All Forum Posts by: Frank Jiang

This is just not correct in any way shape or form.  The debt has not been marked as "unlikely to be collected by the issuer."  This is definition of a writeoff.  This does not mean the debt is no longer owed.  That would be an agreement to absolve the debt.  Huge difference.  This is the primary flaw in your reasoning that you are refusing to acknowledge.  Debt that is written off is not "abandoned" "sunken".  It is simply "unlikely to be collected by my company."  In no way at all does this say that Tom does not still owe $10.  That is an entirely different process that is necessary to absolve Tom of his debt.

The collection of debt IS right, legal and moral.  In your example, you are making Bill (the debt buyer) out to be the bad guy or a vulture.  He is not.  The only bad guy in your scenario is Tom, who reneged on his debt.  The reneging of debt is both wrong and amoral.  I don't understand why you are trying to take a stance of protecting the one who is morally in the wrong.

You are claiming that Bill is in the wrong here?

No. No. No.

The US economy is run on credit (aka debt). Probably over 90% of transactions occur through the promise of future payment.

When I buy a house and get a mortgage from a local bank, what do you think happens to my bank note? Do you think that bank just holds it on their balance sheet? No, they immediately sell the bank to Fannie/Freddie to reduce risk and maintain liquidity.

If people weren't allowed to collect on purchased credit in default, the original underwriter would not be able to sell defaulted debt (because it would be worthless), and they would have to underwrite a higher rate of return or lower LTV. Do you have any idea what impacts this would have on our economy as a whole if that were the case? The slowdown of lending is what causes all the painful aspects of a recession.

What about foreclosure? What happens when a person stops paying their mortgage? The bank "writes off" the debt and then sells the note to an investor. Would you suddenly argue that the investor has no right to foreclose on the property because the bank "wrote off" the debt? Ridiculous.

The real "vultures" are people who renege on promises to pay.

The fact that Joe "wrote off" the debt has nothing to do with anything.  Debt was issued and never repaid.  The write-off is an internal accounting procedure on Joe's books and does not do anything to dissolve the debt.  Bill has all the right in the world to collect on that $10 debt unless Tom files insolvency.  Bill is willing to pay $3 because he feels there is a greater than 30% chance of collecting on that $10 debt.

This happens all the time.  0 controversy from my perspective.

Clearly state out your exit strategy.

If 3 people want to sell and 1 does not, how do you deal with this?  If one person absolutely needs to sell and the others want to stay, can he sell his share?  Would you be comfortable with a member of your group selling his stake in this property to an outside party?  How will this work?

Clearly state out scope of work.

Who does what work?  Who does repairs and manages any projects?  Even if you use a property manager, who is the primary point of contact who manages the manager?  How will they be compensated?

Last, get everything in writing.

The article means annual salary = 40x monthly rent, or monthly income = 3.33x monthly rent.  Basically the same metric as you.

Different lenders have different rules regarding their lending practices in addition to fannie/freddie guidelines called overlays.  They have these because each individual bank has a different tolerance for risk.  There is absolutely no rule that says a rental property can't use a 30-year loan, it just means that individual bank you spoke with does not underwrite 30-year loans for rentals.

Move on and find a new lender.

No.  Probably a crappy overlay at that individual lender.  I would go shopping.

Mid 4% to low 5% for rental.

What about timeline?

Go back to your purchase contract.  When were contingencies supposed to be removed compared to when you informed the seller that you would not be able to purchase the home?

I can't imagine the seller would be asking for your earnest money unless you had already missed this deadline, in which case the reason you can't apply for FHA financing is a moot point.

There is a big difference between not being able to obtain a loan and being able to obtain a loan and simply choosing not apply for it.  It sounds like you are doing the latter, in which case your earnest money is due to the seller.

Are these circumstances you refer to financial in nature (ie you can no longer afford a loan)?  If not, I would say the seller is due the earnest money.

Mortgages: 300k in 2016 vs 100k in 1990 = only 4.3% CAGR, about 2% higher than inflation and fairly in line with wage growth over the same period so kinda meh.  The rate of increase has sped up in recent years but it's not exactly earth-shattering.

Median down payment at 10 is  interesting, but sourcing and methodology are needed:

http://www.prnewswire.com/news-releases/down-payme...

@Russell Brazil Historicals and a few anecdotes for your curiosity.  This states that median down payment in 2016 for 30-yr fixed was closer to 16%

http://www.realtytrac.com/news/mortgage-and-financ...

Everything I read says that getting a mortgage right now should still be significantly more difficult than back in early 2000s and that the percentage of loans that are low/no downpayment is still low compared to anything that could be considered alarming.

I still personally believe that there is hidden demand to drive up pricing even further.  Millenials are held back from buying homes because of additional debt burdens and unable to qualify for loans under current rules.  I think it's important to watch for political indications that deregulate lending (talk of such has recently been stirring).  That is what will truly lead to a large run-up followed by a collapse.

This is an interesting post.  On the one hand, you have faced a great deal of adversity in getting out of this debt and this is commendable.  I believe that people trapped in the debt spiral need extra help to get back on their feet.  However, the way in which you are conveying this information is, to me anyway, quite offputting.

Originally posted by @Jackson Barr:

This is not an excuse and represents what I find offputting.  You are claiming to have learned from your youthful mistakes and are trying to help people, but statements like this are undermining of the theme you are trying to achieve.  It is shifting blame away from yourself to the manufacturer or the jeweler.  You should truly take full ownership of your mistakes.  You were the one who was fully aware of a purchase price when you bought all your things.  The manufacturing price has no consequence, and bringing it up dilutes your message of facing adversity.

Overall, I don't see an ethical issue with what you did.  I think it's great that you were able to hustle find a legal route to get out of the debt spiral.  Congratulations on your clean slate and best of luck in future endeavors.