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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: bozwood who wrote (2390)	4/18/2002 6:44:27 PM
From: Steve Lee	Read Replies (2) \| Respond to of 306849

Does this mean u can borrow the money for a house on your credit card, buy a house, not pay the credit card bill and keep the house? Great system. No wonder house prices are going up. In my country, if you can't pay your debts - any debts - they bankrupt you. But only after they make you sell all your assets - including your house. Of course you can make compromises like they will stop the interest and give you extra time to pay it back but only if you are making a genuine effort to pay it back eventually. Just walking away from it while you have other assets is not an option.

To: bozwood who wrote (2390)	4/20/2002 9:35:13 AM
From: Tradelite	Read Replies (1) \| Respond to of 306849

Boz, it's hard to lose your house simply by defaulting on a home equity loan or line of credit. The issuer of that loan is a second (or maybe third or fourth) lienholder on the property and can't make a move without the knowledge and consent of the first lienholder, who couldn't care less about the second lienholder's status, anyway. When the first-mortgage issuer forecloses on a property, the second/third/fourth guys often get nothing. That's why second mortgages have higher interest rates than first mortgages--more risk to the lender. But still a lot cheaper than credit card charges every month. Also, not all states have the homestead provision which protects one's home against being taken for payment of other debts. It's hard to agree with your premise that credit card companies can only ruin your credit rating and have no recourse beyond that. Was in small claims court one day many years ago and watched a bank VP step up in front of the judge and hand off a whole slew of bad-debt suits for the bank. That same day, I got a judgment against a debtor, myself. I walked out knowing I'd never go to the next step and actually collect any money, but I knew I'd wrecked his business prospects for a long time--he owned his own company and that judgment would stay there forever. On the other hand, banks have the legal resources to carry a judgment forward and get the money by any means possible. It's no fun to go through life with a court judgment on the books---it crops up to haunt the person every step of his life, including when applying for a job. Have sat at real estate settlement tables and watched the settlement attorney inform the buyer that, in order to get the mortgage, the lender needed a check for X dollars to pay off a debt that the buyer had hoped and long thought would be swept under the rug. (In-depth credit reports turn up EVERYTHING--court judgments, dusty old tax liens.) If the buyer refused to pay off the debt (and I saw one try), he ran the risk of being sued by the seller for dragging the seller thru a selling process and then not being able to close the sale at the last minute. The bottom line, in my humble opinion, is that one should take a low-cost home equity line of credit or equity loan if needed to pay credit card bills. Why pay 18-24 percent (or whatever the card companies are charging these days) when cheaper money is available and can get a person out of debt?