Walking away from your house/mortgage

Get a financial advisor or at least someone you know who is good with numbers, sit down, and make *sure* you are coming out ahead on this deal. A lot of people want to do this as an outlet of their frustration over their economic situation, but it's not always the best option.

 

The fact that they can't do so, and will have to settle for taking the value of the house, is priced into the mortgage. If they don't want him taking this option, they can at least refund the extra interest they made him pay on the assumption that this was a possibility.

 

I don't have a problem with it on its face. This is not a moral issue, it's a business issue. Do you think newspaper companies had any moral obligation to pay their bills? Do you thinking developers of the Songbird project in New Jersey have an obligation to finish the job?

I don't think so, because it's spelled out what happens if you don't meet the terms of the contract. Same with mortgages. If you don't pay, you don't own the home anymore. It's pretty simple.

 

I think you've made your decision already.

I'll say this. I'm in Year 5 of a 30-year mortgage. I doubt I ever sell my house for what I paid for it. Money's tight. But you know what? My wife and I keep fighting, keep paying and keep hoping that the environment around us will improve.

And that's my decision.

To each their own, I guess.

 

I'm trying to find a place I can afford to do a 15-year mortgage on. I've never lived ANYWHERE longer than two years that I paid for (family homes not included). The idea of living in one place for 30 years scares me.

 

The moral angle went out the window a looooooooong time ago. If you've been paying even the slightest bit of attention, the banks' predatory tactics will sicken you. Screw them.

New York Times had a great story a few months ago about the high numbers of foreclosures in the million-dollar home set compared to lower-priced homes and people who keep grinding it out. Their conclusion was that richer people have an easier time being cold and pragmatic and doing what's best for them, forget everyone else.

http://www.nytimes.com/2010/07/09/business/economy/09rich.html

 

listen, i understand your frustration but the business agreement say you promise to repay the loan OR we take the property. NOT, you fail to repay AND we take the property AND we chase you to continue to repay. If you cant afford it, you cant afford it, but this doesnt sound like a personal responsibility issue here. the bank doesnt get to have it both ways, where you lose the asset AND still pay for it.

 

Well, that depends on the state and the agreement.

 

"the house next door to me (which is in pretty good shape) just sold for $3K after being foreclosed on a few years back"



3K?

 

Though technically true, I believe there is a federal law that's on the books and was recently extended saying they can't tax you for it.

 

It goes until 2012. Interesting sidenote is that Congress voted overwhelmingly to pass this (386-27 vote in the House and unanimous consent in the Senate). So both the GOP and Democrats agreed that walking away is a not shirking personal responsibility.

http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

 

The banks will tell you they can't help you if you keep making payments. But I had a friend who could barely make his payments -- I don't know how he was making them at all, actually, given what happened to him income-wise -- and the bank said, we can only help you if you stop making your payments. So he stopped making payments and they pretty quickly foreclosed on him, refusing to even attempt to work with him to redo the terms or whatever. And this was a guy that wanted to stay in his home.

So, while I can't personally see myself walking away from my mortgage, I also have seen that the banks truly do not care at all about whether people want to do the right thing or not.