Its an example about how crazy California is. The walk-away affect having people walk away from underwater mortgages that they didn't put a penny into is popular because they can only affect your credit score and seize the asset. You can have $10 million in the bank and walk away from a $100,000 mortgage and they can't come after you ( this is different in TX I believe). You took out the loan and it was someone's ego or investment to buy a home. Pay it back or go bankrupt. It is disgusting that people would support someone making millions of dollars a year to walk away from their mortgage!
Sorry, the banks don't have any sympathy, they took the risk of the loan, and one of those risks is the ability to walk away. If the government was smarter, they would have made the bailout money available to the people to pay DOWN their mortgages.....that way the banks would have gotten the money and the people the relief. Sorry, I think it is smart business to walk away.... DD
Thats what I dont understand about athletes,entertainers and such. I mean martin signed his big deal by his 4th yr, why not just buy the house in cash? My first cousin hit the 49m powerball and she said she was gonna get a mortgage on like a 2m home. I'm from the Papa Lee/Dave Ramsey school of thought of cash is still king. After a couple days to think and hearing my dad in hear ear, she wrote a check and actually saved about 300k on the house. When you're making 11m like what martin is making, why finance?
Buying the house in cash is stupid.....if the market goes down you lose all that cash. Take out a loan.....the interest is deductible. Invest the cash. DD
Did no one read the article? Martin's attorney specifically said he is not walking away but rather have a dispute with the bank. I'd wait to see more details before making any kind of judgement or even guesses at what's actually going on.
I agree with DD. It would be different and "disgusting" if he kept ownership of the house. The bank gets their house back. Happens all the time. K-Martin is not breaking any laws.
i'll never understand why a public figure making his kind of money would take this kind of publicity for a mere $500K. I know that's how it works in CA -- but it's really not defensible. Not that he's been too concerned about defense so far.
What happened to personal responsibility. He can pay for it, so he should. Its his own damn fault he bought at the height of the bubble. He could hold on to it until the market recovers.
This is the society we're living in. We not only feel entitled in so many ways but now we want to be able to walk away if we borrowed and invested poorly and don't want to be foreclosed if we haven't paid our mortgages. The average person foreclosed on hasn't paid his mortgage in over 400 days! Thats over a year! The banks are idiots and they gave bad loans but they lent money out (should've known Cali was non-recourse) based on someone saying they'll pay it back. Silly California laws like this drove up prices even more and now its causing prices to fall even more. That gap from purchase to current value makes all feel poorer and is why the economy there is in the toilet.
Exactly. The bank knew what it was getting into, the government (supposedly representing us, the people) set the laws this way, and K-Mart is simply a shrewed businessman exploiting a loophole in the law. This is just how the game is played. (Or, if K-Mart does have the intention of paying it all back after this dispute is settled, as one poster posits, he has the right to do so. Just not necessarily the smartest thing to do from a business point of view.)
It's business. Martin and the bank have a contract that governs what rights and responsibilities each of them has. Exercising your contractual rights doesn't make you somehow a bad person. It's no different from the Rockets using exercising a cheap team option on AB or Chuck Hayes or use their matching rights on restricted free agents or any number of things that various businesses do every day.
well.....he's exploiting a statute that was put in place for situations very different from his. Legal -- but not honourable. Nobody needs state protection for a purchase that takes up 2 months salary. Not much different then if his sister or mother was legitimately on food stamps. If he pays the bank what he borrowed, there's no dispute or negotiation needed. maybe its a selling ploy? House looks pretty cool for $1.1m.
Then he would be an idiot. He would also be going against his financial counsel as well. I'm sure If it was up to Martin he'd pay the house off but that's not what his adviser recommends. If a professional tells you do do something and you don't take advice then you are a fool.
There are plenty of reasons to take out a loan vs cash, but bailing out if the market goes down really shouldn't be one of them. I get the whole dirty banks arguement, but I don't see how that's justification for not not paying your debts. That said, in some ways, I get the feeling that the bank should be held responsible for the risk in this case as well. It seems to be less about KMart making an investment in real estate, but as the bank making an investment in real estate and KMart. As said, this comes off less as a simple debtor not paying his debt and more of a complicated business deal.
Look, if you guys want to be suckers, the banks will gladly treat you as one. Agree with Reek and CH here, he is playing this just as his financial advisors are telling him too... And it is 100% what I would do too....it is a business transaction, nothing more. DD
