Utah Senator Mike Lee understands the pain of today’s housing market.† The former lawyer and freshman Republican bought a “dream home” in 2008 for $1.1 million, but once he was elected to senate in 2010 he tried to sell it and was unable to.† Knowing he now had to live within his substantially lower salary of a mere $174,500 per year as a politician, Lee sold his home for a $400,000 loss, which his mortgage company JP Morgan Chase agreed to absorb.
Lee bemoans losing his “significant” down payment, but states, “Itís not fun. Itís not something any of us would have chosen. But you do what you have to do when income doesnít match your outlays. You have to pare your outlays down.”
What Lee doesn’t seem to understand — and what still haunts most of America who would be happy to be in Lee’s position — is that many would be happy to do exactly what Lee has done.† Unfortunately, the vast majority of underwater homeowners are unable to get their mortgage companies to agree to any form of short sale, knowing that without one many owners will continue to pay the mortgage until they default and then get both the extra payments and the house itself to sell later.
One of the many factors behind defaulted mortgages are those who are unable to get banks to agree to take the same short sale loss that Lee was able to receive.† Without that agreement from banks, the owners must default, or give up jobs in other states because they are unable to sell their homes.
Lee laments losing his down payment which, based on the idea of 20 percent down means he likely paid at least $200,000 to originally receive his loan.† But that isn’t a “lost” down payment.† In actuality, he just received a $200,000 gift from his bank who agreed to accept the loss rather than force him to continue paying.
If only we could all take the same “loss” as Senator Lee.† I know many who would be happy to “pare their outlays” down in the same manner.
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