On Tuesday evening in Boynton Beach, Fla., underwater homeowners are gathering for happy hour at Ralph and Rosie's Restaurant, an independently owned bar and eatery involved in a dispute with the local town and being put up for auction at the end of the month. Ralph and Rosie will offer the homeowners free appetizers and soft drinks. In Portland, Ore., the meeting's at the Hopworks Urban Brewery. Denver homeowners will gather at the Village Inn on Colorado Avenue.
Los Angeles hasn't figured it out, while Austin is meeting at Texican Restaurant. New Yorkers are getting together at a Starbucks in SoHo. [UPDATE: Los Angeles now has a location. Scroll down for details.]
The gatherings are being self-organized by homeowners looking to meet others who have tried to work out modifications with their bank for their underwater mortgage. Groups big and small have gotten involved: ForeclosureHamlet.org organized the Ralph and Rosie's gathering, while the Service Employees International Union let a long list of their activists do the honors. Last week, HuffPost teamed up with MSNBC's Dylan Ratigan for a series of stories on the housing crisis, which spawned the Meetups, broken down by city here. Scroll down to see a slideshow of the MSNBC series.
Nearly a quarter of all mortgages are underwater and banks are increasingly worried that homeowners will walk away -- or, in the industry term, "strategically default." HuffPost spoke with nearly 50 people with underwater loans to find out what the emotional and financial consequences of strategic default had been for those who'd beaten that path.
"There should be support groups for people who have to deal with these banks," said Richmond Burton, 50, a soon-to-be-former resident of Long Island's East Hampton. "It can drive you crazy. I'm very good at dealing with pressure, and they made it feel like you're at their mercy." Burton will be at the SoHo gathering.
The industry is placing increasing attention on strategic defaulting. On Tuesday, Equifax announced that it had developed a unique method to measure under what circumstances homeowners would stop making mortgage payments, yet continue to pay other bills. Equifax finds, perhaps not surprisingly, that people with more expensive underwater homes are more likely to strategically default.
HuffPost did a series of pieces in conjunction with Ratigan, perusable below.
If you're interested in covering an event as a citizen journalist, want help getting one started, or have expertise to offer, email ryan@huffingtonpost.com.
Update: The L.A. gathering will be at the original farmers market. Writes one homeowner: "Let's meet in the West Patio near EB's Beer & Wine ... where they have the stage. We can find a few tables once we find each other. I'll have on a beige cap and jacket. (If you're running late and don't see us at the West Patio, look around the tables at the market for us, in case the West Patio didn't have enough space.) See you soon! "
CORRECTION: Due to a reporting error, the original version of this story said that a staffer for Sen. Jeff Merkley (D-Ore.) would be attending the Portland gathering. The senator's office had not confirmed attendance and is not able to send a staffer this evening.
The Financial Crisis Spiral
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HuffPost's Will Alden traveled to Vallejo, Calif., exploring the connection between the financial crisis and the housing collapse, while Ratigan sketched the history of the 30-year mortgage and interviewed a California mayor struggling with the new reality:
The American real estate boom turned Vallejo, California -- previously known for little more than the freeway that runs through it -- into a hot property market in the San Francisco Bay Area. But when the home-building stopped, so did the flow of money into municipal coffers, sending the city into bankruptcy nearly three years ago.
That was merely the beginning of sustained pain for Vallejo's municipal employees. As the community adjusts to a wrenching new budgetary reality, one no longer propelled by exploding property revenues, the burden has fallen on ordinary city workers.
David de Alba, a 45-year-old mechanic who has worked for the city for eight years, typifies this process. Vallejo has slashed its budget to get its books in order, reducing its general fund payroll by more than 100 workers, or about 30 percent, since 2007. De Alba has seen his monthly pay drop by about $1,000.
Last summer, after missing mortgage payments, he went into default. In November, he filed for personal bankruptcy. Financial troubles strained his marriage, and his wife left him, taking their teenage children with her. This month, the bank foreclosed on his house. He moved out last Friday, relinquishing his home of nearly two decades. He now plans to move to a trailer park.
De Alba puts the blame for this descent squarely on the city.
"They pretty much destroyed my life," de Alba says. "They put the whole burden on the working class guy."
Like cities across the country, Vallejo has seen its revenues wither in the wake of the recession, prompting pay cuts for municipal employees. In one regard, Vallejo's experience is unusual -- municipal bankruptcy remains rare, as it brings negotiations with employees into court proceedings. But the negotiations themselves are now commonplace: As cities like Vallejo struggle to get their fiscal houses in order, they are often doing so at the expense of their middle-class workers.
HuffPost's Will Alden traveled to Vallejo, Calif., exploring the connection between the financial crisis and the housing collapse, while Ratigan sketched the history of the 30-year mortgage and interviewed a California mayor struggling with the new reality:
The American real estate boom turned Vallejo, California -- previously known for little more than the freeway that runs through it -- into a hot property market in the San Francisco Bay Area. But when the home-building stopped, so did the flow of money into municipal coffers, sending the city into bankruptcy nearly three years ago.
That was merely the beginning of sustained pain for Vallejo's municipal employees. As the community adjusts to a wrenching new budgetary reality, one no longer propelled by exploding property revenues, the burden has fallen on ordinary city workers.
David de Alba, a 45-year-old mechanic who has worked for the city for eight years, typifies this process. Vallejo has slashed its budget to get its books in order, reducing its general fund payroll by more than 100 workers, or about 30 percent, since 2007. De Alba has seen his monthly pay drop by about $1,000.
Last summer, after missing mortgage payments, he went into default. In November, he filed for personal bankruptcy. Financial troubles strained his marriage, and his wife left him, taking their teenage children with her. This month, the bank foreclosed on his house. He moved out last Friday, relinquishing his home of nearly two decades. He now plans to move to a trailer park.
De Alba puts the blame for this descent squarely on the city.
"They pretty much destroyed my life," de Alba says. "They put the whole burden on the working class guy."
Like cities across the country, Vallejo has seen its revenues wither in the wake of the recession, prompting pay cuts for municipal employees. In one regard, Vallejo's experience is unusual -- municipal bankruptcy remains rare, as it brings negotiations with employees into court proceedings. But the negotiations themselves are now commonplace: As cities like Vallejo struggle to get their fiscal houses in order, they are often doing so at the expense of their middle-class workers.
HuffPost's Will Alden traveled to Vallejo, Calif., exploring the connection between the financial crisis and the housing collapse, while Ratigan sketched the history of the 30-year mortgage and interviewed a California mayor struggling with the new reality:
The American real estate boom turned Vallejo, California -- previously known for little more than the freeway that runs through it -- into a hot property market in the San Francisco Bay Area. But when the home-building stopped, so did the flow of money into municipal coffers, sending the city into bankruptcy nearly three years ago.
That was merely the beginning of sustained pain for Vallejo's municipal employees. As the community adjusts to a wrenching new budgetary reality, one no longer propelled by exploding property revenues, the burden has fallen on ordinary city workers.
David de Alba, a 45-year-old mechanic who has worked for the city for eight years, typifies this process. Vallejo has slashed its budget to get its books in order, reducing its general fund payroll by more than 100 workers, or about 30 percent, since 2007. De Alba has seen his monthly pay drop by about $1,000.
Last summer, after missing mortgage payments, he went into default. In November, he filed for personal bankruptcy. Financial troubles strained his marriage, and his wife left him, taking their teenage children with her. This month, the bank foreclosed on his house. He moved out last Friday, relinquishing his home of nearly two decades. He now plans to move to a trailer park.
De Alba puts the blame for this descent squarely on the city.
"They pretty much destroyed my life," de Alba says. "They put the whole burden on the working class guy."
Like cities across the country, Vallejo has seen its revenues wither in the wake of the recession, prompting pay cuts for municipal employees. In one regard, Vallejo's experience is unusual -- municipal bankruptcy remains rare, as it brings negotiations with employees into court proceedings. But the negotiations themselves are now commonplace: As cities like Vallejo struggle to get their fiscal houses in order, they are often doing so at the expense of their middle-class workers.
On Tuesday evening in Boynton Beach, Fla., underwater homeowners are gathering for happy hour at Ralph and Rosie's Restaurant, an independently owned bar and eatery involved in a dispute with the loca...
On Tuesday evening in Boynton Beach, Fla., underwater homeowners are gathering for happy hour at Ralph and Rosie's Restaurant, an independently owned bar and eatery involved in a dispute with the loca...
As housing prices keep tumbling, the number of underwater mortgages continues to rise. The phenomenon, which further slows economic recovery, is attracting local attention. The...
The financial industry keeps defeating attempts at reform, according to North Carolina Rep. Brad Miller (D - North Carolina). "I have just about pulled my...
Good morning government monitors and profilers working for Dept of Homeland Security. Why don't you admit you are pathetic and leave we Americans alone who love the Constitution and believe peaceful retaking of the country is the answer. We are not the boogey man threat your superiors have convinced you we are. We rebuke you and your dark activities. Get a real job and quit sucking off of the government teet.
David_Burt: Good morning government monitors and profilers working for Dept of
On one hand, people advocate walking away from their homes. On the other hand, they moan and groan about the wealthy. How do many people become wealthy? Because of situations like this.
I am 34 and thought an investment property would be out of my reach until I was well into my 40's. Then the guy down the street who was big on new cars, a boat and TV/surround sound systems got into financial trouble for poor choices and chose to walk from his mortgage. So, when the house went up on sale, I went to my bank and secured a loan to buy that house on the cheap. I went to the seller and told them I could afford the home. A little TLC on the house and now I have renters who pay my mortgage and me each month. As soon as I see more people doing the same, I think I will be in the market again.
The banks WILL work with people who can truly afford a mortgage or do something with their assistance. My neighbor to the North is an example of that. The problem is, people EXPECT banks to be as irresponsible as they may have been in their financial decisions. Or, they expect the bank to work with them without a stable source of income if they lose their job or have their hours cut.
Owning a house is a gamble, but too many people don't treat it as such.
sandiegoconservative: On one hand, people advocate walking away from their homes.
Gotta love conservatives. They bellow and belch for decades that the pursuit of pure self interest in the unfettered free market business world is the only moral imperative. They quote Gordon Gecko like he's Jesus Christ. "Business is business. You want a friend? Get a dog. Don't get emotional over stock. Get yours and get out. There are two kinds of people, the quick and the dead and don't whine if you're not shark enough to swim in the deep water" and blah blah blah.
But now all of sudden all we hear is mushy-headed arguments from emotion about how people "should" make every effort to go broke even though there is ABSOLUTELY NO legal or contractural obligation to do so (otherwise, obviously, the courts could stop it...riiiiight?)
Suddenly now you're supposed to unilaterally apply a standard to yourself which the banks would face a shareholder revolt over if they applied to themselves.
Can you imagine if banks announced they were going to split any profits they might make on foreclosed houses with the original borrowers? Not because they're obligated to, but because it's just "right" not to take more money back than you lent?
A little late to change the rules at this stage just because YOU have your panties in a twist over the terms of a contract that you're not a part of. None of your g*ddamned business if someone wants to exercise their perfectly legal option to surrender collateral instead of repay a loan. If the banks didn't think the houses were adequate collateral, they shouldn't have made the loans and whining about it now with no legal leg to stand on is just mushy-headed, emotional, "poor me" conservative victim talk.
You want to stop these defaults? See you in court.
You don't like strategic default? Make it illegal. For everyone. Including Morgan Stanley and including the Mortage Bankers Association (who defaulted on their own headquarters while lecturing homeowners about their "social responsibility" not to make the most profitable legal choice in a business deal.)
Milton Friedman said that the only moral obligation of business is to maximize profit. Suddenly there's a "social responsibility" to minimize profit? Please.
Make it illegal. For everyone. Put up or shut up.
JShankel: Gotta love conservatives. They bellow and belch for decades that
me and my husband had TWO homes, one in san francisco, one in fort lauderdale,, we walked away from BOTH, bought a new house in florida for CASH, and now live MORTGAGE FREE!!!
the banks took the house in california, which we owed 500K on, and sold it for 80K, the house in florida we owed 150K on, and as of tonight, 3 years after we abandoned it, they STILL havent taken it back,, I guess they know it was a bad deal after all, but leaving it in OUR names is just wrong on SO many levels,,,,
DO i sleep at night doing what was right financially for us> ? I sleep like a baby knowing im doing something first,, but the HUGE wave of others who are following our lead will bring the big banks in this country to their knees,,,and i CANT WAIT for them to grovel in their own dirt,, THEY CAUSED THIS MESS< and THEY should suffer for it! NOT the homeowner!
gayandmarried: me and my husband had TWO homes, one in san
Companies renegotiate their loans or default when they make wrong investment decisions. Similarly governments do the same.
Where does shame and fear come in the picture if an individual makes a wrong investment decision? The banker who lent him the money too should suffer losses alongwith the individual if they have given a loan to buy an inflated asset, in this case a house. The banker was in a much better position than the housebuyer to evaluate the property and ascertain whether the asset purchased with the loan it has given is actually worth the value paid for it.
Hence default on the mortgage is a logical step a person should take in order to protect his own and his family's financial future. No sense in throwing your present and future income to pay for a house which is likely to keep falling in price for the foreseeable future.
every one wallks away @ one time you will see how fast the banks start to cooperate..they will steal customers blind .put a 44mag to their temple.that is the only way to get their attention.
big_tom: every one wallks away @ one time you will see
Welcome to the progressive culture, where ads blare hourly about skipping out on credit card debt, shorting the IRS, and walking away from mortgages.
In the age of Obama, there is no real contractual obligation: everything from paying back bondholders to fixing a BP penalty is, well, "negotiable." When the money runs out, the law will too. Law? There is no law other than a mandated equality of result.
UpFromLiberalism: .<br><br>Welcome to the progressive culture, where ads blare hourly about
Surrendering the collateral for a loan IS meeting your contractural obligation.
If the banks didn't think the houses were adequate collateral, they shouldn't have made the loans. Too late to whine about it now. No one guaranteed them a profit on their investment.
JShankel: Surrendering the collateral for a loan IS meeting your contractural
when you take out a mortgage, you end up paying for that house 5 times what you paid for it over the life of the loan in interest charges,, so am i sorry for these banks ?
NOT ONE BIT!!
gayandmarried: when you take out a mortgage, you end up paying
I say walk away, its just business. We did, after living rent free for 19 months, before getting evicted. Saved the money, started a little businees with saved cash (around $30,000) selling cell phones in the mall. Rented a much much cheaper house in a better school district. It was stressful, scary, and a bit immoral. But in the end I have to look out for me and mine. My credit sucks, but it forces me to buy only with cash I've. Still have one credit card, for emergency. I use the credit card twice a month so I don't get charged non usage fees and pay it off every month. I learned the hard way how to think with my head and not my heart. But its wonderful on the other side. So if anybody is thinking about it, just do it. But do it in a smart way.
whattodo_rups: I say walk away, its just business. We did, after
There is nothing immoral about it, not even a little bit. That is the spin being put on strategic default by... guess who... the banks. Yet it is a step many businesses, corporation and BANKS take on a regular basis. Don't let the spin influence you.
TheEquitableOne: There is nothing immoral about it, not even a little
we did it, and left behind over 600K in 2 underwater houses, then since our credit was going to get ruined anyway, walked away from ANOTHER 120K in credit cards, didnt file bankruptcy though, and in 5 years all that negative credit will be off my credit report,, i call it financial prison, BUT< like you, i pay for things with cash now, and its a WONDERFUL experience, knowing i am not a money slave to these thug banks anymore,, Its amazing what you CAN do when you dont pay out hundreds of dollars every month in credit card interest fees!!!!
gayandmarried: we did it, and left behind over 600K in 2
That the Banks, Hedge Funds and Wall Street were all complicate in the creation and drive of the housing bubble and its eventual collapse is beyond a doubt.
They brought forth the lie that housing prices and values would always grow and ten began to market that lie to pull in and sucker normal people into purchasing homes with the strong potential situation that they in fact have over extended themselves.
Banks use to screen their risks and avoid most of these default scenarios by do they historically through job of review and approval.
But then fraud, gaming the system and gambling the risks away became the system and normal, everyday people who would not have qualified for a loan or so high a loan began to be feed into the hopper....and just like magic they all qualified. Executive bonuses soared.
Now this unprecedented risk taking with investors money by Banks has come home to roost.
Well...Banks, Hedge Funds and Wall Street guess what? You made a very bad investment & judgment call and now your firms and the investors you misled are going to pay.
The people who are defaulting are not walking away to avoid their responsibility....they are walking away because the logic of their situation demands it and by doing so are teaching the banks something they appear to have forgotten,
That ignoring the risks within a unsupported investment doctrine will most likely lead to losses to your institution and your investors.
Patrick_Shaw: That the Banks, Hedge Funds and Wall Street were all
John Courson, CEO of the MBA, said in an interview late last year that he believed mortgage borrowers should keep paying their loans even if that no longer seemed to be in their economic interest. He said paying off a mortgage isn't only a matter of personal interest. Defaults hurt neighborhoods by lowering property values, Mr. Courson said. "What about the message they will send to their family and their kids and their friends?" he asked.
In other words, it's okay for them, but not for you.
ched: As pointed out by the excellent Huffpost writers on this
Tonight's Meet Up in Seattle was very successful. Instead of the ONE person who attended the last Meet Up, we had NINE people attend. NINE. We had three counties represented, King, Pierce and Snohomish. People came from 45 minutes away and spent 2 HOURS talking.
It was good. Perhaps next time there will be 900 attending....all carrying p!tchforks, ready to rumble with the big banks.
karen1p: Tonight's Meet Up in Seattle was very successful. Instead of
Billy Bob Clinton started this mess when he repealed the Glass Steagal Act and legalized credit default swaps turning the housing market into casino gambling at its finest. Alan Greenspan and Clinton kept interest rates artificially low so money flowed like water and the rest it history.
wheatsavage: Billy Bob Clinton started this mess when he repealed the
Exactly, and after learning from his impeachment proceedings he stated that he was given bad info pertaining to the gramm-leach-bliley Act (all lower case due they are all lower life forms). Whether or not this is actually true or not is debatable, but at least he came cleaan on this one and stated he made a mistake.
* November 4, 1999 -- Gramm-Leach-Bliley Act passes the Senate 90-8 and the House 362-57.
"I do want to say that I intend to try to listen to everybody. I think we all know that successful legislation comes from compromise." then Sen phil gramm
"You've heard of mental depression; this is a mental recession." He added, "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline." Co-Chair phil gramm, McCain for President.
He joined UBS in 2002 immediately after retiring from the Senate.
"Global Business Group Vice Chairmen are appointed to support the business in their relationships with key clients."
Investment Bank
Chris Brodie
Lord Brittan of Spennithorne, QC
Robert Gillespie
Phil Gramm
Here is a really good story, if you have the time. We had one of those variable rate mortgages in the early part of the decade. They doubled the monthly payment for a number of years. Problem one is that we owed the IRS back tax on 401K money that my husband used to buy the house. We paid our yearly taxes and our refunds went to what we owed. That was fine and fair, IMO. But, the IRS 2 yrs. ago garnished over 1/2 of our salary, which put us into Chapter 7 at the end. We were filing and trying to make payment arrangements with them, but to no avail. We of course, secured an attorney, and to make a long story shorter, we found out the following.. The IRS ADMITTED to our lawyer that they garnished the wrong person. The numbers on the account were not ours. They even said that they had in the records that I was a government employee, which I was not!. Too late for us now that they ruined our lives. We now rent a nice home and walked away from the one we still legally own. We check on it occasionally, but it's still sitting ther empty with no real estate sign as of today. We haven't heard from any attorney associated with this for 3 months. We could have stayed in the house, but I said eff it. If they want it they can have it. Peace
InnerThetan: Here is a really good story, if you have the
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First Posted: 02/08/11 02:17 PM ET Updated: 05/25/11 07:30 PM ET