I’m back from vacation, some links I’m reading

Ramit Sethi

I’m back from India!

I had a great time in Delhi and Mumbai, and I’ll probably post some of my photos/thoughts a little later. I was also lucky enough to meet up with a few readers (here’s Ranjan’s writeup on meeting me), so thank you to everyone who met up and said hello.

While I’m catching up on stuff, here are some links that caught my attention recently.

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  1. avatar
    Mark H.

    Ramit, thanks for the article link regarding homes under water. I am in this exact scenario. I accepted a job offer that requires relocation to CA in a few weeks, and to my surprise my house is not worth what I owe (after refinancing a few years ago and taking out a 20k home equity loan for home improvements). I still don’t know what to do. If I sell at a loss, I am stuck with trying to come up with the difference (plus commissions), if I short sale, the bank will still want the remaining balance (50K), if I allow my house to foreclose, I am going to have a huge DEADBEAT sign on my credit report.

    Any reader suggestions?

  2. avatar

    Kudos to you for proactively looking for viable alternatives to foreclosure – that probably makes you more responsible than 50% of the people on that chart.

    Unfortunately, there is no easy answer. If you have assets to cover the difference, the bank will want you to come up with that at closing – it is extremely difficult to broker a short sale, even when it is clear that the homeowner can never realistically come up with the difference and foreclosure is imminent. Banks still seem to have their heads in the sand about where the real estate market is headed.

    How deep are you? 25K? 50K? 100K? If the amount you will owe is manageable, I would just suck it up and consider it a lesson learned. If the amount would seriously cripple your finances, foreclosure might be the only option.

  3. avatar
    Mark H.

    Colin, thanks for your response.

    To answer your question, when its all said and done (Including Legal and Real Estate fees), I am probably going to owe about 50k at closing.

    Part of this is my fault, I should have know something fishy was going on. To elaborate, during my home equity loan process (2006), I had two assessments done on my house, the first was a market analysis done by a real estate agent (his value was $240,000), this did not work for the bank, so they had one of their “Professional Assessors” come out and do a full apprasial (his value was $320,000). So, I was led to believe by the bank that my house was worth a lot more than it was (and that I had plenty of equity should I need to sell). Shame on me for not thinking that was unusual that two people could be 80k apart.

    Anyway, I’d be lucky to get $225,000 today.

    It’s my opinion that I was worked by the bank, these professional assessors (who are paid by the bank), I believe were exaggerating values to satisfy their employers!

    I doubt that my house has lost $95,000 in value during this down market.

    I am an ethical person and want to do whats right, but I think the bank should take “some” responsibility and make a better effort to work with homeowners in my situation. My conversation with the bank this morning was basically “We will come after you for the remaining balance!” This should be fun!

  4. avatar
    Justin W.

    Would keeping the home as a rental become an option and hold onto it until the market turns around in a year or two?

  5. avatar

    Thanks for the post and links.

    I read “The Entrepreneurship Myth” , good ideas, particularly on why some fail and others don´t.

    What about start ups and small business as educational experiences? If you come out even, or even a little short, the experience of running projects on your own, having responsibility, having to make decisions, networking, selling ideas are all good for future endeavors and for personal growth.

  6. avatar

    Ramit, love the link about Failure of the Last Mile. Great stuff.

    Not sure why women who fear being weighed in the doctor’s office is a failure of the last mile, though. As a woman, I feel that it’s generally best for the self-esteem not to weigh yourself. So whenever I go to the doctor and get on the scale, I simply don’t watch the numbers as the nurse balances the scale. For years I did this and never knew how much I weighed. Then one day a nurse ruined my peaceful ignorance by declaring my weight out load as she wrote it down. No nurse had done that before, they simply wrote down my weight without saying anything. I could have strangled her right then and there.

    It’s a serious issue for women, and I’m not even one of the women who obsesses over weight.

  7. avatar

    I never care about being weighed at the doctor’s office, because their measurement is always wrong since I’m wearing clothes, shoes, etc. Plus, I am a size 4, but I have a lot of muscle tone, and I weigh a lot more than I look like I weigh. One nurse weighed me three times because she didn’t think I could weigh as much as the scale says.

    I can see how overweight people would be sensitive about it, though. I mean, if you know you need to lose weight, you don’t want your number called out in a hallway full of people. That’s just not necessary, and making a patient feel bad is not the way to encourage weight loss.

    As for the homeowner article–great read. I don’t have a lot of sympathy for the people who knowingly chose to overextend themselves, but I think the banks are every bit as responsible for deceptive lending practices.

  8. avatar

    The responsibility for repayment of the loan is with the person who asked for the loan and signed the contract.
    There appears to be a mistake with the paperwork and it’s not the banks or assessors’. It’s the signature by someone who agreed with the numbers.

  9. avatar

    Allen, that’s a pretty gross oversimplification.

    I agree that people should be responsible for their actions and make good on their obligations – but that doesn’t forgive the banks for irresponsible (and sometimes predatory) lending.

  10. avatar

    I read the housing article and it pisses me off. All of those people have alternatives to make their mortgage payments and none of them need a government, otherwise known as my tax dollars, bail out.
    The first couple didn’t need a bigger house, they wanted it. That was pure greed on their part, not the lenders.
    The 60 year old woman has 3 extra bedrooms and could rent them out to help with the cost of the mortgage so she could travel and buy clothes. Or she could take the 6k from retirement and sell the big house she never needed in the first place and work a couple of years longer.
    The last couple mentioned are in a sad position, but they have the option of renting the house out.
    If this is the scope of the homeowners in need of a bail out, Americans should be up in arms that they are financing peoples mistakes that are fixable without help.

  11. avatar

    You should get weighed at the doctor. You could always ask that they don’t read your weight to you, or don’t look at the scale. But they wouldn’t want to do it if it wasn’t important to your health.

    As for home loans, there needs to be some personal responsibility for this. When tech stocks crashed, did the government ride in and put money back in people’s 401ks? Did they help Enron employees that lost their life savings because there was a freeze on selling the stock? If you take the risk out of speculation, then what incentive do people have to avoid it? And when it turns out poorly, is the government going to rescue everyone? I’m sure houses will sell when the price is right. Are people and banks going to lose money? Probably, and rightly so. They took risks and it didn’t turn out as planned, suck it up. Are we saying people are too stupid to make their own decisions and accept the consequences? They need someone to hold their hand and bail them out when they make a bad decision? If it was outright fraud on the lender’s part, then the borrower shouldn’t shoulder any of the blame, but in any other situation there has to be some personal responsibility in the matter.

  12. avatar


    I applaud your response and second it. I cringe at the thought that I moved my family away from SoCal in 2005 because houses quickly moved out of my affordable range and I was *responsible* enough to recognize I couldn’t afford to buy. Now all the former speculators with green in their eyes are playing the victim-of-the-lenders card. I have been saving for a down payment on my first home ever since… have yet to buy… and don’t want my hard earned money taxed to cover the greedy.

    Suck it up, folks. You gambled and lost. Now get on with short selling your houses to the rest of us who waited…

  13. avatar

    I’m LMAO @ all the greedy scumbags [flippers who got caught] who paid too much, thought they could make an easy couple 100K and then dump their overpriced POS crackerboxes on some other chump 🙂 Between these people and the ones who took out mortgages as simply a way to live somewhere rent-free for a year C_R_Y__M_E__A_R_I_V_E_R_!