right but to many feel they can just play by their own rules. Hate to say, it is not just here though, it is American's across the country doing the same thing.

    Personal responsibility is a thing of the past and until more start stepping up and taking on that personal responsibility nothing will get better.

    This is not just about housing, it is about everything in our lives.

    Don't blame elected officials, police, schools, Etc. for what you have created.

  3. Only an idiot would believe it is NOT ok to default under our current economic housing downturn.

    When in the world would any reasonable person, homeowner, retain debt of 400,000 on a property that is worth 200,000?

    Somehow it is ok for big banks to engage in predatory lending, credit default swaps, bank servicing for unknown note holders, etc. It is ok for these big banks to engage in this conduct - but somehow the masses should look down on others who default on their loans as a result of the bank's negligent/criminal conduct?

    Get real. If you are underwater by a significant amount - you have no choice - only a fool will keep up the obligation on an item worth less than 50% of what you currently owe.

    Even for those people that have managed to modify their loans - those modifications are nothing more than short term relief.

    All this "it is your responsibility" against consumers is pure hogwash. All while these big bank wall street pigs get away with their exploitation of the masses.

  4. unlv702...

    RIght on the MONEY!

  5. " others who default on their loans as a result of the bank's negligent/criminal conduct?"

    Thats pretty rich. People stopped paying on the 10 investment\flip properties they misrepresented themselves into owning and that was the result of the banks conduct only? The house next to mine was rented out while in foreclosure right up to the auction day. That was the banks conduct only?

    How about the negligent conduct of the debtor\buyers? how many loan apps were lied on? It was a giant bust out.

  6. Didn't Donald Trump file for Bankruptcy protection. ie debt discharged at the stock holders expence. But yet no one say's he is imoral.

  7. I don't wish anyone any grief. That said, every buyer signed an agreement, a promise to pay. Those who can make the payments and walk away are committing a crime. It's the same as if you float bad checks, only it's one big one.

    The value of your home is only relevant if you need to sell and can't. If you intended to stay in the home, you are ahead by virtue of lower taxes. A home is a place to live, not a credit card, not an investment in the sense of increased value primarily from inflation of prices. Those who thought real estate values only go up either lied to themselves or never did their due diligence. Home prices have never been excepted from economics, they have fallen before and will again. Even undeveloped land prices can fall.

    It's not okay to walk away when you have the means to pay.

  8. "But an equal number disagreed, saying homeowners have a legal and ethical obligation to pay their mortgage if they can."

    Segall -- the obligation is defined in the mortgage note itself and the centuries-old law of notes. Nevada's current version is found @ http://www.leg.state.nv.us/NRS/NRS-104.h..., Article 3. It's all right there for anyone who bothers to look it up. So far I see no one else here citing it.

    "Change to title of the article to read "Almost half of Nevadans are worthless dirtbags"

    bobthebuilder -- the only dirtbag here is your ignorant post. See my above link. I'd recommend NRS 104.3501 and 104.3412 to start.

    "Homeowners do not have a legal obligation to pay their mortgage. They have a contractual agreement, enforceable by provisions in the contract. There is a big difference."

    bankv -- only partly, since it's a note, not a contract. Their legal obligation is created by the debt instrument, the mortgage note. Our Supreme Court explained it all last year in the Pasillas and Leyva cases. Look them up.

    "Perhaps the question should have been "Is it OK to steal?"

    ScottNV -- the stealing is mostly on the banks' part. In the Leyva case our Supremes said "The obligor on the note has the right to know the identity of the entity that is "entitled to enforce" the mortgage note under Article 3, see NRS 104.3301, "[o]therwise, the [homeowner] may pay funds to a stranger in the case." Most foreclosers are incapable of proving they have the right to enforce the notes and usually can't even tell you who has those note holder rights ... you know, strangers to the notes.

    "...every buyer signed an agreement, a promise to pay. Those who can make the payments and walk away are committing a crime."

    BRASS -- how exactly? Especially when those demanding their payments won't or can't prove their right to enforce payment. So who's the criminal now, Dale?

    "Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them..... in America, it's far more shameful to owe money than it is to steal it." -- an article from the November 25, 2010 issue of Rolling Stone by Matt Taibbi "Courts Helping Banks Screw Over Homeowners"

  9. By the comments, it's perfectly clear that it's the leftists, who are only along for a "free" ride and always have their hands out, champion not honoring ones obligations. No honor, no integrity, no morals and no qualms about being low-life cheats! I'll bet not one of the cretins shared their gains with their lenders when the housing market was hot and they cashed out 100s of 1,000s ahead. No, these self-centered and greedy leftists like to play "head-I-win; tails-you-lose." Talk about mean-spirited. They take the cake!

  10. "By the comments, it's perfectly clear that it's the leftists..."

    lvfacts101 -- if ignorance was bliss you'd be in nirvana

    "The note is the cow and the mortgage the tail. The cow can survive without the tail, but the tail cannot survive without the cow." -- the late Professor Chester Smith of the University of Arizona College of Law, as cited in Restatement (Third) of Property, Mortgages 5.4, Reporters' Notes

  11. I am not sure why so many blame the bank, all they did was loan the money so the person could have the American dream of home ownership. I am sure the 45% who think it is OK are the 45% who got their homes with little or nothing down thru governmental programs. I do think a default option should be available so people can move to the next level,a smaller retirement home, a bigger home for a growing family, new job out of state, etc thru a "carry mortgage" that would go on the next property they buy, yet not be a factor in the calculation nor a hinderence of credit for the new mortgage. When that replacement property is sold for a profit the carry mortgage could be paid or the balance gets carried forward again. Yes it is a debt.

  12. "I am not sure why so many blame the bank, all they did was loan the money so the person could have the American dream of home ownership."

    petef -- don't be naive. Everyone posting on public forums like this paints with big, broad brushes. Not all lenders and their battalions of parasites are evil, nor are all homeowners deadbeats.

    When you sign one of those mortgage notes, a promissory note which qualifies under Nevada law as a negotiable instrument, that stroke of your pen actually created the "money" you were then "loaned" as soon as you issue it.

    Taking this a step further, if you signed the Note with a local lender, say Pulte Mortgage, then you suddenly get your greetings from BofA telling you to send them your payments, would you enforce your right under NRS 104.3501 to make BofA prove its right to your payments? Didn't think so.

    My point -- considering what home ownership means to the average family living in it, one fraudulent taking is one too many, and must be swiftly, severely punished. Our public authorities were Constituted to protect us from that kind of predator.

    Maybe it's better to ask here what exactly happened to that $1.5 BILLION from that national mortgage fraud settlement from the big banks. Check that out @ http://www.8newsnow.com/story/16911256/t...

    Segall -- you paying attention? How about finding out not only what happened, or is happening, to that $$, and how exactly it's being handled to help Nevada's homeowners it was intended for?

    "The nine most terrifying words in the English language are 'I'm from your government and I'm here to help.'" -- the late President Ronald Reagan

  13. It is one thing to find yourself in a tough situation that requires a tough decision. It is quite another to say, out of the gate, that it is "okay" to absolve oneself of personal responsibility and accountability, to demonstrate that one's word (or, signature, in this case) means nothing when things get tough.

    Oh, and that persistent excuse that it is okay because "the coroprations are doing it"? Sounds like the argument I used to make to my mother when I was ten years old, to which she would reply, "I don't care what Johnny down the street is doing; you aren't Johnny down the street."

    Exactly.

  14. KillerB

    Every mortgage I have signed had some wording that let the bank assign the Mortgage to whomever they wanted. Is this the "fraud" you are referring to? That the originating lender was not the one foreclosing as the note had been assigned to another lender when every mortgage has language in it that was signed by the borrower? The stop gap measures to stop foreclosures over a possible minor technicality will come back to haunt the housing market as it is artificially holding up prices now and not allowing process of liquidation to continue orderly.. B of A originated the note, sold it to Fannie Mae, they bundled it with others and sold to Wells Fargo as a block investment, all parties that had the note were legal owners of it at the time they owned it and this is how new money became available to loan for more owners to buy houses. The system has been like this for 40 years or more. Now it is all the banks fault and they commit fraud by foreclosing on a note they own?

  15. "Every mortgage I have signed had some wording that let the bank assign the Mortgage to whomever they wanted. Is this the "fraud" you are referring to?. . .Now it is all the banks fault and they commit fraud by foreclosing on a note they own?"

    petef -- on your first point, not at all. The usual verbiage is found in "1. BORROWER'S PROMISE TO PAY . . . . .I understand that Lender may transfer this Note. Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." 90% of everything anyone needs to know about all this is right there.

    On your last point, you leaped to giving the banks too much credit -- "owning" the Note. If the foreclosure beneficiary is indeed the Note Holder, and proves it when challenged, that's a totally different thing. But that's rarely what happens.

    It seems you're not factoring in two requirements Nevada law insists on, the first being what I quoted from Leyva about paying strangers to the Note. The other is the requirement of recorded assignments/transfers -- "Absent a proper assignment of a deed of trust, Wells Fargo lacks standing to pursue foreclosure proceedings against Leyva."

    "If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"

  16. Looks like this article is pretty spot on about how people feel.

    Their "Poll" is running 50-50 and the comments seem to be that way.

    Other things that seem to be 50-50.

    Half of American's pay Federal taxes while half don't.

    Half our the kids in our school district pass the tests and graduate while the other half does not.

    I guess this is to be expected.

    Half of American's take personal responsibility for their own lives while the other half does not. ;-)

  17. People and corporations have an ethical responsibility to pay the bills. People get hurt when they don't. A shame only half believe that.
    Vegaslee is dead on!

  18. To a large extent our entire economy is based on people paying for the goods and services they receive, including homes. When half don't believe this it's debatable whether you still have a capitalist structure. Mortgage defaults, credit card defaults, medical defaults.....give me a break!
    A strategic default is still a default.

  19. "A strategic default is still a default."

    zippert1 -- default in this context is defined entirely by the notes and relevant law. And under that law under certain circumstances one can refuse to pay on the note without dishonor, meaning there is no default. According to NRS 104.3501 if the maker demands the note be exhibited with proof of the right to enforce it, and the person wishing fails to do so, payment may be refused lawfully. It's been like that for centuries.

    "...I sincerely believe, with you, that banking establishments are more dangerous than standing armies..." -- Thomas Jefferson in his May 28, 1816, letter to John Taylor