Talkback: Would you walk away?

This may be a familiar story. We bought our house at the end of 2006 and had a great loan package with just my husband’s income. So we rented a home until our “dream home” was being built. Then March of 2007 hit and our loan package was no longer available and we were locked into a loan because we signed an agreement with the builder stating that we would purchase the house so long as financing is available. Well, they came to us with a new loan package and the monthly payment was 900 dollars more than what our previous loan package stated. We wanted to just say no thank you, but the builder would keep our $3000 earnest deposit and sue us for breach of contract. So we were stuck, we talked it out and decided we would work our buts off and pay for the house. We lasted about a year. We had a new baby and I was off of work without pay for 6 weeks. I tried calling the banks to ask for deferment but they said too bad so sad. Anyway, after I returned to work we used my credit to purchase a cheaper home that we could afford and walked away from the “dream home” and our life is great. We can afford to buy our kids halloween costumes and take trips to the zoo and save money and take vacations. The best decision I have ever made. Once you throw out all of the guilt of walking away, you can lead a very happy and healthy life. Its just business, that’s what the govt and Wall st. showed us, right?

Well, here is my situation. I have been in my home for a little over 3 years. Divorced with two kids, remarried, and trying to get out of the drug infested, roach trap home i was in, we started looking for a home. After a couple tries we come across a good deal, low priced, all original house so it was a blank slate for us to do as we pleased. but we get in on an 80/20 loan giving us a combined interest rate of nearly 9%. So a year later we refinance, rolling all the closing costs in for 7.25% but upping my loan another $10000. Not too bad of an idea being this is our home, we want to be here, and we need a break on the payments. So we do this. THEN the economy crashes. Husband and I take a 20% paycut between the two of us at our jobs. We just had a baby weeks before, my mother passed away few months before that, ive maxed out my credit cards, and now i need new options. So, i do a streamline and reduce my rate down to 5.25% but again, rolling in the closing costs and upping the balance again another chunk. Now after two refi’s, I’ve upped my mortgage balance over $22000. But its still not enough. SO I take out my 401K until i have depleted that resource. We try different small business to try and make a few bucks here and there, but with no luck now we are in a crisis. They are building houses newer, bigger, and much more updated that ours north of us for under $200,000. I need $215,000 just to break even after realtor fees and a possible concession to the buyer but there is no way ill sell it for $215,000 when there are new homes in a great new area for less. SO i try and get a loan modification. But since im not technically behind, just had some late payments, there arent any programs for me. But as well it seems that the pockets within GMAC dont have any programs to offer. Im assuming that they didnt participate in Obamas plan. So they tell me there are no options except that if i default that they can review the options to split up the balance over a small period of time to make it up. So now we are trying to lease the house out at what our payment is and then rent something smaller for cheaper. Hoping that the market stablizes and then gets better so eventually we can gain some equity OR just be able to break even and sell. BUT a once strong renting market doesnt seem as strong as we thought. We’ve had 3 interested parties and nothing. Whats left? If we walk, im not sure what the consequences are, if we try and short sale, we dont qualify because we are both still working. What options are there for people who have made it this far but just cant anymore? NOTHING! The plan has too many holes. I am a supporter of Obamas but they need to push harder or have another resource for people who cant get help from the mortgage companies they are with.

So here we all are, 3 years into the financial crisis, with no end in sight.
Here’s my story, it’s one of survival.
Purchased a home in Ca. in 1995. For the next 12 years offers came in the mail saying the house was worth 110K, 220K, 350K, finally about 425K, and would I like a loan? No thanks. Kept paying down the loan. Market crashed, my house is nearly paid off, and worth about what I paid for it in 1995. That is okay because it never made sense that a neighborhood with multiple drive by shootings, gangs, drugs, etx. would have 400K homes. I knew things would go wrong and fall eventually..why? Because when I saw ads written in Spanish, saying you can buy a 500K house with 3% down (that’s 1,500.) and pay just 1,200 a month, I said oh oh, they are going to rook people into impossible loans. Well, why not? The mortgage brokers, the 19 year old “loan specialists” were making 10K per transaction, so if it breathed, it was eligible for a loan. Since all this,lost my job. I moved out of Ca. rented the house, took ALL the money out of my home equity line, and have purchased another house, foreclosed, in another state. I would sell the Ca house, but the neighbor was foreclosed, decided to make her house look ugly so a relative could buy it back for her cheap. While she did take the 400K refi, she decided to walk..why pay for a house that isn’t worth it, that’s her attitude. It’s also the banks attitude about things, so while it impacts my property, I don’t blame her. I’m still not working, but have income from the rental, and renting rooms in the new house. At age 55, it’s hard to find a job. So we must all find a way to change our lifestyles to fit this new picture. I not only stopped eating out, I now grow vegetables and herbs. Every little bit helps..and I hope to find a job before the home equity runs out.
till then, survival.

I posted below, a few months ago. I am glad to see CNN still has the comments open, because as hard as it is to be in this situation, it is good to hear from other folks who did the right thing but are flummoxed by this situation.

I live in South Florida. I am a 33 year old woman and bought my home in 2007 as prices were falling, but am now about $110,000 underwater. This was a fixer, starter home for me as a single, but the neighborhood is deteriorating and the schools are bad. This house was perfectly affordable for me but my long term boyfriend and I are planning marriage and starting a family, and my house is holding us back from starting our lives together. Given all the analysis in Florida, it is clear to me that things will not recover for many years. I have been denied the “Obama” refinancing as I am too underwater, so with a nearly 7 percent interest rate it is not possible to treat the home as a rental. I have tried every angle with my bank but they will not help me. At this point, I will probably move forward with defaulting on the loan and forcing the bank to short sale the property. If it comes to it, bankruptcy and ruined credit will be a shorter term solution than staying in a grossly upside down home in a deteriorating area. I have been turned off from buying a home ever again, so my credit score does not mean as much to me now. I can buy a vehicle with cash and deal with it.

I have to say, reading these posts makes me feel a little better since I’m finally hearing from other people who are in a similar boat to ours. But it also fuels my anger at the same time.

My husband and I bought a house for 265K in AZ in 2006. We were told it was a “buyers market” since prices were beginning to fall from the year before. Well our house is now worth about 60K less than we bought it for, and it will probably fall even farther in the coming months/years.

We planned on keeping it for a few years as a “starter house” and then selling. We thought we were making a smart investment since we’d previously lived in Los Angeles where we’d paid a ton in rent for 7 years. I was looking forward to finally building some equity – ha!!

I have two reasons for wanting to walk away. First, we have two children and the house is just getting way too small. I was pregnant with my first when we moved in, but never saw this as a two-child house. That said, it’s not the size of the house that bothers me the most…it’s the neighborhood. There have been so many foreclosures in our neighborhood that it’s just becoming a crap-hole. Weeds and unkempt lawns everywhere. We had criminals renting the house next door to us, who are now thankfully in jail. The people who just started renting the house across the street (which was vacant for two years) have brawls in the street in the middle of the night. This is NOT where I want to be raising my young children.

So now I’m longing for my previous life of a renter – when I’d be able to pick up and move when the living situation got bad. I am sure our neighborhood will get worse before it gets better, and I’m not willing to risk the safety of my family so that I can do the “right thing” by my mortgage company.

My husband and I are among the many Americans who bought a home in 2005 and are now upside-down on our home. We have faithfully paid our mortgage for the last 4 years and have prided ourselves on doing that, even though we no longer want to live here. Over time the tight budget, the fact that we have no extra money to maintain the home, our yard is such a mess I am too embarrassed to have anyone over and our kids have no yard to play in. I am paying all this money for a poor quality of life. My husband and I have decided to either walk away or short sale the home because our family is more important than the bank. Recently our marriage has been affected and I just had to draw the line. I will not end up divorced over this. We will go and rent in a better neighborhood, have extra money every month which means we will pay off our credit card debt faster and ultimately be debt free faster.

I am just….so….ANGRY. All those freaking greedy banks and politicians have totally RUINED this country! Those of us who are responsible spenders and borrowers seem to be getting the hardest hit in this housing crisis, yet we are getting the least help. My father taught me impeccable credit skills, which I am thankful for. I started getting credit at 16, pay off all my car loans early, paid off my school loan early, and always pay off my credit cards in full every month. I bought my first house in July of ‘05. I didn’t want to buy a house, but my parents sort of coerced me to do it, because they were afraid that I would get priced out of one, as fast as the home prices were rising here in Arizona. So, I caved in and bought a small townhouse (under 1000 sq ft) in Scottsdale, AZ for $160k, with a fixed APR on both loans. (I got an 80/20 loan.) I have never been late on a payment, but I have been told by B of A that I cannot get refinanced or anything, despite the fact that my house is now worth only $120k. Everyone here in AZ on the radios are saying that another foreclosure wave is coming through AZ, and our home values will go even lower. Great. So, basically, my house will NEVER be worth what it was when I bought it. I can’t even rent it out, because the rent in this area has dropped so low, it wouldn’t cover my mortgage payments. What pisses me off, is that if I had terrible credit, I would have been refinanced or my total amount of the loan could have been reduced. However, because I am responsible, I get screwed. So, even though I have perfect credit, I am seriously considering walking away from my house, because why pay off a house that is going to be worth less than what I bought it for in 26 years?? I am even considering squatting in my house (not paying the mortgage) until they kick me out. Because if I”m going to take a terrible credit hit, I might as well get something in return…free rent while I can.

Similar to some others stories, I’ve worked so hard all my life to save money and finally buy a home all on my own. I’m 39 years old. About 20 months ago, a very large chunk of my meager life’s savings went toward the down payment of my town home. A year later my home is completely upside down by and now is under about 33% (145k). I put 11% down on my house, and pay 6.2% interest on a 30 year fixed mortgage. I feel lucky (at times) to be able to afford my home, but this is also a curse as no bank will consider working with you (from what I’ve been reading). This was my 1st home and certainly wasn’t planning to be here for long term (5-7 years).

I hear it will take more than 15 -20 years to recover my losses (I know this can vary). I’m paying 35k a year in interest I wonder if walking away and just starting over would be better. I have heard most banks won’t even consider talking to me because I’m not desperate. So do I walk away and accept that maybe I made a bad business investment? I’m still trying to work that out, but there is so little decent advice for those in my situation and there are so many new businesses popping up to feed off the desperate. At a loss for now, but hoping I can figure this out soon. In the meantime I’m just trying not to beat myself up for my bad timing.

Sorry I’m a late comer to this forum, but I just saw it and it’s the first forum I’ve seen with so many stories like mine.

We owned a home for 11 years, and sold it after I finished school to move to a better neighborhood. We rented for a time, but as renters our taxes increased dramatically, and with the feeling we’d have to buy or forever be priced-out, we bought a small townhouse despite the lingering credit effects of my return to school.

I worked hard to pay off the debt we incurred while I was in school, and was briefly the proud owner of an 810 credit score. But now with the property value down by 38% ($200k), the ARM up to 11%, and my wife unemployed, we can’t sell or refinance (believe me, their ‘call before there’s trouble’ policy is just PR, never to be implemented). Our lawyer advised us to run the credit cards up again, buy new cars, and take lower paying jobs in order to make bankruptcy attainable. Why did I go back to school?

We can’t recover the loss, can’t pay, can’t sell, can’t refinance. The ‘better’ neighborhood we borrowed for is quickly degrading into an unkempt, noisy slum. I doubt it’s value will return. Why won’t the ‘financial experts’ who got us into this mess share responsibility? I’ve ignored prompts for bankruptcy and walk-away, but I’m tired. Why shouldn’t I walk away?

Here is our dilemma. We live in a drought-ridden city, and over a year ago got an estimate from a foundation repair company. It was 14 thousand dollars. I contacted our bank, and they said no of course and to try back in about 6 months. Now, we have never been late on anything..and I mean anything for the 12 years we have been married. We have owned this home for almost 4 now and again have never been late, in fact have sent in extra money when possible. One week ago, we came home from vacation to the right side of our brick home crumbled down about 3 inches (enough to sever our gas lines). The gas company turned off the gas..took the meter. We now have to hire someone to fix that hole in the house and broken gas line. (estimated at 5 thousand dollars)The foundation repair estimate is now at 24 thousand dollars, 5 thousand for the gas line/home repair, and the cause of all this was a leaky pool pipe underground for what appears to be years. We have doors that won;t open, doors that won’t shut, compression lines on 7 of our walls, 23 cracks on our walls, bricks loose and literally falling off of our house..the list goes on and on. The bank will not lend us 35 thousand dollars to do a home improvement and fix these problems. The contractor said if we don’t fix the foundation, our roof/windows/etc are next and the problem will only get more and more problematic. We are either going to file bankrupcy, or give the house back to the bank. We cannot get into our garage, cannot lock our back door, do not even have hot water right now. We have no other alternative but to give it back to the bank. Since they won’t loan us the money to repair it, they can have it because it is uninhabitable. Should we file bankrupcy and not reaffirm for the house, or just let it go into Foreclosure?

I find it interesting that CNN Money chose to profile four homeowners – two who won’t walk away and two on the fence only because of their “moral values.” Where are the two that did walk away who can tell us the net effect on their lives? Are they lost and unable to even rent becaue of poor credit scores or have they moved on to live without stress or overwhelming financial burden? I find it distressing that we are getting such a skewed picture here!

My wife and I bought a house 5 years ago for 165,000.00 it was a fixer upper. we fixed up what we could the first year and then refinanced the house. The house was at 315,000.00 We took that money and completed the repairs to the house had extra money left over and paid off some bills.
Now, 2 years later our house has developed a very bad habit. When i rains hard in VA the house floods. last year the water was 8″ high. we paid to have a sump pump professionally installed and lost a good many personal belongings as the homeowners insurance would not cover. After the flood we jacked up our insurance levels, for just in case. we joked that we would never need it since we bought it. we then proceeded to do repairs to the house.
Now, 13 months later we were hit by a bad storm, lost power and the house flooded badly. A freind of mine arrived with a generator, we got the sump pump to work and now 2 days later we have most of the water dealt with.
my wife and I are done. She is a nervous wreck (it keeps storming) and I am tired of putting money into an indoor fishing pool.
What options do you recommend… should we call the bank and say here you go it is your problem have a nice day. should we short sale it, which means i have to do all kinds of repairs again to get it ready.
A contractor friend of mine came by to look at the house, he said to fix it properly would take a bobcat or bulldozer (not sure) to dig out the whole house, put a rubber matting against the foundation and then cover it back up with correct pitch to length. Sounds good, but i do not have $53k to do this.
We are so tired, and frustrated.
We have never been late on any payments, and the bank will not even talk about adjusting our mortgage (the ARM is set to increase in July).

Any suggestions? What can happen to us if we just walk away and give the bank the keys? We live in Virginia.
Thanks!

I am so glad to hear people agree on the fact that BANKS NEED TO REGULATED. Talk about PIRATES – we have
mass colonies of them all over our country. When is the government going to put these pices of crap in their place. I would love to know who voted a long time ago to let banks be regulated. Well, now and forever is the time. I have story to tell about a reverse mortage my recently deceased mother had (we (myself and two brothers) and still have 1/2 house value in equity. Well, the RIHMFC and Morris-Griffin didn’t let my mother know what would happen if anything should ever happen to her. She had cancer, and was given a clean bill of health after her last bladder cancer surgery. Well, she died in 2 weeks of that surgery. What a mess we had to contend with – the shock of losing our mother, paying for the funeral, and all tjhe big house expense (taxes, etc.) We didn’t even have a chance to mourn losing her because we had all this to contend with. Along with that, because there is a reverse mortgage on the property that we live in, we either have to refinance or, sell or forclose. The last option is out as far as I am concerned. However, one of my brothers wants out, and my other brother wants to go in on the mortgage with me. However, he hates credit cards, and has nothing on his credit report. I only work in a supermarket because for the past 3 years I had to take my mother shopping and to her drs. appointments (she had 5 doctors.), and my job is nights and is 5 minutes away from home. Now, I am scrambling to find a better paying job, trying to get the 500% overly cluttered house ready to show if we try to sell. We are trying to do both – get refinaced and sell, or else Morris-Griffin will just vulture in and take over. This is such an unfair experience, not only losing our mother, but losing the home that we grew up and lived in most of lives. We have 1/2 the property value as our interest, but that isn’t enough. I asked Morris-Griffin if we could refinance it, and since we are not 62 years of age, we cannot. My mother could have done that and we could have taken over the payments. Now, I, who is doing all the work here, am totally exhausted and stressed out. All this stress and fear of losing our home with nowhere to go when November (and near the holidays mind you) comes around. I wake up in the morning and feel like I am in a nightmare. All this because a bank couldn’t see that my my mother died sooner than was expected (they had given her 3-6 months), but died in 1 week. After a clean bill of health after surgery, she goes back to the hospital and is full of cancer, and died shortly thereafter. Is this fair? THE BANKS ARE HEARTLESS PIECES OF CRAP, AND NEED A BEATEN – AND A GOOD ONE.

We live in Florida and bought a modest home for $175,000 in 2005 at the top of the market we were afraid if we waited much longer we would be priced right out of the market. Between my husband and I were making > $100,000+ a year. I made extra payments, Fixed up the house by putting in about $20,000 in up grades (house built 1987 still original ranch)we could afford the house even though we only put down 5%. Well the market dropped out and I
was laid off, after 4 months I found another job, making $30,000 less than I made before. We went thru all our savings keeping up the 4 months I was out of work. Now I am 2 months behind in our mortgage because we are just making it by the skin of out teeth and had a few emergencies to deal. (no more $ cushion.) From the begining I kept in touch with my bank who said “sorry we can’t help you” I asked about refinancing but my home is worth $120,000 and we owe $165,000. Fine than give me a LOWER % RATE SO IT LOWERS MY PAYMENT, can’t help me either. I can’t sell it without being held liable for the remainder of what we owe on the house since there is no way someone is going to pay us $165,000 for the house when it is only worth $120,000. I have taken my daughter out of college, and will not be able to send our son to college either in our current economic situation. Why is it okay to bail out the banks, but there is no help for the middle class people who have to pay this bailout back in their taxes. Do you wonder why people walk away when no matter how hard they try to do the right thing there is no help, or you are to so far ruined that by the time help comes it is too late, your credit is ruined. The very thing most families are the most proud of is their family, their home, their committment to their responsiblity and their credit rating. I would walk away if we could to do what is best for our family, but we can’t so we continue to struggle to stay on time with all our other obilgations. We all need help, the American dream is dying qickly, how long is it going to take for the government to open their eyes.

I made the mistake of buying a “starter” home during the boom, and now it looks like I am stuck with it forever. My boyfriend and I are planning to get married, yet we will never own a home together. The neighborhood around my home is declining and it is unsuitable for the long term. The house needs tons of work but when we are upside down $100,000 (!!!!) why freaking’ bother? Our only hope is to rent out the starter home for less than the mortgage (big deficit each month when adding maintenance costs), and buy a better home for less than $200,000. We may do this, but I do not really want the headache of landlording. I am pretty stressed out by this and if I lived in a state where walking away did not subject me to a deficiency judgment (we live in Florida where the lender can hold me personally liable) I would consider it!

Oh this subject just had me boiling. I dont mind helping those who had terrible instances in their lives, ie deaths, loss of jobs etc. But what Im mad at is the fact that I am in AZ one of that hardest hit states. I bought at the peak 2/06 and I cant get help. I no longer work but apprently my husband makes to much to modify our loan. We bought when we did because prices were going so high we feared if we didnt buy then we would never be able to afford a home, I was pregnant and had a child already. We were making a combined income of 100,000.00 per year! We were responsible and even though told we could afford much more we bought what we knew we could afford. BUT they only way to get approval was to get an interest only loan. 10 years interest only (option to pay more which we ALWAYS do) for 10 years then re-ammortarize after at the same crappy 7.45%. We went this route becasue I had a credit score of 791 but his was not good at all so in order to get a loan this was the only “stated income” option. Meaning they used BOTH our incomes but only my credit. We have always made our payments on time and I always add more to the principal every month. But I want a regular 30 year fixed at a lonwer rate. Even to lower it to 5% would cut 200.00+ off my payment that I could live with! But we cant get any help becasue we own WAY more then the 105% guidlines to qualify under the Obama plan and my lender (Aurora) actually had the balls to say well if you pay the difference between what your house would appraise at ( I would be LUCKY at 120,000.00 and we owe 165,000.00) then we can refinance you! Well if I had 45,000,.00 laying around to put in my home I would do it. Why didnt they set money aside for the worst hit states or ALL home buyers that did not buy over their heads, or flippers and say any home owner who bought in the peak will automatically have their interest dropped by 1-2%? This would have helped far more people then the only ones getting approved. In my oppion we will be double hit. Why? well all the people who do get their loans modified will owe less then us and take a lot less time to recover. This was supposed to be my starter home not the one I die in. I honestly see why people are walking away! A friend just bought a brand new home, double my size, for less then what I owe at a rate of 3.8%! his payment is the same as mine. Its tempting really it is. If I didnt worry about uprooting my daughter I would have walked by now. Something more NEEDS to be done for me and others in the same situation because if not more and more people will walk creating and even BIGGER housing problem and lowering the house prices for me and the other honest people who are NOT walking away.

LISTEN UP AMERICA. THIS POST IS ETREMELY IMPORTANT.
My wife and I refinanced one of our rental properties. We both work very hard, we both pay off ALL of our debts. And we live on very little. My motto in life has always been, Sacrifce now for a nice early retirement later. We both have credit scores of 807 and 814. Like I said, we do our best to make right decisions.
However, now we are faced with an epidemic crisis. Our property which we were very capable of affording and one day refinance has become our nemesis. Our small condo rental property has dropped in value from 120K to 35K. We cant refinance and we are soon to see our 5/1 Arm Interest rate skyrocket. The bank won’t renogotiate because we are not behind on our payments, nor are they willing to help because we have $25K in savings.
EVEN IF I WANTED TO DO THE RIGHT THING AND PAY OFF THE MORTGAGE OR REFINANCE, I CANNOT.
I truly believe that the worst is yet to come for our great nation. When a couple with a nice combined income and credit scores over 800 cannot avoid foreclosure then we are facing an epidemic crisis this country has ever faced.
More upsetting than anything, our leaders (both Dems and Repubs) are doing very little to force banks to make good wise decisions for the American people.
Every great Dynasty has its time. America is soon becoming a second rated sub-standard country.
I SURE HOPE I’M WRONG. PLEASE STAND UP TO OUR ELECTED OFFICIALS AND TELL THEM ENOUGH IS ENOUGH.

I have a PS. I dont think poeple should be so judgemental of others. Everyones situation is not yours and people have to do whats right for them. I also wanted to say that it certainly sticks in my crawl to be paying for a house that isnt worth what ya bought it for. You expect that for cars not homes. Its just all a sad sad situation for us all. OH and yes Id love to take advantage of the market and unload my current house and neighborhood that Im not so happy with for a more desirable one.

Wow!!! Pages and pages of stories here. As I see it lets face it you’re on this earth X amount of yrs and then you die. Some of our desicions are good ones and some arent. This is such a huge problem for so many. My bank sent me some paper work saying that they possibly could assist in lowering my mortgage after faxing tons of personal info no one got back to me for like 4-5 mnths. And basically said blah blah blah and then someone followed up with me in another 4 mnths. After faxing over info again, they basicly told me that I needed to make MORE money for them to consider assisting me and wondered how I was current on my mortgage. I said…”well did you ever think I was paying my mortgage but letting other bills go or not paying them in full?” Basically it was a too bad so sad tone from them and they sent me a denial letter. Frankly at this age Im tired of always trying to do the right thing. Banks charge out rages interest rates. Credit card companies if your late on another bill they can raise your interest rate. How fair is that AND DO THEY CARE? ARE THEY LOSING SLEEP FOR THEIR ANTICS? So many times your the little man. The folks that has the ball in their court wont return your call and or you just get the run arround. Think about it. When you owe the phone company they will hound and hound and hound you. But if they’ve made an error then its like ohhhh we’ll credit you in 10-14 buisness days that then turns into mnths. They cant ever get your stuff right or take forever to do it. They want their money ASAP but when the shoes on the other foot they get to you when they get to you. My area the foreclosers is bringing up the crime. A neighbor was a attacked and beaten 2 summers back. Just heard of another attack 3 wks ago and many other bad things all about too. Hey if people could put their homes on the market the right way and sell in a reasonable amnt of time I think most people would, but thats not the case now days. If you want to move, have to move or whatever your just stuck. So some time in life you screw or get screwed. Neither is right but it just seems to be the way of the world and life. So if ya need to walk away..hey ya gotta do what ya gotta do. I also find it funny that people are ashamed, embarrased in these pardicuments and ashamed of bankruptcys. Well I thought the other day our own government is Billions or is it TRILLIONS in the whole is well! So even they cant get it right. So why wouldnt they think Joe Bloe making 75k a yr couldnt be in the red too???

My neighbor has decided to walk away from his home because he was not happy and wanted something newer and bigger. the funny thing is he was able to get a second loan and purchase the new one. the old one he is just walking away. The problem I see is that is fraud and he should be punished for that. i know have an empty home across the street from me and he is living in luxury. When are they going to put a stop to all of this. Why do I have to pay for all of this?

We have lived in our house ten years and are upside down. We bought the summer of 1999, in the city because we had 4 children already and needed more house for the money than we could find in the suburbs. Now the city is in debt, crime has gone up, schools have gone down and we are stuck . We are the type of people who pay off our debts. We are surrounded by friends who have let their houses go and now are renting large homes and going on Cruises. There isn’t much motivation to be responsible but I can’t picture us leaving our home unless the crime gets unbearable.

I guess I feel the people who typically live beyond their means and have bankrupticies and foreclosures on their records are the ones that get rewarded. It is frustrating.

We’ve been negotiating with our lender(s), first and second holders since December 2008. Their first question to us is “is it our intention to retain residence?” Our response was yes. Due to economic turn of events, such as; loss of family business, reduction of husband’s income. Approximately 1/3 less than customary. The house is worth approximately a 1/3 less than a year and a half ago. We don’t want to walk but if we can’t negotiate a fair and equitable amount, than we have no other choice but to “walk.” The banks are the ONE’s who cut us off of cash flow for the business. This was operating capital. This was certain death to our business. Sorry I went in a different direction, but somehow they connect the dots in our situation and maybe others. We’re both lucky to have jobs, but our income does not match our output. We’ve been about 45 days late with coming up with the mortgage payment (interest only) every month. We don’t like it, but we are limited to our income. We don’t relish the thought of moving because we’ve been in our home for 9 years. There is more to our story, but I tried to get to the meat and potatoes.

“We started fixing up the house. Then we adopted our daughter from foster care. Then something happened. My husband started racking up debt. Huge debts. We didn’t know it at the time, but he is/was bipolar. He was hospitalized in a mental hospital, and lost his job.

Then, I learned that although he could file bankruptcy on his own $60,000 of debt, there was about $30,000 extra that had my name on it. I still had my good job. But suddenly we had the mortgage, PLUS $30,000 in debt, and 50% less income

Well, now for two years, my husband hasn’t been able to work at all. I am supporting all of us. I am working two jobs. Last week I worked 73 hours. But our house payment is current. Even the $30,000 (that I never signed up for!) in debt is current, although that is a struggle.”

Carol, even though he may be bipolar, he should be able to get a part time job. What else does he do? Just sit around and mope around the house? Or is he in the mental hospital 24/7? If he has the medication to control his condition, then he needs to get a part time job that requires little training or even social interaction (i.e. stocking shelves, warehouse work). If this keeps up, you are going to burn out. Is it only for bipolar that your husband won’t work?

This is the way I see it adding to my previous comment a few below.. The last homes to appreciate in this major false housing bubble are going to be the first to come crashing down fast.. and its a trickle down effect that will start to hit the more affluent and older neighborhoods.. I can see how staying put if you are only 20% or less underwater but where I’m from, this new subdivision is already at 180+% LOAN TO VALUE.. Obama’s housing bill only helps those up to 105% Loan To Value.. That means are our house value has been cut in 1/2 in only a short amount of time, 2 years to be exact… Typical real-estate turn around and break-even points were usually around 7-10 years over the last 30 or so years.. now they’re going to come down so fast to the point that it will take 20+ years to break-even.. so you better tell youself and your family that you all will have that good paying job for that long.. and with all this interest rate stimulating and printing money we don’t have, get ready for hyper inflation in the years to come only making cost of living so high at the worst possible time.. can someone say goodbye USA?
=(

First, our story:
My husband and I were married in 2000. We both had good jobs, a combined income of about $80,000/yr. In 2003 we decided to buy a house. We were surprised to find that we qualified for a $275,000 house!

We decided, though, that we needed to buy a house that we could afford on one income, because you never know what the future holds, whether it’s unemployment, or divorce, or something else. So, instead of buying the top of the line house, we bought a little fixer upper. We put $20,000 down, and had a mortgage for $123,000.

We started fixing up the house. Then we adopted our daughter from foster care. Then something happened. My husband started racking up debt. Huge debts. We didn’t know it at the time, but he is/was bipolar. He was hospitalized in a mental hospital, and lost his job.

Then, I learned that although he could file bankruptcy on his own $60,000 of debt, there was about $30,000 extra that had my name on it. I still had my good job. But suddenly we had the mortgage, PLUS $30,000 in debt, and 50% less income

Well, now for two years, my husband hasn’t been able to work at all. I am supporting all of us. I am working two jobs. Last week I worked 73 hours. But our house payment is current. Even the $30,000 (that I never signed up for!) in debt is current, although that is a struggle.

This week I was looking at the want ads, and I saw a job that I could fit in between my other two jobs, if I only slept 5 hours a day. As of right this minute, I’ve decided that I can’t do a third job. But if things get tough enough, I just might.

Our little house is falling apart. Because after I pay the mortgage, and the debt, there isn’t anything at all left to put on a new roof, or fix a broken door. And my once-handy husband, isn’t able to do that sort of thing any more anyhow.

I’ve paid down our mortgage to where we only owe about $105,000. Our house was appraised last year at $100,000 (down from $150,000!) So basically, the $38,000 that I/we’ve paid into the house is gone.

On my bad days, it really looks like it would be a lot easier to just walk away from it all. But I love living where we do. And I love the pride that I have, that I have been doing this “all by myself” with no bailouts. I tell myself, “every time I pay a bill, I’m that much closer to being financially healthy again.”

And I love that I can reassure my daughter, who is desperately afraid of being homeless (she was homeless before she became our daughter), that everything is ok.

I wouldn’t walk. I’ve put too much of my heart into where we live and the life we have.

This article is so depressing. I don’t even know where to begin. My hubby and I got married two years ago — we’re in our mid-thirties. I was renting, so I moved into his financed condo (the bachelor pad). It’s a tiny space, and here we are now, ready to buy our first home and maybe start a family.

Problem is, he’s upside-down by about $35,000 on the condo. Doesn’t seem like much compared to some stories, but it’s enough to get us scratching our heads. Do we save up that $35,000 to sell the condo at a huge loss? Doesn’t really make sense. Plus, think about how long it would take to sell. Funny thing is, we had a buyer who was willing to go in on about half of that amount, and add on another $15,000 to their offer price. Great! Only the bank wouldn’t approve them.

So long story short, we’re stuck. We’re both grateful and happy to be secure in a good shelter, but are frustrated that two people with good incomes and credit scores can’t get rid of their home to buy a new one. I can only suspect that those who are actually able to buy homes these days are those who are renting, and those who make enough income to buy investment properties. Advice, anyone???

Okay, this is the problem.. people that are on the opposition of walking away are those who have equity in their homes (about 2/3rds of America) and those who don’t want to foot the bill as a tax payer. The problem most of you don’t see is that people are financially capable of buying homes AT DIFFERENT TIMES of their lives. Some of you are lucky to buy when the market is ripe, some of you buy out of fear that you will get priced out, etc.. Its easy to start blaming the struggling owner. I am a first time home buyer. I too also played by the rules and was at the right financial position to buy. I bought at the peak 2006 in the fastest depreciating area of Southern California (Inland Empire). I was shopping for over 3 years and got priced out of Orange County (a more affluent area). We put 10% down and had 800+ Ficos. Now our value is 50% Underwater and moving fast. They are so many STEALTH foreclosures (no signs on the lawns but I know the owners have stopped paying). Now tell me, do I ride this sinking ship till I’m the last one here and put myself deeper in a hole just to save the morality of the nation and to save the banks from collapsing? Don’t blame me that congress is giving stimulus money to the banks. Let them collapse and have the housing correction come quicker!! They are prolonging this disease by intervening. They should’ve intervened before this crisis!

WE DID NOT CASH OUT ANY EQUITY and buy nice cars or went on lavish vacations. We simply got ripped off by a false demand created by lax lending standards!! Of course homeowners weren’t sharing their equity when times were good.. but neither were the investors who were making billions on the short term from these bigger loan amounts as well as the Government making tons of property tax revenues. I am in my late 20s.. I think the people that are affected are mostly first time home buyers who bought in the peak (2005-2006) and in areas that were stimulated by false demand (subprime buyers galore!). But for those of you who used your house as an ATM and redid your home and paid off nice cars, then you don’t deserve to walk away. That is your debt to begin with and is different than those who were in the right financial position to buy but got ripped off at the wrong time by the false demand these banks created by giving out so many stupid loans. I fall right in the middle. Not a subprimer but not the most perfect borrower with thousands of assets to fall back on and a lifelong promising income.. I can still pay but it is a major grind now as my income has dropped 30% and my brother who stays with me is about to have his job sent to Texas for cheaper rent but I already know I’m stuck here 20+ years as well. I can’t guarantee my job will be there for even the next few years. The numbers don’t lie. THere will NEVER be an appreciation like this EVER and I either foreclose now or foreclose later and the older I get, I won’t see much money in teh bank because I threw it all into this black hole and might lose it if I lose my job a few years from now. I will cut my losses right now and move on! I learned alot from this. Point your blame to the people on the top that created this system of irresponsible lending so that responsible people like me (800 fico means I earned my way to get this and have paid everybody else on time and in good faith!) don’t have to get ripped off next time.

Too bad the banks don’t modify loans on a case by case basis. They have no way to filter us out or the staff to really investigate each household. If they relaxed it a bit, of course you would have too many people taking advantage even those who cashed out their equity to buy stuff.. If they see your loan was original purchase money and you obviously got ripped off in 2005-2006 and live in a fast depreciating area, then they should do a principal reduction. But if they see you refied so many times (you can tell by a title and credit report how many times a person cashed out their equity), then they should be responsible for their debt.

I don’t feel any guilt for walking away. I do feel sorry for my neighbors who put much more into it but they made the same mistake and its up for them to realize that sooner or later. I live in subdivision that was built in 2005-2006 so people here are not so emotionally attached y et. It is a case by case scenario that is hard to see through for the lenders. We are in a major crisis and a study from the Great Depression showed that those who held on longer came out deeper in the hole than those who chose what made sense. IT is a sad case that our country has become everyman for themself but please.. POINT YOUR FINGERS TO THE PEOPLE AT THE TOP… I don’t own any investment property nor did I flip properties to get to this home.. IT hurts more than you think to walk away.. I am not proud but its the best choice for me and my family.

NON RECOURSE – NON RECOURSE

If you are in Az and other states the bank cannot come after you for the difference on the loss. There are points to be aware of, primary residence, etc. But most people should qualify. Its in the banks interest to let you short sale its easier on everyone in the long run. The house we bought in SE Phoenix for $160K in june 07 is now about $65K. We’ve out grown it and the bank is letting us do a short sale. NON RECOURSE LOAN!!!!!

I recently lost my teaching job due to state budget cuts in Arizona (what was thought to be a recession proof industry!.. there are 221 layoffs in my district alone)
I purchased a modest home in 2004 before the big boom here, got engaged and built a larger home with my fiance in 06. By the time our house closed we were unable to sell my smaller house and decided to rent it until the market “picked up.” My fiance lost his job over a year ago, we split and he moved back to Nebraska. Now I’m stuck being a landlord upside down $600.00 a month and NOW JOBLESS! I tried to do a short sale and was told I still would have to pay for the difference. I had a loan modification on one loan that expired after a year and apparently don’t qualify for another since I’m losing my job. I submitted paperwork in Nov 08′ to rework the high interest mortgage on the large house and have been assigned a case worker but spent countless hours on the phone trying to contact them (its now the end of March and I feel like giving up even trying)
Prices have dropped in value now to the point where I’m upside down on both (We bought the larger house at $245k and the same house now brand new sells for $150k… my smaller house I bought for $140K and now is selling for $115! $115,000 upside down and STILL declining?!) My tenant just broke her lease this month after a 4th break in to the house and several hundred in damages. I’m now considering teaching abroad (since there are an estimated 1000 teachers valley wide losing their jobs) and I’m getting to the point where it doesn’t make sense to stay, especially if I can’t find a job. I’ve always been responsible
have a 730 middle credit score and zero debt besides my houses, but DOES IT REALLY MAKE SENSE TO STAY? I’m thinking with my frugal spending habits and teaching abroad in S. Korea for a year or more (paying 3% taxes and low cost of living) I can save up enough to buy a property with cash in several years.

I’m not a dead beat or uneducated person, but peoples’ priorities are revalued when hardships happen and I feel like I’m using the best common sense and judgment in strongly considering JUST WALKING AWAY. After all people are living “rent free” for up to six months by going through foreclosure. I can up save a small fortune just by doing so.

I just wish the banks would streamline the short sale process/modification process to help turn this mess around. When I have an offer of $90k on my house and they tell me I have to pay a settlement of $5k-20k depending on my situation and what the bank decides (and STILL ruin my credit for 2+ years) forget it! If I had 5k… and a job I wouldn’t be doing a short sale!
Plus, if I foreclose they are going to pay the process fees and probably get $50K at an auction months later. Who wins in this situation?! It seems so bass-ackwards!!!

I bought my home in VA with my brother almost 5 years ago when the real estate market was booming. I think we bit off more than we could chew with it, but on paper we qualified.

It has been a struggle over the years to make the payments and have fallen behind several times. My brother has taken out two loans to get us current. We are now current on the mortgage but don’t anticipate being able to stay current for much longer.

I recently got married and have not lived in the home since. I still pay my share of the mortgage. I am expecting my second child later this year and know that continuing to pay for a home that I do not live in is going to be difficult.

On paper, I’m sure that the mortgage company will find that we can “afford” the property based on our incomes. But in reality, with our other expenses/debt, we really can’t.

We can’t sell it because of the state that the real estate market is in right now. The property is not in great condition and would need some work (carpet/paint/minor repairs) and we don’t have the money for that. Plus, houses are selling for $60-$90K less than what we owe.

We are not trying to just “walk away” or be irresponsible about our obligations, but our lives have changed and we simply do not need or want the house anymore. We can’t get rid of it, but can’t really afford to keep it.

We don’t want to go into foreclosure because we are concerned about the deficiency judgement. A short sale would require us to put money into the home that we don’t have.

If anyone has any suggestions other than to foreclose, please share your thoughts…

We are not irresponsible people that want to simply walk away because our home has lost value nor do we fall into the category that we have lost jobs, are disabled, etc. There are situations, like ours, that fall somewhere in the middle.

Yes, I agree with what some people are saying, it’s nobody’s fault but our own that we bought a home that was more than we could handle. We were naive and fairly uneducated about the process. We had always intended to sell the property in a few years. But it is NOT our fault that the real estate market is what it is right now and CAN’T sell the property.

We just don’t know what we are supposed to do. Of course we understand that a foreclosure is damaging to our credit, but credit can be repaired over time. The only way to recoup the tens of thousands of dollars that we sink into this property every year would be to hang on to it indefinitely (5+ years) and we can’t afford to do that.

I am in the same situation as alot of people…. way under water. When I read about the man in South Dallas, who bought his house for $82,000 and It’s now worth probably around 50,000…that’s very different from the situation here in California. My house sold for 360,000 a little over 2 years ago… and I have no idea what it is worth now. Probably around 200… 160,000 difference. Of course someone only under by about 20,000 isn’t going to walk!!

What the new program does is take away hope…you can only qualify if you fit a very narrow field….

*Loan owned by Freddie or Fannie
-Nope, don’t qualify
*Loan is only 105% of the appraised value
-Nope, don’t qualify

Modifications… no idea, lender doesn’t know yet. And If I do qualify, I imagine that the modification would only affect my interest rate for a couple of years.

Are they just trying to frustrate the responsible people and give them an ulcer!

It is GOOD to hear so many people walking away. It is time to stick it to “the man”. Look at AIG. They screwed us, and the gubmint is letting them get away with millions of taxpayer dollars. So I say: WALK AWAY. Screw the bankers – even if you can afford the mortgage. It is time to stick it to the man, and shaft them good.

Mike,
You make so many bad generalizations its really silly. You live in Chicago so you probably have no clue about how bad it is in states like CA. Are you good friends with Rick Santelli? He’s another person clueless as to what is really going on in many areas and also from Chicago. Or is it a perquisite to be an overly judgemental jerk if you live in Chicago? I’ll have 50 grand in the bank the day I walk out since CA passed another 90 days of rent free living in the house in Feb. I’m guessing median prices will fall close to $120,000 in another year so I’ll buy a home without a mortgage in about 3 years. Guess I’m not too stupid to do the math and figure owning a house outright in 3 years is better than paying a $3000 a month mortgage for the next 40 years.

Don’t do the crime if you can’t do the time.

Walk away = Renter and bad credit

Stay & Pay = Hard work and homeowner

It is simple, make your choice, it is not that complicated. If you were stupid enough to get yourself in over your head you are not smart enough to own a home. Responsibility is the key. If you want to walk away, please do, I do not want you as my neighbor anyhow. You will be renting from those of us who are responsible and if not you will sleep under the EL or under a viaduct, who cares.

Make your choice.

I am an angry person about this whole house value ordeal. My husband and I bought a home late 2007, shortly after property values started declining. I have been finding more appealing properties for equal to less than what I paid for mine and I am tempted to foreclose and get a better house for less money. What gets me is all these people getting in on the good deals. When the market does go up again they are going to make a nice little profit.

It feels unfair and makes me want to walk away from this mortgage prematurely. I am staying because it is the responsible thing to do. The fire is fueled when I see houses in my neighborhood going for significantly less than what I paid for mine, not to mention the “types” of people moving in because they can now afford to live in my neighborhood. I don’t mind new neighbors, but please people take care of your house for the benefit of us all.

On the jobs notes studies conclude that 33% or 1/3 of employers check credit before hiring someone. That means 2/3 don’t check your credit at all. Most of the time they do check your credit it is part of a comprehensive background check and rarely is a person excluded from a job due to a poor credit score. Thats not to say it doesn’t ever happen, but internet statistics say it is rare. The employer also is legally obligated to tell you if information on a credit report was in any way a reason for denial of employment. I’ve never met anyone whom an employer denied employment based on bad credit. I know plenty of people with bad credit and good jobs.

I get really tired of all the fear mongering with bad credit being the reason people should stay in their homes. If you feel your home is worth what you pay for it then you should stay in it. If you feel your home is not worth what you pay for it then stop paying for it. Its really quite simple. Also if you live in CA bear in mind that your car tax, income tax, and sale tax are going up this year. This will far more than offset the stimulus tax cut. Obviously this wasn’t entered into the calculation when many people purchased their homes, but now you’ll need to come up with another $1000 a year.

Regarding this comment:

“Marcolm Forbes, the editor of Forbes magazine at the time, commented in his magazine that he couldn’t understand what the problem was, you buy a home and you live in it until you die and then your heirs have it, so why worry about what the “current” value of the home is at any specific point in time? A rather simplistic approach given the transient nature of our society, given that when you move from one job and city to another you are very concerned about the “current” value of your home, nonetheless an interesting concept for those who are not likely to move. ”

Unfortunately, the bottom has fallen out of the economy here in South Florida if you lose your job you will be unable to find another one making the same salary. A lot of people are being forced to consider moving, but are trapped in their homes that are $60,000 underwater or more.

People think that others are walking away from their homes because the value has dropped. This isn’t the case. In the cities hardest hit, the people are walking away because they cannot pay their mortgages anymore.

None of the government money has helped the home owners. The HOPE program? They have only written 25 mortgages. Hard to believe? Just check. Banks will not rewrite the mortgages, the bankruptcy option has been so badly written down that only a select few will qualify.

The BIG MYTH is that people are getting these new mortgages and sticking it to the tax payers. The only offer is that your payments will be reduced for 2-3 years then return to the contracted amount plus whatever your unpaid back payments will be added to the monthly amount. These homeowners are now 2-3 year renters that will be forced from their homes at the end of this time. Banks are figuring that the prices will have returned to normal so that a foreclosure will net them a profit.

Ask your self a question. Would it be better to walk away from your house now or in 2-3 years?

I have noticed one trend in these posts. Most of you who think you are being analytical do the math right but the assumptions you are putting into your equation are just that, giant assumptions. Also, they are variables, not constants.

You assume credit can be repaired in 7 years. Says who? You assume lending standards will be back to where they were. Says who? You assume your house will NEVER recover. Why? You assume you will always have a right to get a loan in the future. Why? The lending community likely won’t touch you for a decade, even at higher rates. Do you really know what that will cost you over the next 20, 30, 40 years?

You assumed, and continue to assume, trends never reverse.

I wonder how many of you analytical types analyzed the area you were moving into when you bought the house? How many put careful thought into whether the values could continue to be supported and why? How many thought about the job growth, population growth, or the general economy of the area you were buying in. How about the attractiveness of your lot vs others if you ever had to compete with them? On the other hand how many of you thought “hmm, this house is bordered by a freeway on 2 sides, and a garbage dump on another, and I’m 400 miles from downtown, jets from the airport buzz my house, and there are powerlines running overhead. Oh no bother, its a house, it ALWAYS go up in value, right?”

Wow, these comments just go on and on. I am from Arizona. My husband and I have been together for 5 years and from day one we have done everything by the book. We pay off our credit card every month, our car and truck are paid off, we don’t over spend. We saved for a year and a half to put a nice down payment on a new Harley, and that will be paid off in 16 months. When we bought our home (tons of pressure from friends advising us to buy), we researched, saved, and my husband was a Residential Electrician with a builder that allowed a builders discount. We built, what we thought at the time, was our dream home. We didn’t get a huge house, didn’t get a huge lot, just 1600 sq. ft. in a nice community outside of town. An hour commute for me each way, each day. We never missed a payment for two years. I started carpooling. Well the residential market went to hell. My husband’s salary was cut in half, he was unemployed, out working for whoever would give him work , regardless of the amount of pay. We fought for 6 months, drained our savings, and called the bank asking for help before we missed a payment. They told us sorry, call back in a month and then advised us that by national standards we were spending too much on groceries each month! Standards that I am sure were set before gas prices went through the roof and all of us saw a huge increase in our monthly grocery bills. I couldn’t believe it. If there is a book on how to do things right, we did it. My husband had a credit score of ZERO when I met him. In 5 years, we bought him a truck, paid cash. Paid off my car. Bought a Harley and purchased a home with a credit score of 723. Now we are 60 days behind, my car broke down and we can’t even get a loan for a used car. FIVE years of working on our credit, phones calls to our bank asking for help, and for what, to have all that work gone in 60 days! And that is not even counting the money I have lost on my 401K! We are all in this, but they have turned the American dream into an American nightmare and we signed a fixed conventional loan. Today we are upside down about 100,000. We have choosen to walk away. We fought and drained our savings. But I refuse to go into debt on my credit cards to keep a house that I will pay 600,000 for (after 30 years) with my bank not backing me! We paid 17,000 in payments last year on our home and 14,000 of that went to the bank for interest! How can they not help people when it is everyone!!! I don’t care what people think about me, we are hard enough on ourselves for all of this (wondering what we could have done different), it doesn’t matter if Joe Blow thinks I’m immoral because I am doing this. Financially it makes sense to us and I am done fighting when no one has even given me a reason to fight. Everytime I stepped up and asked, help us so that we can keep moving forward, they have told us sorry, can’t help… B of A has taken 35 BILLION in tax payer money and they can’t help? How much money would be put back into the economy by hard working folks like us if they took EVERYONES homes, rewrote them at current market value for 4% interest? We would all spend our money elsewhere, pumping it back into the economy, making our house payments and living the American Dream. I don’t have the fight left in me anymore, this is not a home anymore, it is hell!

Sherri
Buckeye AZ

People should get off their high horses. If they want to scream immorality, do it to the right people.

They are claiming that they are paying through the bailouts of AIG and such. AIG being the mortgage insurance and such. We have been bailing out everyone since many, many decades ago through WELFARE. Why are you not screaming at them? Some people fake disability and claimed benefits for many years. I am sure some of you screaming knew people who does that. And some people have 14 kids so that they can claim welfare and they don’t have to work. Screaming “IMMORALITY” ??

What about bailing GM and Chrysler? Is that hurting your pocketbook through taxes? DID GM AND CHRYSLER INSURED YOUR MORTGAGE? Are you screaming at our Leaders, THEY PASSED ALL THESE BAILOUT PACKAGES? I know for sure that some of you that are screaming still have a job at either GM, Chrysler, AIG, Citigroup, Fannie, Freddie because of the bailout. Interesting.

What about those who filed for CH 7 bankruptcy. Those people are even more “immoral”. They charged up their credit cards for luxury and such, then filed. Do you think that you are not paying for their bankruptcies? Have you been screaming “immorality”? Maybe some of you screaming “immorality” right now have filed Ch7 before.

These people are simply trying to have a new start. Their original intention was to keep the house for many years to come. Circumstances have change due to the economy and such. Of course, these home buyers and the BANKS believed that housing price will NEVER come down. That was both of their fault for believing such myth.

Again, I can say this with a clear conscience because I bought my primary residence in 1997 and still not underwater yet. Sold 2 other investment properties in 2005 that I bought in 1995, 1998. Have never claimed any kind of welfare in my life.

There is nothing illegal or immoral about walking away.

I’m in the same boat as many of you. I can scrape by to afford my interest payment but i am sick and tired of being broke. It doesn’t help me nor my family when i cannot plan for our future. A house just isn’t the purchase it used to be.

I understand why people would be upset that folks are walking away, but for us who are underwater by 60%+, what would you do? My house will NEVER reach it’s original purchase value, my neighborhood has gone to crap because of irresponsible borrowers and lenders, crime has increased 10 fold and I’m supposed to struggle to stay here and raise my kids…why?

I would have no problem toughing it out if home deprecation was around 20% but that’s not my case. The banks refuse to help me because I’m current on my mortgage, Obama’s plan is a joke and when i fall behind in payments and the bank holds it’s hand out to help I’m gonna bite the hell out of it. They can keep this house.

It’s a hard decision but the best for me and my own. Good luck to everyone else facing this dilemma.

All of these people who talk about walking away from the house when they can afford the payments are scum. You act like some evil bank pays for the difference between the foreclosure sale and the amount owed on the loan and no one gets hurt. That is not so. Those who say they walked away and didn’t have to pay the difference were able to do so because they paid mortage insurance. Who is paying the policy? We are, the American taxpayer. Why do you think we keep putting $30 billion into AIG every few months? AIG didn’t make mortgage loans. AIG sold mortgage insurance. When these ’smart’ people jettison their ‘investment’ because it didn’t pan out, they make us pay for their bad decision.

A) Income dependent for making payments

B) Credit & Income dependent for qualifying loans & credit card.

C) After the loan or agreement turned into contract, means agreement locked (non variable) according to A) & B) – regardless of current condition which is a variable.

D) Economics are in constant variance regardless going up or down.

E) In Economic upwards, everyone – creditors and debtors are generated and locked.

F) In Economic downwards, creditors and debtors are in a bad position due to locked agreements.

G) Suppose that the agreement is not in a locked position, and it allows for variance in economic and employment conditions and the loss allocation are shared to the banks and debtors, there are very good chance that foreclosure issue wont be much of an issue as is now.

H) Food for thought… appraisal value is very subjective.. and never goes down. That kind of thinking needs to be changed.

I) Moral consideration is subjective as well. To be good, good for you. To be bad, bad for you. Question is what are the implications? For self or for the business, or for the whole? Again, very subjective.

Wish you all the best in keeping or renegotating mortgages with the bankers or others, or walking away from mortgage.

NR

I paid cash for my house through years of savings – so I guess I wouldn’t walk away, although I would never get back what I have into it, especially all the weekends and vacation time I have used to remodel it. So I guess my tax dollars will be used to help those who could not have, and should not have got into the mess that the banks allowed them to get into. This whole mess is no single person’s fault, but a combination of effects, like the existance of credit-default swaps, that got us all into this. I certainly won’t have a bank knocking at my door, and this comforts me. But I will be part of the body politic that will end up helping us all dig out of this hole.

I built and moved into my house in 2007 ast a cost of $350,000 and it appraised at $410,00. I just attempted to refinance and the appraisal came in at $300,000. So, on paper I am now upside down. But I have a job and can still pay my mortgage. Even if I were upside down by 75%, I don’t see an advantage or a reason to walk away. At the time, that was the cost and its what I owe. I look at it like this. The value on my house is meaningless except when it comes to property taxes and time to sell. As an optimist, I do believe that eventually the market will come back and I will be able to refinance or sell then if I want to. I would only consider walking away if I were to lose my job and could no longer afford to pay it. Basically, the survival reason. Otherwise, if I walked away…I would still need a place to live and I prefer not to rent.

We purchased our home for $560,000 in 2006; it is now worth 60% less. The builder of our home said he couldn’t build the house for what they are selling for now. If we walk, we lose our tax break, a guaranteed place for our dogs, our down payment, and our excellent credit. We have an ARM that starts adjusting in two years. If we can’t refinance at that time, we will walk away. The only reason we are not walking away now is because we are convinced that there are so many of us in the same situation that maybe there will ultimately be a solution we can work out with the bank. By the way, by my calculations, by the time our loan starts adjusting, we will have already paid the bank over $250k in down payment and payments – you would think that would count for something.

All of who talk about morals make me sick. I guess you haven’t felt the pain of walking around your home knowing you won’t be able to stay in it much longer. You haven’t had to try to figure out what is best for your dogs… putting them to sleep or hoping the animal rescue will find them homes because your family has no room for you and your dogs. You can’t rent a place because you can’t afford even that. It’s not your fault you were injured and had to go on permanent disability from your $80,000 a year job. It’s not your fault your husband was layed off from the same bank that is now foreclosing on your home. You stuck it out for 2 years. Used all your savings AND 40lk’s trying to keep this home. So until you walk in MY shoes don’t judge me. Don’t think that I’m irresponsible or immoral. You don’t see me sleepless or sitting there with the tears streaming down my face feeling to hopeless. I tried to sell my house but the short sale wasn’t approved. I did everything within my power to be the upstanding citizen I have been for 55 years. So, please know we aren’t all flakes who didn’t think before we made this decision. This hurts more than I can say. I just hope the person who buys my home keeps it up like I have and loves it just as much.

It is not about being underwter or upsidedown – it is about being able to pay the mortgage every month. Manage THAT and no one walks away.

If FED directly lent to primary resident homeowners up to 50% of present value – not to exceed $100K -30 years at 4%- secured by a tax lien on the house.
That would solve the cash flow problem of the majority of homeowners.
This would put money in the banks (paying down that exisiting loan) and protect taxpayers with that primary tax lien for any forclosures.
This will also have effect of stablizing the market – because fewer owners will sell (at a current loss) because they can pay and hold.

In 1992 we bought our first home in Long Beach CA. The housing market was heading for a slump; aerospace / aircraft industries were laying off thousands of workers… we paid around $198K (~90% LTV)for our little 1940s stucco box. The region’s home values continued to drop and we found ourselves with a home valued at about $165K a year or so later. Whaddya do?? The banks didn’t care. They were unwilling to negotiate with you. People were selling for less than their mortgages and getting saddled with paying off the difference to their mortgage holder. There was no bail-out and mortgage refi assistance. Yes, we could walk. I was laid off from McDonnell Douglas Aircraft shortly after we bought the house and we had a new baby. What next? The answer for us: Tighten our belts and stay. We figured ‘you have to live somewhere’ and rent would cost us close to our mortgage payment and we had the tax advantage of writing off our mortgage interest. Plus it was OUR home. we didn’t want to be anywhere but there. It took a number of years for the values to come back and pass the 1992 purchase price but in the late 90s we were getting there. When we finally sold it in 2001, the market prices were close to $300K. By 2006 they were over $500K. Today they are back to about $250K. It’s a roller coaster. We now live in Montana where the real estate roller coaster does not have quite the same steep highs and lows but even here we see folks getting close to being upside down in their mortgages. My plan today would be the same as it was 15+ years ago…. STAY. I’m not planning on going anywhere else and this is where I want to be. If my husband and I end up without our jobs and were forced out due to foreclosure, I guess we would figure out the next chapter of our lives after the sheriff dragged us off the property.

Well I did walk away. I understand I made the choices that put me in that position by over buying and using a flimsy loan so I don’t blame anyone but myself but here is what happened to us starting in 2006. Six months previous to buying the home I landed a position that brought my annual income up to 75K and my wife was in her fifth year at her job making 45K so we decided to move into a better area. We found and purchased a nice 3 bed home for 300K and rented our first home out for 1400 monthly (500 over going rate) but that was 200 a month less than our note. the new home was 2200 monthly so in all with the HOA included we were at about 2500 out of pocket each month. Then the market changed and along with our home only being worth 173K (the price it was short sold for) my job of then one year disappeared as well leaving us with less than needed to make the monthly, we used credit cards and a personal loan to stay afloat for seven months while I tried to find a new job to no avail and during that seven month period we tried to get help from our lender to alleviate the pressure as well but they were not willing to do anything because we were not behind. At seven months and broke we borrowed money from family to move to an area we both found jobs in and then rented a home. In July we will have been in our rental for two years and with credit scores back in the high 600’s have been told we can buy again if we choose when our lease runs out. At times I feel guilty for walking away and letting the bank have the home but then I remember that they didn’t try to help us either, Although we have made all our other debt payments our goal these last two years is to become debt free and then we will save for a new home but like anything else in our lives now, cash and carry. J Wellington Wimpy a popeye character was famous for saying “I would gladly pay you tuesday for a hamburger today”. If I cant pay cash for the home then I guess I dont need it today I can wait! After all home value was never the problem in the first place its the affordability, if it were value than we would have to take the intrest into account because a 300k home would have cost me no less that double that over 30 years because of intrest, but if I could have afforded to make the payments then why not stay because everyone with a mortgage pays more for their home than its worth.

Foolish article. Put that moral against a loss above 20% and friends who are in similar financial situations receiving help simply because mortgage payments where missed. I have a friend who missed four months of mortgage payments with a bad credit history. The bank has forgiven those four payments and is currently reducing his mortgage rate. I don’t wish him anything bad but what about me? Should I be as moral as the bank? I entered into an agreement with the idea the bank had some sort of moral to stick with its good customers. Not use my tax money to pay for someone else who is less responsible then me. In my opinion, my agreement has been slighted and I stand to loose $200k for my financial future, if I don’t receive a similar offer. I still have about 10% equity but the bank will find their missing mortgage payments from a prior good customer come April, may, June & July. If it doesn’t look like the same investment I made in the beginning, I can’t sell and no moral has been upheld to me. Why should I be willing to loose more than I’ve invested in at this point? My full paycheck and an apartment is looking very attractive right now.

Why not show people in CA. I bought my home in 2004 for $230k I refinanced it in 06 because the arm was up. I refi’d for $256k, today the home is worth $105k, I have also lost my job. My mortgage is $1710 with a heloc of $65k ($450 more per mo.) My wife makes $10 per hour and I do not qualify for unemployment because I was self employed and no one is hiring for anything making more than minimum wage.) We are considering walking away because we filed chapter 7, but where will we live with a 90# dog and pay less than 1700?

Well I would love to trade a house with one of these cry babies! 10%, 20%, hell at this point 30% would be great! We are $260K upside down!!! Would they walk away from that? Has any one noticed that the areas the people are from? There is not 1 from Florida,Cali., or Arizona the worst states hit! Who wrote this article?! If they don’t want to do the work, they should keep there LAZY ASS home!

ABSOLUTELY AGREE WITH ONE OF THE PEOPLE BELOW.

Interview better people.

Get someone from South Florida, Phoneix, or Las Vegas.

I bought a home in Las Vegas in 2004 before market spike for $179,000, the value rose to $250,000 today one beside me just sold for $98,000!!!!!

The people in the article are down 20%, that is joke!

Try market values that are cut in half or greater.

All of the stories that are out there on declining markets are written by people that are shocked their house went down 10%.

Visit Las Vegas, for sale signs all over the place. 18,000 Bank owned homes on the market and it is to believed that the banks have another 20,000 homes that they could put on the market but are holding back to try to stabilize the market.

On a positive note, if you are looking to buy a home, the values in Las Vegas are awesome. You will not be able to find a job, but you can get a great house price.

Thank you
Craig

Look this comes down to business and morality. The great majority would love to keep their home but truth, reality, fact, says all the programs are hogwash. That si why they write you off and send the bill collector after you. Its good business sense. Think business they respect you more. It is not about self serving or selfish for the average Joe it is about survival. People could have been helped long ago but like usury that isn’t going away and help isn’t coming. To stay and eventually get the boot because they can and write it off is to be the fool. Only a very small percentage get help if that. 40 in 400,000.
get help. If everyone mailed them the keys you would see instant realo help. The ones trying to hold on, just postponing the inevitible.

First of all, negative amortization is not when your house is worth less than you owe. Negative amortization refers to the repayment schedule of a mortgage that pays no money towards the principle and does not fully pay each terms interest. That additional interest is applied to the balance so the balance is ever increasing, not decreasing, thus negative amortization occurs. It has nothing to do with the value of the home and only involves the mortage balance.
I also disagree with the premise that there are any long term benefits to walking away from a home whose value has decreased and is now less than the mortgage. This article is referring to people who can pay their mortage but are questioning the benefit of continuing to do so. Besides the obligation to live up to your word you obviously must consider the long term ramifications.
The value of a piece of real estate is a snapshot, not a movie. It represents what that home would sell for today and today only. If I owe $500,000 on a home that is worth $800,000 it is only worth that today. If tomorrow it drops to $350,000, again, that only represents what it is worth today. Tomorrow it may be worth $900,000. A home is a long term investment and the exact worth on any given day, or even any given several-year-period is almost worthless. If you walk away the damage to your credit will be major but, if you can pay the mortagage and you stay, your investment will pay off in the long run.

I will be one of those walking away from my home. I bought in 2005 in CA about 6 months before the housing market collapsed. My house is now worth about 50% of the value I bought it for. I did not take out any crazy loans or get a loan I could not afford. I can make my payments but I did get a 5 yr ARM that is due next year and who will refinance me now? No one. So I’m walking away now and saving my mortgage payment savings for my next home.

This is purely a business decision to me. Everyone applies all these moral and ethical reasons to homeowners but don’t require any of those from the lending institutions. You don’t think those banks would continue to make a profit if they sat down and re-wrote my loan with me? Over 30 yrs and the hundreds of thousands of dollars in interest they would get? What is their ethical duty besides making the absolute most money they can? They don’t have any so why should I?

Sorry, in the second paragraph meant to say “I’m also really not buying [not buting, whetever that means ] into the fact that you have [not "have not"] fulfilled your contract in this situation”.

To West Covina, CA: congratulations on buying low and selling high.

Beyond that, you have got to be kidding me. You are trying to parse words to draw up some distinction between an unsecured loan (e.g., a credit card) and a secured loan (a note and mortgage/deed of trust)? Give me a break!

It’s called a “promissory note” for a reason. When you sign those loan documents, you are promising to pay per the terms of the loan. To do otherwise (when you are able to pay) IS UNETHICAL. I’m also really not buting into the fact that you have not “fulfilled your contract” in this situation.

You say that the bank takes back your house if you don’t pay. True; in cases when the note is less than the value of the loan, the bank takes the house as compensation for nonperformance of the borrower. The problem arises when the bank gets a house that it worth less than the note; in this case, the bank is left holding the bag (i.e., gets nothing).

So you are advocating making your payments when things are going well (property values are going up) and not making them when things are going poorly (when you are underwater)? Nice. I’d have more respect for you if you had let the bank take your houses when they were appreciating and you had equity. At least then you would be consistent in your thinking.

As someone has already said in this column, situational ethics equate to no ethics. But I guess I’m not surprised by what you are saying — someone who doesn’t have any ethics will be the first one to argue that walking away from your mortgage when you can afford to pay (which is unethical) is not unethical.

Let’s make this simple, most people who puchase a home at any price above an absolute market bottom and, I would contend, ALL people who build a new home will be “underwater” on their home value at some point in their lifetime. A continually increasing value of a home is not a God given right. When your local economy turns down, home values almost always suffer. In the early 1980’s, which pre-dates most “polls”, most of the nations home prices had declined, similar to now. Marcolm Forbes, the editor of Forbes magazine at the time, commented in his magazine that he couldn’t understand what the problem was, you buy a home and you live in it until you die and then your heirs have it, so why worry about what the “current” value of the home is at any specific point in time? A rather simplistic approach given the transient nature of our society, given that when you move from one job and city to another you are very concerned about the “current” value of your home, nonetheless an interesting concept for those who are not likely to move. Bottom line, I would contend that home ownership via a mortgage carries the obligation to pay off the mortgage regardless of the “current” value of the home. As many people are finding out in todays economic environment, owning a home via a mortgage is not a good economic decision, renting is cheaper and carries fewer obligations.

If I could walk away, I would, but I am one of the many responsible home owners that did not commit to loan terms that I did not understand. Additionally, before I signed my name to the contract, I was sure I would be able to satisfy my financial obligation to the lending institution. I am now underwater to the tune of 137% loan to value. I consider my self somewhat fortunate, due to the fact that I would be able pay my financial obligations even if I were to lose my job. It would take some juggling, but I’m sure I could manage. Otherwise, I would not have committed to the loan.
I now have a house I cannot afford to sell, cannot refinance to a lower rate and cannot afford to rent out. If I do attempt to unload this property, it will ruin my credit for quite some time and will put my retirement savings in jeopardy because the banks will likely come after the difference between the sales price and loan balance.
My big issue with the Government bailout, is that we responsible borrowers are being penalized for…well, being financially responsible. Our tax dollars are being used to atone for the mistakes of the irresponsible borrowers that signed a contract that they didn’t understand and or couldn’t afford and for lenders that engaged in very questionable loan practices. The combined result of these two groups is the big mess we have today. And here I am, on the outside looking in as my tax dollars are being used to give these two groups a pass or do over without any apparent repercussions.
I do realize that there is more to this issue than what I’ve described above. Some people have lost their livelihood. If they are not earning money, how can they possibly meet their financial obligations. But my point is this…If the Government is going to use tax dollars to address this issue, it needs to address the issues of all tax payers, not just the irresponsible ones. I need some help too. I need to be able to sell my house. (or at least be able to rent it) I need to be able to refinance my loan to reduce my payments. I need to get out of this negative equity situation I’m in. I’m trapped with this house likely for many years to come, unable to seek out career advancement opportunities elsewhere in the country. I can’t afford to go make more money.
Why not give all taxpayers equal consideration. Make lenders write off negative equity. Push down interest rates so borrowers can reduce their payments. This is a really big mess that the Government is investing enourmous resources to address. I strongly believe that if we are going to use tax dollars to try to fix this, then all taxpayers should reap some benefit to help them with their particular issues.

INTERVIEW BETTER CANDIDATES!! Like in FT. LAUDERDALE/MIAMI
I OWE 500k… MY NEIGHBOR WAS JUST FORECLOSED AND THE BANK LISTED IT FOR 189K!!! OCEAN ACCESS!!!

I AM 300K IN THE DRAIN!!!! TRY THESE NUMBERS!! NOT 15K OR 20%!!

I AM NOT WALKING I AM RUNNING….

I don’t feel sorry at all for Scott from Kansas, whose wife threatened him w/ divorce if he didn’t sign the loan papers. That’s exactly why she divorce him in the end, because he’s an extremely weak man w/ no backbone. No woman wants to be married to a man who can not make hard decisions. I have the whole family mad at me on a continuous basis for saying “no” or making unpopular decisions, but we are financially secure and have no worries. I can not press this point enough, that Scott is supposed to be the MAN OF THE HOUSE. He’s supposed to be making the tough choices. As far as calling other people MORON’S. I think the real MORON is the guy whose wife left, and is now facing foreclosure. If your the MAN OF THE HOUSE, then you need to start acting like it. The only positive thing about this mess that Scott created was that he has no children to see what a LOSER their father is. You ought to be ashamed for even writing such a goofy story in public!

I bought my house in brentwood, CA in Dec. 2006 for $600,000. I put 20% down. Today my house is worth in the low $300,000. I have a 7 year interest only loan with an East coast bank and a 2nd with another. Just recently I submitted a hardship package to them in the hopes of possibly refinancing or modifying my loan. I am a tenured CA public school teacher-19 years with the same district (talk about job security). According to First American that reviewed all my financials for my bank “I don’t meet the criteria for a loan modification or refinance”. I have a 750 credit score – just what is that criteria? They say my debt to income ratio is too high yet I have paid them on time for the past 2 years. So bottom line instead of my bank taking a chance on me (all I want is a fixed rate loan at a good rate) they are willing to take close to a $200,000 loss with a short sale, oh, and throw the holder of my 2nd under the bus – they won’t get a cent from a short sale. I am sure I am not the only one in this position. In this economy you’d think banks would lighten up on their “criteria” and refinance those of us underwater and on the brink of walking. Why is it so easy for them to let good people walk? It seems it’s easier for them to take the big losses from short sales and forclosures than to actually work with their exisitng customers 9who are in good standing) but then again – they do get federal bailout money to cover their losses. I love my house and would love to keep it but do I continue to pay an interest only loan at 6% on a house worth half of what it was? No. Might as well throw my money out the window. I am walking away. I support President Obama and what he is trying to do but until the banks actually start working with customers like myself the mortgage crisis will continue. How very sad for too many of us.

What if we want to stay, but are going to have to walk? In 07, my wife and I bought our house. We had talked about and looked at some houses but when she saw this one, she just had to have it. We had worked hard on our credit. My debt to income was low and I had a small part time home business. My credit was great, and the credit card company, even lowered my interest rate. We together could afford it. A week after we walked through the house, she was in “love” with, I had a heart attack. It was so massive (a widow maker) I actually died, had a near death experience and came back, but that is another story. I was only 42. I was hospitalized for 14 days. 6 days from coming home from the hospital, I signed the Note. I tried to talk to her before that, that I didn’t think this was the best thing to do. Her trump card was she threatened our marriage if I didn’t sign for it and she carried my health Insurance. I had this attack 5 days before my 90 day probation period had passed, so luckily my company kept my job open. 6 weeks after the attack I was working so I could make good on this Note I put my name on. Now, here’s the Irony. Less than a year after the attack my wife and I split up. I started trying to work with the Bank. I couldn’t afford the entire payment. I knew this when I bought the house, but what choice did I have, so, I guess I made the best choice I could at that time. The divorce cost a lot of money, thank god no kids. She cleaned out the savings account and took other money stashed away. I have virtually no money left in savings. The house is now in foreclosure. I feel like crap. I hate what this is doing to my neighbors and my town. I GET IT!!! I found a new job, to cover most (85%), and if I could have paid the insurance and taxes separately, the whole payment but, due to the economy it fell thru. I am grateful, I hadn’t given my notice because I have a good job, and make enough to make a payment, not the entire one. I even tried to work a part time job. But this congestive heart failure got in the damn way. I couldn’t do it because my heart only pumps out 30% of the blood that pumps in. So, this situation is providing me an opportunity to hopefully work this out. The way I see it is either way I win. If I can work it out first I will if, nevertheless, if I walk I am grateful, I can do it now. I have tried 4 times to work with the Bank. I even went through my PMI 2 times trying to work it out. My PMI is Fannie Mae back insurance. My house that almost and just might cost me my life was on the auction block. A week before the Sheriff sale, the first moratorium was put in place and stopped the sale. I was burning up a few fax lines with all the documents I have sent. I’ve spent money in overnight fees if I couldn’t fax the documents they wanted. I keep my home clean; I take wonderful care of my lawn. My home is beautiful. I qualify, I want to make good, and I want to do this but I won’t have a choice but to walk. If the bankruptcy law gets changed before they do the sale maybe I will still be able to work this out. The Bank will get money from the PMI Company for the 20% down on the house. This is insurance I paid for in my monthly payment. Good thing I was morally and ethically right on that one huh? AND what they get from auction they are getting their money for the house. That was the collateral and that’s what they will get. What they are loosing is the interest I would have paid. I even tried to do short sale. No OFFERS. So, I feel for those who are loosing the values of their homes. I too, lost around 40-50k in value. Now, my house is back to its true value. I can afford it. The bank won’t work with me. If I can, I am going to run from this but, I am facing it. I am not looking for pity or sympathy nor do I ever have the right to judge the life of another. I am not going to beat my self up because I won’t fit someone’s Idea of moral, or ethical. The way I see I am batting a 1000, doing what I believe to be it, and not getting anywhere. My character isn’t the problem, my finances are. So there isn’t one person on this earth qualified to say they’re so much more morally or ethically right, nor are they the authority to dictate what is moral or ethical. He who is without sin, point the first finger. I am losing my home, I have crap credit and my interest was raised on my CC that I don’t use. I have made my payments on time, on every debt I have, except the house. I have 200.00 a month in medical needs a month. I have done everything to make a bad situation right so, I will walk away from this with a clear conscious. To those of you who think we should or aught to be sent to jail, or be punished are a bunch of MORONS! I am getting the consequences of my choices. I don’t need or deserve to be punished.

To West Covina CA,
You are a BIG part of the problem. I would NEVER want to do a business transaction with you!
Let’s see, If I’m winning the bank gets the money, if I’m losing, so will everyone else. What a freakin lousy attitude.

I would like to say something with regard to mortgages, foreclosures and the plight of many people losing their home. Why is it that, in this type of situation, the homes are taken from the have nots and are resold to those who have for almost half the original price. Isn’t this the same houses we will one day want to buy again? To me this seems to be such a contravention to the rights of every human person to house, feed and clothe himself. What happens to basic human rights in these situations? I once read that “every city, state or country is only as good as its weakest link.”
THE SILVER BULLET
My solution to this mess is a global fundamental change in our accounting and economic process by eliminating the so called “present value” of property. Land should never be used for speculation, or profit making, but each individual should be entitled to a ‘residential property’. Land should never be “owned” by the “first come first serve” or those who because of their wealth become land-owners and then resell at enormous profit to those who want a place to house themselves and family. The earth belongs to all and must be used for the benefit for all.
The “value” is on the “house” constructed on the land. Land will be the property of the city/state and leased at $1.00 to those who chose to live, or set up business in that city/state.
First time buyers will depend on the the units made available by the city/state. When there is movement or migration out of the state the “sale” value will be based only on the house constructed on the property and not on the property. The property will always have a value of $1.00. Mortgages or loans will be provided by the Banks to build the house and therefore no “present value” on the property.
Think of it. When we lose our home we lose our dignity. I do believe that this is the only way to eliminate poverty and ensure that the Universal Declaration of Human Rights, signed by almost all countries of the world in 1948 are not only words.

If you decided to keep the house, very good decision. But please stop whining how the bank and realtors cheated and lied about the everything. No body pointed a gun at the homeowner and say “take the house or else!!” Take the blame, the drop in value, and say “I will tough it out regardless. Don’t need any gov’t re-modification.” THAT WOULD SHOW CHARACTER.

Walking away is simply a fresh start for those who wants one. Basically, there are only two choices, stay or walk. But please SHOW SOME CHARACTER – remodification? DON’T DE-HUMANIZE THOSE WHO DECIDED TO WALK AWAY.

By the way, I sold two investment properties in 2005. Bought those in 1995 and 1998. Not a day trader. Just a good planner. Now waiting to buy many more when the time is ripe.

I’m walking….and fast!!!
bought $78,000 house in ‘96 @12.5% w/balloon payment due in 2011. Missed 1 payment, Citi “re-worked.” Now, balloon pmt of $68K due in 2027. Been paying $743/mo. since 1996 = appr. $106,000. $743 for 18 more years = $160,448. House next door sold for $35K. House appraisedfor 83K year. Do the math!

To West Covina Ca,

You sound like a day trader. Now, if you can’t realize the difference between your house and a gambling chip, maybe you shouldn’t be buying a house. And as far as the lack of law that doesn’t let lender sue and recover – THAT’s a deficiency. For the most parts of other contracts, you would be sued for damages and panitative, which is added just for that reason – to prevent such behavior.

Walking away from an unsecured loan, such as credit card and borrow from your friends, that is unethical. A mortgage is a secure loan secure by a house. This is a business deal between a bank and buyer. One of them will lose.

What is wrong with the world today is entitlement. They want to make themselves to be high sounding, I am ethical. Therefore, I won’t walk away, but since the market fell, I deserve bailout.

Walking away for a fresh start is a business decision for the best of the family. Less stress, more time with the family instead working 3 jobs (if any) just to make the mortgage payment. That is ethical when you put your family above everything else.

To West Covina Ca,

You have got to be kidding me? Please educate yourself with the definition of “ETHICS” and try again…

That attitude is what is wrong with the world today.

To Darwin Howard of Inkster, MI.

When your are upside down $135,000, WALK. First, if your credit is still clean, buy your next door neighbor’s house for $50,000. Get a co-signer, anything to qualify. After buying the house, give up the old one. Let it foreclose. Your new mortgage is only $40,000 (20% down) Good deal.

If you can’t get qualify, stop making payment on your current house. You probably get to stay without any payment for 12-18 months until they come to take the house. Then with all these savings, get a fresh start. Wait a few years for the market to calm a little bit. You can probably buy your next door neighbor’s house 3 years later for about $40,000

Either case is better than stay in your current house and trying to modify your current loan. The principal balance will stay at $185,000 regardless.

There is nothing unethical about foreclosure. Mortgage is a contract. They loan you money. You make payment. You don’t make payment. They take your house. CONTRACT FULFILLED.

In most states, they can’t sue for deficiencies, that is part of their risk for doing business. NOTHING UNETHICAL.

I don’t mind people walking away, but stop with the justifications. None of these people were mislead, or cheated by the banks or brokers- like many others were. They all made bad investments. You made an investment and lost- so you don’t want to pay. I’m sure if you’d made the investment and won, you’d expect others to pay you. If your house was worth $50k more than you owed, you wouldn’t offer to give the back the extra 50k, and break even, but you expect the bank to absorb the loss and walk away. Be honest and admit you’re not good for your word and that you don’t believe in a contract. Don’t blame the banks, your neighbors, or the brokers. For the young couple- you obviously didn’t make good credit decisions, because you’re faced with destroying your credit- that was a bad decision. Get over your guilt- admit you made a bad choice and move on.

I will say a prayer for every single one of your families. You are all very strong. Please, remember, that if you are all under too much stress, it will make you ill. Your kids, your spouses, and other loved ones, would prefer you do whatever it takes to keep your sanity, and health. If walking away, is financially more sound for you, and will keep you alive and healthier longer, then you do what is best for YOUR FAMILY!!Do not let what others think or say, cause you to stay in what makes you and your family unhappy. YOU and YOUR SPOUSE do WHATEVER you know is BEST! There are ALWAYS going to be those that are judgemental, and know it all’s, but see, they really don’t have a clue! YOUR life and YOUR families well being is what is important. Without you and your spouse still happily married, and healthy, your marriage could fail, and you all could end up ill. Love yourself and your family enough (which I know you do) to walk and away, and if necessary, file bankruptcy, even though I know, it’s not normally in your nature. Think of it as a learning experience, and move on. What is the worst that can happen, other than your egos being bruised? Bless you all! Your all good people!

why continue to feed a dead investment?
Do the math. If you are 120k upside down- and it is going to take you 8-9 yrs just to get back to even par again (assumming you can pay down a portion of the principle and there is some form of appreciation over the next 8-9 years) but it only 4 years to repair your credit and begin saving again from the point you walk away- think about how much you can save in 8 yrs vs. feeding a dead investment with nothing to show for it just to get back to where you started? and for what PRIDE?- people need to stop being sheep and THINK. if a short sale doesn’t work to alleviate the debt burden then Walk! The banks made billions over the last 6 years and all they are doing is paying for their greed and the market isn’t crashing… its normalizing back to where it should have been all along. 25% appreciation in 6 months vs. 4-6% annually seems logical to me? If the banks won’t modify the troubled loans into long term fixed programs to keep people paying with favorable terms then putting a band aid on a festing wound is only going to make matters worse and delay any recovery stiffling confidence further… desperate times require desperate measures. There is no sush thing as an expert anylonger as no one has the right answer. Unless the Govt creates a bad bank system to offload these bad assets, heal the banks so they can stand on thier own,sell off the bad assets at a discount after they modify the terms and then repackage them back to the street in a more stabalized state- this song and dance has no end in sight.The govt must act as a doctor here and remove the cancer or the body (economy) is going to die eventually!

if the banks were smart- they would hire all of the unemployed people from Wall street to finanically advise thier customers on modifying thier clients loans! increase employment and stop the bleeding!

I think you are missing the point Ken from Sunnyvale. It’s not a matter of own or go homeless. It is what makes the most business sense (I’m not addressing ethics) These examples listed in this article are flimsy, but other people have real decisions to make. If your home dropped 50% in value and you’re out $200k (Vegas, Phoenix, FL)in a “normal” market it will take about 20 years for your home to increase the 100% in value it needs to get back to cover the 50% you lost. A foreclosure falls off your credit in 10 years or less. That’s a real decision to make. The examples with $15k upside down aren’t a real decsion. They will pay more than $15k in the long run F’ing up their credit when they go to get a car loan or another home.

I got my dream house in 07 for 185000.00. Now there are home in my block that sold for 50000.00. What would you do?

I reworked TWO of my mortgages on two different properties in late 2005, the bailout plan was called “sell high”. What a concept! With Obummer’s plan, your principal is not reduced, you only lengthen the term of the loan to 40 or 50 years. When you are upside, underwater, whatever you want to call it, the best bailout plan available is FORECLOSED and walk away. Why? You can stay in the house with no payment for at least 12-28 months before they come and take you house.

Bank hated foreclosures and people are getting in line to make them happy. You see, as long as the principal is not reduce, the bank will not lose any money. They only made LESS money because the interest is reduced.

A short while ago, banks don’t like re-modification because they are greedy. They don’t want to make less money. Now they choices are to make less money or lose money.

Why not walked away from this house and buy another now at a much lower price than what you owe right now. Get a co-signer or something. Or even wait 3 years after the credit market returns to normal the all banks will overlook the foreclosure record. This is call BUY LOW.

The exact same thing happened in the 1992-1997 foreclosure cycle. People walked away and the same people were able to buy again in 2001.

To the guy in the story that says he is a lender’s dream,with a 700+ he is the one dreaming. I have 820 and credit card companies have reduced my credit limit. Right now banks are in the Titanic mode, every man for itself and there are not enough lifeboats. As of right now nobody is a lenders dream.
Banks are sinking fast, because of people spending more than what they could afford, in houses, credit cards, cars. People were treting there home equity like a second income. Now that that is gone the thought of let’s return our home because is not worth it is affecting all of us, we need to be responsable adults, we signed the dotted line, we pay for it, if not we will create a downward spiral and everyody loses. Here in Arizona I am 35% underwater in the mortgage but t payment represents less than 25% of my income, the golden rule is always spend less a lot less that what you make and you will prosper, but keep with the neighbor and see what happens.
My mortgage is under my wife’s name only if becase she got it before we got married, so I could get another one in my name but this is what this country is about , be responsible, spend less than what you make, save at least 30% of your income and plan ahead, have children if you can afford it. But now a days everybody goes around winnig, ” I don’t make enough”,
“my house is worth less than what I owe”, “the president is not making the right choices”.We all got in to this, let’s work and pay period, let this be a lesson we cannot spend to appear to be rich, if you can only afford a condo and no children so be it!

Your choices are not “own a home” or “go homeless”. Those of us not dumb enough to try to buy overpriced homes do something else: we rent. And for all those moaning about how their house is worth so much less now, let me clue you in. The house isn’t underpriced now, it was overpriced when you bought it. If you couldn’t afford to take a loss when you sold the house, you shouldn’t have bought it. Even if you can’t afford to sell, if you don’t have to as long as you can afford the payments, you have NOTHING to complain about. If things are tight, sell the BMW or Mercedes that you leased with a home-equity loan.

If you got a 5/1 ARM or Option ARM because you couldn’t afford the fixed-rate payments and were betting on home prices to rise, well you just lost your bet and now you have to give up the collateral for your bet. Just like the bankers on Wall Street have to do if their bets go wrong and they don’t have cash to cover them.

I bought a house 5 years ago for $82,000. About a year later it was re-evaluated for $150,000. I went to the Accessors office and talked him down to $95,000. I have no intention of selling, I would prefer that my house go down in value…The taxes drop. When my house was valued at $150k, the taxes went up 40%…I couldn’t afford that…thats why I talked them down and they actually went down from the previous year.

To the fellow who said tech jobs didn’t check credit scores, you’re wrong. Mine did 3 years ago.

To those who say prices never come back — they said the housing prices would never come down again only a couple of years ago, remember?

There was a real estate bubble (and crash) in DC in the 1980s. I bought a condo for about $120,000 in 1990, at the bottom of the market. The seller brought $40,000 to the table because he had paid considerably more for it a couple of years before.

Within a couple of years similar units were selling for $100,000 and then not selling at all. It was the first real estate I had owned and I was sick. I figured I would be stuck with it until I died, but I didn’t consider walking away.

I sold the condo in 2004 for almost 3 times what I paid for it and bought an end-unit row house that needed work. Last week I received a new tax assessment that is $80,000 lower than the last one. Cool, property tax cut in 2010.

To those who are thinking about walking away — you’ve already made one bad financial decision buying the place at the top of the market. Chances are you’re about to make another one if you can pay the note but walk away from it.

I don’t judge people who just couldn’t meet their obligations due to illness and job loss. But anyone who is enough of a jerk to walk away under other circumstances deserves to have all of his/her investments work out as well as this one did.

Using corruption in politics, banking, whatever as an excuse doesn’t fly. Using “I have the legal option” also doesn’t fly. I am SO tired of people patting themselves on the back with “I didn’t break any laws”. Not breaking any laws is the bare minimum, and anyone who only does the bare minimum is not deserving of self-congratulation.

This is my third post on this forum. In the first two, I was critical of people who, despite being able to pay for it, had walked or were considering walking away. But I also tried to do so in a constructive way.

Well, after reading a bit more of this, I’m done being constructive.
“Me” at 6:10 a.m. this morning: “stick it to the system that stuck it to you”? How do you figure that one? Who stuck it to you — did anyone force you or anyone else to sign loan documents?

I also hear a lot about “good people making bad decisions” who ought to be given a break. This happens all the time…it’s called life. I have put an awful lot of money into my children’s education savings trust fund, and it’s worth half what I put into it. Bad decision on my part, but you don’t hear me asking for a handout (and yes, I’m underwater on my mortgage too — like hell I’m walking away).

And finally, all this nonsense about having nothing to do with “morals”, “integrity”, and “honor” — it’s just a “contract” to some. Well, I guarantee you if the bank broke their “contract” and wanted to call in the entire mortgage immediately, raise your interest rates by 3 percentage points, etc, you people would be the first to scream bloody murder/want to sue the banks for their “immorality”, “dishonesty”, “lack of integrity”, etc.

And finally, quit pretending that that only people you are hurting is the “big banks”. In this environment, you are hurting everyone by doing this, your friends, your neighbor, your family — you are being straight-up selfish.

I hope many of you saying these things don’t have children, so that you can’t teach them the same selective values that apparetly you have.

I have to agree with the idea of letting us use our 401k’s without having the penalties. I’ve said this for months. Where is the common sense that our leaders are SUPPOSE to have? Someone out there has to reading these posts that can help.

I cant believe how insensitive most people are towards another struggle. I dont own a home, but I am in Michigan a state with highest unemployment rate. I work a full time job and a part-time job (to pay for student loans). I would never complain about someone who geniuely needs a helping hand. We should be focusing on why our government is giving more welfare benefits to those who dont try to work, and have no marketable skills. We shouldn’t have to pay for the lazy.

My husband and I purchased a home in Southern Riverside, Ca. A foreclosed home exactly like mine sold for $260,000 three doors down from us. That puts us upside down by about 200,000. If Pres.Obama’s plan to refi people with good credit, making all current payments is allowed; we can contribute back into the economy by being able to put food on the table, pay for increases in CA taxes, CA DMV fees and the like. Any Federal tax cuts arne’t going to help anyone living in Calif.

I believe a refi situation is the only was we can get the “mortgage” industry back on track.

It is GOOD to walk away from the home. It is a good thing, because it will cause the bankers on Wall Street to collapse, thus accelerating the time for the collapse of this government. And that is a good thing. The next step, which I recommend for all, is forego paying taxes. The sooner we starve the federal beast, the better.

During the early 1990’s recession my condo in south Florida could not be sold because my mortgage balance was 20% higher than the actual value of the condo. I kept the condo and later was able to rent it out so that I could move on. But it took 7 years to reverse my financial debt to where the condo’s value was higher than the mortgage. At that point I sold and actually made a small profit. However, the years of keeping up with the mortgage payments (which were adjustable monthly – yes that’s true, I got one of the first ARMs to come out in order to qualify), taxes, and insurance drove me crazy at times, and added a lot of stress to my life. But I survived it in the end. But that was then, and with this current recession I do not believe I could have made the same decision. The point here is that if you decide to keep your home and can bring yourself to the otherside of this recession in a few years, it most likely will pay off. That said, these are different times that demand more financial resources to survive then the early 90’s. But believe me when I say it will end (the recession), and the world won’t. You do survive somehow, and life goes on. But each person in this type of situation may not be like the other whose going through it too. Do what have to do to live with yourself and keep your family together. When all is said and done, that’s what is important to most people.

Rich Foretich – Bravo! Personal responsibility at its best. Mike Files – Wants more money monthly to SPEND!!! How about using the money to pay down your increasing debt?

My wife and I purchased a PUD four years ago. WE put 15% down and thought of the home as a long-term investment. Since then, the homes price has reduced some 50K, and the HOA have gone up $200 a month. We got a 5/1 ARM with the intent of refinancing before the 5 year ARM was up to a 30 yr fixed. We’d like to refinance, but our home is not worth the amount of money due. Furthermore, last year, we moved to a different area of the state because I got a better job. We now rent a house and would like to buy one. We have renters in our old house that covers the mortgage, but not the HOA. I have no problem holding onto the house because it is paying for itself, but will need to refinance the mortgage before next August.
This is not about being financially responsible or morals, but we are being put into a corner with no options. We are trying to get enough money to cover the losses, but if prices keep falling, there is no way we’ll be able to refinance.

Several points:
First, the banks are too quick to ruin your credit and slam the phone down before they consider renegotiating loans. I partly blame banks for not being willing to renegotiate loans faster.
Secondly, people like Rosemarie and her comments disgust me. Rosemarie, people have families and some have even made bad decisions, but let’s not criminalize them.
Lastly,
I bought a home and a rental before I got married back in 2002. I lived within my means and my credit is impecable. I saved 40% of my income and no i did not make more than $50,000 per year. I chose to live within my means. Then I got married and my wife owned a house as well. We were doing very well financially. Morally, I choose not to walk away from my mortgages. Both my wife and I are unemployed now, but we have savings put away for the rainy days. I can’t afford to buy my 2 year old daughter any toys, but that’s not priority in our lives right now. Sometimes I entertain the thought of foreclosure and consider that my two other condos were simply investments. Just like a stock or a business, investments do decline. And sometimes, it makes good business sense to cut your losses and walk away. Would you hang onto a business if you were losing $500 per day? Would you hang onto a stock if it declined 30% or more? Just a thought.

Well I think everyone is crazy to think that the majority of people who walk away are crooks. Most people worked really hard for their homes & did not make the decision easily. The idea that they are crooks is completely asinine! When people have lost their jobs or are underemployed and can no longer afford their homes what do you want. When they walk away it is treated as a foreclosure. The bank gets the property back. Nothing has been stolen. If the banking industry had been regulated maybe the entire country would not be in this mess. But please use some logic and compassion because you don’t know how this will effect you in the long run. I was laid of and it took more than 2 years to find permanent employment and I have extensive experience and college degree. With the banks not offering loans even to those with good credit what do you expect people to do. These are material things and if a family has to leave their house I rather they do that than committ murder & suicide as is happening more and more. It is not a desirable outcome but it is not the end of the world. The little people are suffering but the CEOs of the banks and mortgage companies who made this clusterF@ck are still living in their mansions, villas and taking their private jets. So please excuse me if I feel compassion for all the little people who worked hard to get a piece of the American dream, to only have it snatched away because of things beyond their control.

Too bad more people aren’t like these individuals where personal responsibility and morality are top priorities. Good for you! It is UNFAIR that others get bailouts however, you reap what you sow so eventually it will all even out. Even if others walk away you can know that you did the right thing. That doesn’t mean that the right thing isn’t hard. We are debt free through our own efforts!

I live in Arizona, and bought my house around $250K. Now houses are selling for $67K for comparable sizes and locations. I worked hard to get good credit and am quite upset I’m contemplating trading that for the $180 in unrealized losses. However, I could not earn that much in take home money in over 5 years, including potential living costs, so it is undoubtedly a good decision to leave. Why is is so hard to make the decision, though?

I agree with the other comments regarding the “MORALITY” of walking away from a bad investment. Morality has nothing to do with it. People, your home is a bad investment if you owe more on it than it is worth, and you must detach emotionally, just like the big businesses do, and make hard decisions. What business would decide to keep a bad investment and lose money every year because they felt “morally responsible”? I think the current banking situation shows that businesses, and by this I mean the banks, are in this for themselves; they won’t even modify loans for good customers. What example has our government, wall street, and the banks shown to Americans? Oh thats right: get massivley over-extended by granting millions of bad loans, then leverage those bad loans up to 200 times in the secondary market, and when it starts to fall, you simply blackmail the government (read taxpayers) into a huge bailout scam, get additional mortgage insurance on the asset (from AIG) and THEN take the asset from the homeowner (foreclose), sell it at foreclosure, thereby sinking the house values of all the other houses in the nation. And the homeowner is supposed to dig deep and find “morality” in this situation? WTF?

Veronica from Orlando verbalized what so many of us are feeling. You live within your means or below, and now you get to subsidize people who bought a home they couldn’t afford. We may have looked at those same homes, but knew it was stretching our capabilities far beyond anything that made any financial or common sense.

Yes, I’ve read some stories here and my heart goes our to those people who had medical or personal tragedies. They are the minority of the people involved. Currently, I am attempting to cover my own financial responsiblites in NJ by working part time here in WA.

My daughter is deployed to Iraq, and I’m staying with her children and my son-in-law on the other side of our country. You’d be surprised with how much we all waste, until we take a good hard look at ourselves. There are so many things we think we NEED, when it is simply things we WANT, but can easily live without.

Driving past South Hill Mall yesterday, it was evident how packed the parking lot was around restaurants. We buy our coffee or latte while we use our blackberry or listen to our ipods. How many children have things that we never expected to have as adults?

“Buying” the world for our children does not give them the necessary tools they need to earn a living and WORK for what is important to them. While we clamor about how the sky is falling, we get our manicures and massages. Yes, there are people employed in these areas who deserve to make a living. But it also shows how we have changed our standards, contributing to the mess we find ourselves in today.

Ben Franklin from Mass came up with a good idea. Allow people to use their 401 k’s to provide their own “bailout”. Don’t tax this money or penalize them for resolving the issue themselves. It helps resolve the problem, keeps people responsible for themselves, and doesn’t place the burden of our problems on future generations. No wonder I haven’t heard any politicians propose this (for those who do have 401 k’s) solution – it makes sense!!! People would use their own resources to put their own affairs in order. A family could be very proud of their efforts, and think of the values it would teach our children. But there wouldn’t be all the businesses on the fringes making money off our problems, so I’m sure it won’t come into fruition. It would provide too many benefits at the lowest level.

Here’s an idea for you homwowners that have it so rough…Perhaps bankruptcy on your credt card debts or letting go of your $500 a month SUV payment, maybe cut down your minutes in your over used cell phones. Nobody owes you anything-are you in a home or an investment, either way wherever you live you have to pay. And you people that think your home is an investment-how about this…No one guaranteed you that your home value would have to increase…Nothing is guaranteed. Just like stocks. So quit feeling sorry for yourself and do what you can to pay your mortgage.

People would’t have to walk away if the government and the banks had not screwed us over. To the idiout that wants to make it a felony needs to have her head checked. If any body was to be punished legaly, it is the politicians and loan officers that created this mess. How can it be stealing if we were lied to? Go to hell Rosemarie.

I’m 57 years old, single Female. This is my second home. I have an upside down loan. I was laid off from my job last October and living off my severance and a Temp Job. My Temp job ends April 6. I’ll be out of work again. I also work a part-time job. My part-time job doesn’t pay enough and other Temp jobs are not paying enough to make my mortgage payment. With no job, no one will refiance me. I’ve never been late or missed a mortgage payment. I have no medical insurance at this time. I’m going to start taking money out of my tiny 401K to pay my mortgage. That only has enough in it now to maybe last 1 year. I’m going to file for unemployment and see about getting more part-time jobs. If that doesn’t work… It’s homeless I will go.

I believe that Congress should pass a law making it a felony to walk away from a mortgage, punishable by a huge fine, years of probation or electronic monitoring, and a permanently damaged credit score. (I would stop short of prison time because the prisons are already overcrowded.) Please keep in mind that I’m talking about “walk-aways,” not foreclosures in which the homeowner tried to work it out but lost. If people want to act like crooks, they should be treated like crooks. If you walk away from your mortgage, you are stealing from the bank that financed your home. If you default on a second mortgage, you have stolen everything you bought with that money. It doesn’t matter whether you bought chemotherapy or a trip around the world. Yes, I’m sorry for homeowners that are underwater, but making an unwise investment does not give you a “free pass” to become a criminal.

Here in the Inland Empire of California, home values have plummeted at a much faster rate and at a higher percentage than most other cities and areas in the U.S. Our home value has dropped by over $250,000 and we considered walking away, but decided we have too much invested in this home, maybe not as much as the couple who built their dream home, but enough non-monetary value to sway us toward toughening out and staying. To say that people who walk away have no morals is just not the case. A lot of decision-making is involved in staying or leaving including considering whether our decision helps or hurts the economic tide of our country. People ought not to throw stones so quickly at those of us who for whatever reason are caught up in this housing crisis. We plan to stay.

I would hold off on doing anything until OBAMAs plans get into action-People with the Lower value may be able to refi at 105%- They were looking at a plan to get a person down to a debt to loan of 31%Several different options- It will be interesting to see how it plays out

The concept of “walking away” from your mortgage is tossed out as if it has no consequences. It does. If you walk out on your mortgage, your credit score will be damaged. Which, if you dont plan to get a new job, or a new place to live, or insurance, or any other type of a loan for the next 7-10 years, is no big deal. But most Americans need to have a decent credit score, so walking away should really be the last resort.

Mr. Franklin, you make me sick. To even consider walking away from your responsibilities just because you perceive that you need a bigger house – and you just have a small child and a wife. That is what is wrong with America. Seems that people think they are entitled to go “bigger and better”, and not stay with the things they have. If you walk away from your responsibilities, just because you’re upside down on it for now… you are a complete loser. Pathetic that you’re even considering it. Man up and be responsible for what you’ve done.

It is truly sad and disheartening, that the current Obama Administration and Congress are not working to provide incentives for Americans to make the right choices regarding their financial obligations and responsibilities. Instead, many of the policies under discussion, including the recent stimulus bill that was passed are simply creating more moral hazard that is challenging the core values of many Americans and their families.

When it comes down to it I think many Americans will make the right choices for themselves and their families.

At the end of the day, as long as my wife, 4 month old daugther, and myself have food and shelter I consider us fortunate. I will make the tough decisions that I need to make in order to provide for my family’s basic needs.

Very responsible and decent person!He reveals the best side of human being’s nature and spirit!

Why would you not have the income to pay the mortgage anymore? If you lost your job then you were not in the right place and didn’t go with the right company. People must realize the times that we are in and what is selling and what is not. People must eat and it seems like the restaurants always have people in them. Let’s give an example, if people are hurting why do they go to Olive Garden or Ruby Tuesdays? There are much cheaper places to eat and save lots of money to pay that mortgage on possibly a home that is way too big for you. I’ve seen lots of people that get greedy and have these large houses just to keep up with some sort of status. Now they are thinking, wow I should have thought about my family instead. It’s the people’s fault for getting into trouble, not the government.

I am in the same boat as most homeowners; unfortunately thier are no morals in business, if thier were, this financial meltdown would not have occurred…

Why spend the next 10 plus years paying twice as much on a mortgage to just try to break even? That is stupid when you can walk away and sacrifice 3-5 years of bad credit. What good is credit when all your money is going into an overpriced mortgage anyways? Further debt won`t help anything. You might as well stick it to the same system that stuck it to you! Just tell them I said to F**k Off. LMAO…

If anyone shold be helped by the government or bank foreclosure prevention, it is Pat Conroy, the guy has shown responsibility and integrity, and still is forced to pay 6.25%! and yet the federal rate is close to 0%! Just asking for a fair rate and longer amortization Mr. bankster. It is time for the banks to be accomodative and be winners together in the long run.

I plan on walking away from a loan that was forced on me and no not by placing a gun to my head but making the ability to purchase too good too true. I purchased my home in 2005 with a 100% Lender financed 5% interest only for what I thought was 5 years. My loan adjusted in 2008 adding an additional $500 to my existing monthly payment. My income was slowing decreasing as a self employed person. I contacted my bank and requested that they modify my loan back to the original terms for another 2 years so that I could get my income back to a position that I could afford to pay. They said NO. Although the extra $500 is going towards the principle so they are still receiving the exact amount of interest! I don’t need to pay down the principle as the market value is decreasing drastically. I want to keep my home and not walk away but if I can’t pay the mortgage payment each month what am I suppose to do. I have no savings, 401K’s, stocks, bonds or annunities. I work 40-60 hours a week with receiving less income than a year or two ago. How do I keep from walking away?

David Cruz wants to walk away – and I think he’s the smartest of the bunch.

Look at it like this:
The banks gave out the loans that people could not afford, and now they are talking about ‘responsibility’.
What about their own responsibility?

And they won’t refinance against current (low) interest rates.

Tell you what: The mortgage contract is a legal agreement with the legal option to legally walk away. The option is there and it is legal and it protects families from total collapse while the bank reeks in the last payments.

David Cruz has done the math, and what’s more: He rightly views buying a house walking away as business decisions.

It’s a shame that the banks are willing to auction homes for pennies on the dollar from these greedy sub prime loans but UNWILLING to let the original home owner make a deal to keep them for the same amount the auctioneer gets for them. People buying them are investing for future profit where as the homeowner will be out in the street. Offer us the same amount you would get at the auction and we would be able to stay.

Im trying desperately not to walk away. Ive been in my home for 10 years, have no problem with the payment,still have a job, and great credit. The problem is my balloon mortgage is due in 2010. I am unable to refi because the value has dropped over 45k My lender “COUNTRYWIDE” has been advising me to walk away. Even there managers are calling me a fool for fighting so hard. They have told me on more than 1 occasion to walk away. “its a buyers market” is exactly what I was told. I recently signed up with Save my home USA who is now at bat for me. Countrywide tod them they WILL NOT modify any loan that is not set to change in more than 90 days. The way I see the values dropping, I still wont be able to do anything next year. I know some of you are saying the balloon is my fault, but I was completely sold on the rate, and definitley did not think I would lose 45k on a 100k purchase. Good Luck & God Bless !! Were All Gonna Need It

All those people made a choice (humans still have free will, right?) to purchase a particular home at a particular price. So what if the market value decreases! Those who walk away from their homes when they can still afford the payments are irresponsible and greedy sore losers. A home is a place to live and raise a family, it is NOT an investment.

In one of the stories, Ben Franklin said “we may have to put morals aside in order to do what’s best for our family.” Ben, putting morals aside can never be what’s best for your family.

All this talk of ‘morals’. It’s a joke. Business is business, whether you are a 14 million dollar bonus CEO whose company tanked and is being bailed out, or your mortgage is not worth the dollars you are putting into a tanking house. The ridiculous ‘morality meter’ that is being applied to these situations is not a true moral issue, it is a punishment. How morally stupid to stay in a house where you are being suckered into paying for the CEO bonuses and the bailouts and getting nothing in return but some egotistical false sense of ‘morality’.

I bought my house in Jan 2006 for $190k, put down around 8%, and financed the rest on 2 mortgages. I’ve paid off the 2nd mortgage, and now owe about $140k in principal on the 1st (30 yr fixed) with a rate of 5.75%. But houses in my immediate area are now going for $70-120K. I make decent money and my job is stable. I have no debt at all except my mortgage. Assuming no major changes in my job situation, I could pay off my house in another 8-9 years.

But it’s very frustrating… I did everything the right way, but it makes me wonder if I would have been better off staying as a renter for $500/mo with a roommate, rather than paying $1300/mo. Buying a house in early ‘06 was the right decision for me at the time for a number of reasons, but financially, it’s a huge loss so far. I’m not the kind of person who will walk away from an obligation, so I can only hope that housing prices & the market will recover before I have the desire or need to sell.

Unlike a lot of unfortunate people, I at least have the advantage of being able to significantly pay down my debt in the meantime, but I have to weigh the cost of paying the interest on the loan over a longer period of time versus having extra cash in hand for security’s sake versus the decreasing value of my home.

I worked very hard to get to this point in my life, and I have no intention of contributing to the problem by walking away from my loan as long as my circumstances remain positive.

I have been reading thru the comments being made for over an hour now. I am sick and tired of some of people judging(obviously not in the no other option left but to walk away situation)that if someone walks away from thier home that we are basically a low life and have not morals. For some that are walking away this may be true but not all people doing this have the choice of deciding one way or another. As for myself, I have not choice and how dare I be stereotyped as such a person. My husband has been out of work for over 6 months and although we both work, he was the bread winner in our family. We have been struggling to pay our mortgage for the past few months and are pinching pennies. This month will be the first time that there will not be enough money to pay this payment. My husband and I both have great credit but this will soon be going down the toilet.

Seems to me that the mortgage companies would rather lose out on 100% of the mortgaged amount than work out some kind better option to help home owners stay in their homes and ending up only lose out on a fraction of the total mortgaged amount.

In my neighborhood, houses that a few years ago were going for $160,000.00 are now selling as low as $45,000.00. What the heck are those of us that still owe the full face value of a few years ago suppose to do????? If you were looking for a home and have 2 comparable homes in the same neighborhood at these prices, which one would you buy??? It’s a no brainer why so many Americans are being forced to walk away from their homes.

Dont be so quick to judge people that are walking away from thier homes/lives/memories. It’s not always by choice.

Bought home in 12-05 for $389,000 currently owe $387,000 – countrywide 4 option loan interest only paid since loan inception…Never wanted to live in home longer than 3 years, wanted to capitalize and then take money and move on…These are track homes which are currently being bank sold for $150,000…Would I walk? If they raise my rent any higher, I will…I pay $2000 a month between 1st and second…I can’t see paying more…To hell with my credit…God Bless! (This is my primary home!)

I am the person who said that I am willing to walk away.

Although the article may portray a villain fueling the foreclosure crisis, it’s really about a victim of the actions taken by mortgage bankers, speculators, and political decisions that have helped only a selected few. I am trapped in a situation that has very little options available.

5 years ago, the condo I purchased was at a very conservative price range in the city I live in. The loan was affordable, and the opportunity made sense.

Conditions have changed, and now it’s time to move. I can’t sell the property because of its value. It’s very difficult trying to fulfill the contractual and ‘moral’ obligation to a bank that has failed for giving too many bad loans out to people.

I can’t qualify for a lower rate since I’m up to date on my mortgage, but the person who bought a mansion on the other side of town qualifies since he missed a couple of payments. Where is the fairness in that?

Today, I’m still up to date on my mortgage. The only reason I’m still paying is because of the Unemployment rate. I am not yet willing to commit an action that can potentially cause the loss of another American job. But once that Unemployment rate goes down, I’m packing boxes.

I know other people have worse situations, and I pray the government takes care of those people like they’ve taken care of the banks.

Why are people so freaking concerned about their credit score? Honestly, a lot of people today had better put it on their gravestones, they are so concerned about it & their lives seem to resolve around how high it is. I don’t care what my score is. I save money and pay cash for everything, except my small plain house, which I guess most people would not be impressed with – but it’s paid for.

Don’t buy a house if you have ANY debt. Don’t buy a house if you don’t have an emergency fund. Nowadays, I believe an emergency fund should be 12 months (used to be 3 to 6).

And please quit worrying about your credit score (unless you plan to borrow money for the rest of your life).

If you’re “underwater, figure out what you would have paid in rent, without a mortgage interest deduction, and then figure out what less bad shape you would have been in had you paid rent.
Think about it. I, personally decided that houses were overpriced 3 years ago & saved every penny I could. I just got a great deal at 4.5% interest.
I did not invest in stocks, because when I heard my grandmother’s stories long ago, I decided that ’safe’ as in FDIC insured was smarter. I’d like to throw that in the face of everyone that said I was stupid.

The sad part is Money and all the press who should have been policing the action of the last 8-10 years did not.

My folks sold their place in Tucson a bout a year ago just before the dam burst. They paid about 181K for a new place in a Del Webb community…then prices started to climb and climb, but it was all fake. They did sell for 256K and were not happy with only making 50-60K.

What thing in your life do you buy, use, abuse, clean up- and sell and then MAKE money….I do not get it.

Ask these same poeple to pay MORE for a used car and they won’t, they’s think you were nuts.

I looked at houses as my parents moved and wanted us to come with them, we were renting small but no debt. Going to Indiana where the same 1,400 a month gets you 3,500 square feet, was just too tempting and we bit, tried to pay 5K down, were told it was not necessary in July 2007…..paid as we could as my work did not pan out like we hoped, refinanced at a better rate at the end of the refinance everything blip in Indiana in April 2008, then with a new job we were looking up…..but the new job did not last, and we slipped in September, October..having notified CHASE in August that I was applying for UI, again..nothing posiible till you are 3 months behind……Chase lost 56 billion in mortagage assets….and now even though I want to pay I cannot as they want the balance, that they keep increasing because they are morally inept and cannot undertsnad what is happening to the mortagage facade that the US relied on for so long.

It is OVER folks. I hope the banks fail that bought in to this mess and then ran to Uncle Sam for a handy-me out.

Why am I different. I just want to start paying again, and tack my arrears on to the endo or spread it our for 30 years, but the BANK is too STUPID to figure out that is a benefit in the long term.

Actually they don’t care as they turn the bad notes over to Fannie or Freddie and get their base price. They would not make money on the house now for 15-20 years so THEY are the ones walking.

The fact that we have no social and national conscious to provide basic housing that owners pay into for our citizens …with all our previous wealth..that is our greatest failure as a nation. What kind of family allows some members to sleep inside while the others are left to the elements.

If you can stay, great for you. If walking makes sense go for it. Our own judgement is what we have to take responsibility for not the landed-developer-bank frauding nexus of pseudo capitalists that created this whole mess not with cash, but money they never had.

I understand what President Obama is doing and commend him for his outstanding leadership. However – I do agree with the sentiments of Veronica (Orlando, FL – Post March 6th).

I served my country honorably for more than 20 years with the US Navy and have always done what I’ve been asked to do with an enthusiastic smile and a positive attitude while making tremendous sacrifices for this country. But I’m mad as hell about how we as a collective nation allowed this to happen and I’m tired of being asked to help others who were irresponsible or made bad financial decisions. I’m not naive enough to be believe that life is fair however – I believe the majority of these people are taking advantage of other global citizens and did not exercise caution when entering into what for most Americans is the largest single purchase that they will ever make (e.g., home). I believe that there are people that need and deserve our help but believe they exist in the minority and not the majority. It is my hope that those of us who are walking away from their homes, will learn from this mistake and not repeat it.

I have some good advice for people who want to try to sell a home because of financial difficulty,etc.DO NOT USE A “SHORT SALE” PLAN!! This means getting panicky because you can’t sell your home for enough to cover the full mortgage price.If you do this,the next year at income tax time the IRS will ADD THE AMOUNT that the sale did not cover to your level of income for the previous year which will put you in a tremendously inflated tax bracket and you will pay out the “CABOOZLE”!The form that you will receive will come as a CANCELLATION OF DEBT which you will have to file as income with your following year’s taxes.Please be forewarned!I heard a visitor speaker on CNN giving this as an alternative to foreclosure,NOT A WISE CHOICE,unless you have some money to give away,and you do not!

People overpay for things every day… cars, electronics, groceries.

Why should I feel sorry for or lend assistance to someone who overpaid for a home?

If you make an adult decision to make a purchase, shouldn’t you be bound to honor that commitment?

The bank won’t refinance, and only way to get the loan modified is to stop making monthly payments. I think this is wrong as well. The problem is if the payments increase again, then I won’t be able to afford it. I may be forced to walk away. I’m single

If you can pay your mortgage, why worry about this? You don’t lose money until you sell. So don’t sell for awhile. Unless you can’t afford your home (in which case you have to bankrupt, anyway), this is an abstract issue. Just sit tight and keep paying that wonderfully low interest rate. And than God you’re not paying 12% like we were in the early eighties. It’s all good, people.

My car loan is underwater as I drove off the lot. Should I walk away from the loan or just drop the car off at the dealer?

Gee, let me get this straight. My husband & I lived frugaly in a small apartment, budgeted & fought over what to spend so we could scrape together the 20% down payment on a house that we could afford. We didn’t spend lavishly on vacations or toys or dinners out, instead opting to put the money towards our down payment. We now live in the house of our dreams – yes, a house that has gone down in value, but we were and continue to be fiscally responsible adults – and we still don’t throw money on lavish vactions, toys, or dinners out. Instead, we only eat out on special occasions, have happy & content children, and ensure we set the right example for our children & remain true to ourselves as decent adults.

Meanwhile, my sister & her husband lived it up …. lavish vacations, eating out 4 times a week, leasing cars so they could have new ones every 2 years, the latest electronic gadgets, on & on the list goes. All the while living in their enormous house paid for with interest-only loans, always refinancing so they could get more money out of their house. Now they can’t afford it, it’s worth less than what they owe, etc.

I’m supposed to feel sorry for them and help bail them out? Give me a break. Did they feel sorry for me all those years they were whooping it up & living large? NO! The meanie in me is thinking “oh, I can buy their house for pennies on the dollar when it goes to foreclosure” and why shouldn’t I be able to profit from it?

The question that hasn’t been asked is … why does everyone think this bailout will all of a sudden make those people decide to be fiscally responsible adults? They’ll just be in the same situation a year or 2 from now. OK, if we’re to give them a bailout, how about a bailout for those of us who were fiscally responsible? Say, give us a year’s worth of mortgage, too. Then you’d see us stimulating the economy with that money!

Sorry, it’s the same story as the ant & the grasshopper. The grasshopper lived it up all year long & didn’t prepare for the winter while the ant stowed away food for the winter. The grasshopper arrived at the ant’s door when the weather turned cold, expecting a handout.

Sorry, you make your bed, lie in it & live up to your responsibilities. What message does this bailout sent to our children? Or is the message intended to be “be irresponsible & you’ll be rewarded”?

Why would people so desperately try to stay in their house? Where is the sense in that?

Roof over their heads? A home is where the family is whether it is owned or rented.

Lose all of their down payment (if any at all) and the monthly payments? Those are all gone anyway after the value has drop whether you stay or foreclosed. That is just a total loss anyway. Don’t throw good monthly money after the bad money.

Ruin their credit? Credit are already ruined if you have any mortgage lates. Yes, foreclosures stay on credit report for 10 years. Realistically, most major lenders will overlook foreclosures after 3 years of perfect credit card payments.

Benefits of letting your house go into foreclosure? Don’t have to struggle with your extremely high monthly and pay a much lower rent. With the savings in mortgage payment, you can start to save for a sizable down payment to buy the real American dream in 3 years when the price is even lower. Probably the price of another house is MUCH, MUCH lower than what you owe right now on your current mortgage.

So the question again is why are the homeowners trying so desperately to keep a house that they cannot afford – not just the monthly, but the total outstanding balance.

SIMPLY PUT, JUST WALK AWAY FROM THIS NIGHTMARE AND LET THE BANK DEAL WITH THE LOSS INSTEAD OF YOU !!!!!!! Why do you think the banks are in this bailout thing. They don’t like foreclosures. They are not taking a big loss if the principal balance is not reduce. The only idiots are the “desperate homeowners” who need to repay the whole principal balance one of these days if they stay.

One more big benefit to the defaulting homeowner – no monthly payments nor rent payment until the actual foreclosure in about 9 months.

People, just let the property go into foreclosure instead of keeping the agony.

Walking away from your home when you can obviously pay is just unethical and disgusting. The one that is going to hide behind his wife’s credit – even worse. How dare they walk and make the situation for everyone else worse. Rent the property, take the smaller hit, and get yourself another place. You home is a home, not an investment. Underwater? Tough, so are 50% of homeowners. Should we all walk away? Grow up.

First of all the article is unbalanced as it contains no-one who has actually walked away.
The arguement that if you walked you will lose your credit rating, is farcical. Your excellent credir rating was the cause of your problem`s in the first place. Consider,walk away, never borrow money again,live within your means. Saving the money beforehand, when ever you wish to purchase. Have a happy life.
Or protect your credit rating, live beyond your means and end up broke, with high blood pressure and a candidate for a stroke.

When we bought our house, we only had a 5% down payment, half of which was borrowed from a life insurance policy. We paid 10.5 % interest for 5 years, after which our house was reappraised at less than it’s original price. We waited 6 months, made some cheap yet strategic changes to the look of the house, and it reappraised for exactly the purchase price. At that time we were able to get an 8.5 % interest rate. But wait, this is not a sob-story. Our home was built and bought in 1984. We never, ever thought of abandoning our home because of appraised value, or interest rates. We never, ever treated our home like a “gingerbread house”, to be consumed for toys or convenience. Today, we owe less on our house than the price of a fancy new car. Our interest rate is 5.5%. It will be paid off by the time we are 65. And our home’s value is… obviously, it’s priceless!

I had a credit score of 795, but I also had an ARM. I figured when it adjusted higher, I would just refinance it. However, when the value plummeted, I did not qualify for a refinance and the bank would not negotiate with me. I could not afford the payments, so it went through foreclosure. Because of this, my credit score plummeted to 697. Ironicly, I can still get credit cards, vehicle loans, and great insurance rates. I just can’t get another mortgage for a while.

Walk away from the biggest financial decision most Americans make in their lives ? You’ve got to be kidding me. I bought a home in 2003 with 20% down, 30 year fixed rate mortgage. I worked long and hard to save for my 20% down payment. It’s insulting and ridiculous that people who bought homes with very little to 0% down with risky ARM mortgages are walking away from homes and their financial obligations. PEOPLE WHO WALK AWAY FROM HOMES SHOULD BE CRIMINALLY CHARGED. DAVID CRUZ, YOU ARE PRIME EXAMPLE OF WHAT IS WRONG WITH AMERICA. THE GUY IS WALKING AWAY FROM HIS CONDO WHICH HE HAS A FINANCIAL OBLIGATION TO PAY FOR ONLY TO MOVE TO A LARGER SINGLE FAMILY HOME. WHEN WILL THE GREED STOP !!!!

You know – when it is each man for himself – and each family for themselves – thats when society begins to fail and anarchy begins. For those of you who have lost their jobs or who are truly too sick to keep up with your payments – that is one thing. But for those who don’t pay because their investment has tanked – you are a cancer on society. It infuriates me that I have to pay for your cheating on your responsibilities and looking out only for you and yours. I lost money on my first house – because it devalued. I ponied up the costs and took the hit. Thats the way of life and living it honorably. Anyone who thinks that buying a house is a guarantee on profit is an idiot. I hope congress makes some new laws on fiscal responsibility not only for the banking industry but for those taking loans as well. Similar to garnishing wages for child support – I’d like to see wages garnished for people who walk on homeloans. A pox on those who consider this as an option.

The private banks and their So called “federal” reserve have stolen our money and thus our freedom. So don’t feel guilty and walk away like a lot of people whom I know are about to do becasue of what these banks have done. We must let these banks fail and then establish a government owned bank which is loyal the US citizens and lends money when we need it. These private banks and their federal reserve have put us into a depression, and they will do it again if given the chance. Many of these banks and their so called “federal” reserve are either owned, controlled or manipulated by foreigners who have conflicts of interest with our own, and this is the only way to stop it. Who cotrols a country’s money supply and banks also controls that country, so I vote that we the citizens take back control if we want to keep our freedom. Thomas Jefferson warned us about the banks and to never let them set up a federal reserve. He said that it would become the greatest threat to our freedom, and that freedom is now endangered.

Some of these people are disgraceful. Walking away because the value of your house has dropped even though you can affort to make your monthly payment??? SHAME ON YOU!!!

You are a disgrace to this country and you are further ruining the economy. So you’ve outgrown your house? Big deal! Me to but I’m staying put.

Yes,walk away unless we get a new
government owned banking system that actually lends money and cares about our citizens enough to not give our money to these crooks. Let the private banks and federal reserve fail because they failed us and themselves as well.

Many people whom I know plan to walk away unless properties values go up quickly. To do this we have to scrap the federal reserve in favor of a new government owned bank that actually will lend money, and let the private banks fail which caused the problem.

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False. Please do your research. The indicators according to historical trends over the past hundred years say exactly the opposite. Easy credit (free money) is a thing of the past, and so is zany equity. Prices will have to return to what they were before the beginning of the bubble. This is fundamental economic fact, not theory, and not open for debate. I’m sorry.

I’m a REALTOR…my co worker bought a house at 535K, now it’s worth 340K at the most. He has it rented out and still loses 1K a month in expenses. I told him to walk. When is that house going to be +535K again?10 years? That’s another 120K+195K…his credit isn’t work that much!

HousingPredictor.com found in a recent survey that 1 out of 3 homeowners say they will walk away from their mortgages if housing prices continue to slide.

To those of you who think that you can just purchase a home on the credit of a spouse please remember that the bank will only look at their income to judge the amount of the loan and debt to income ratio. So, together you may make 100K, but if a spouse only makes 50K. You will only qualify for the a loan amount that can support 50K. What is funny is the same thinking that got people into problems, will keep them in problems in the next 5-15 years. No one said you had to buy the house to begin with. To others who think your credit scores will recover. Yeah, like the banks are going to suddenly get forget the last 5 years. This is a generational event and lenders are not going to forget this easily.

I think there needs to be a debate raised about the ramifications of people doing this to their future financial well being. I did some sensativity analysis of mortgage payments and found that it may make more sense to pay on the underwater mortgage than to walk away. This has to do with the higher interest rate that a person would be charged for having a forclosure short sale on their record. Current rates for an individual regardless of credit score with a 5-7 year old forclosure is 12-15%. At those rates homes will have to decline 60-80 of their highes to make economic sense to walk away. Examples: Original loan value $350K @ 6.5% = $2,212.24 monthly principle and interest. If a person wants to take a new loan at $240K @ 12% = $2,468.67 monthly principle and interst. Over the life of the loan it would be an additional $92K. This does not include higher cost on all other credit. Interstingly enough the lower the original loan the more it makes sense to walk away. (ie $75-125K to a new loan amount of $50-100K for a comparable home)

I am seeing so many stories about people being $20,000 or $30,000 underwater. My wife and I have a combine income that is well above the norm, and we are fortunate. We have never owned before, and she had an investment condo that we planned to sell to use as a down payment.

In 2006 we decided to look for a home, and although most of America would say we bought above our price range, we felt we could handle the payments. We financed on a 30 yr fixed mortgage, with an 80/20 split that we planned to pay off the 20% part of once her condo sold. The payments were high, on a national average, but…well, that’s what Southern California real estate was like.

We closed in November 2006. Our house was underwater as soon as the developer started dropping prices in early 2007 to get rid of inventory. Her condo could not sell due to litigation by the HOA. People began foreclosing, driving down the prices. The same story most people have.

The difference is that we aren’t a bit underwater. The identical home three doors down from us, owned by people who had 15 tenants and never paid their mortgage, HOA dues, or property taxes, was repossessed and sold for $400,000 less than ours! That is what’s being missed about California property. It’s not about buying more than you can afford. It’s about LOSING more than you could ever make back. Through no fault of our own, we are $400,000 underwater, unqualified to refinance or get any benefit from the government. The bank would rather foreclose on me and sell my house for what it’s worth now, and lose all the costs involved, than sell back to me.

Why not walk away! If we owned this house for 20 yrs, we’d break even and continue to pay three times what the neighbors who bought up the foreclosures are paying for identical houses.

Eventually…everyone will own everyone elses homes and the banks will continue to lose money. The loss of equity is what is driving people away.

You people crack me up!

Wake up this problem will not go away without government help! You bad rap people for not being able to afford they’re mortgage? These people have lost jobs, had a financial setback, or lost income due to the economy.

Here’s your choice help them or let them foreclose and now your property value is decreased, the neighborhood is flooded with vacant homes and you invite crime to the area because nobody is there to take care of the house.

Good people are in a bad situation! Guess who was telling these people they could afford the mortgage…the banks! Guess who were now bailing out…The banks! So it’s ok to help the one’s who told these people they could afford it? I’m not a mortgage broker, a realtor, or a banker but they all told me and millions of other people ohh yes take that interest only loan or take that adjustable rate. Because as they padded they’re pockets and bonuses there was no concern that the little guy would be burried by a economy waiting to head south.

Now because values are so low people can’t refi and try to take advantage of a lower payment or secure loan. These are not criminals they’re normal people like you and me! Don’t want to help the average american but we’ll flood foreign countries with aid? Come on people wake up!!

This needs to be done or we can sit and watch the economy fall further into a depression. My only hope is that the aid will get to people that need help! If you call your bank now to inquire they take your name and say wait for someone to call back. This is after you’ve already sat on hold for one hour!

Wake up America it’s time we help each other out!

The REAL Ben Franklin once said “There are no gains, without pains”. How about you keep that in mind before you ruin your credit.

Not everyone can own a home, that is the plain truth. The foreclosures are mostly on the low end of the market, at least in my area. Anyone that got an ARM within the last 5 years, did not do their homework prior to getting said mortgage. Anyone who got an interest only mortgage, was doing nothing more than gambling/praying. Anyone who only put down 5% was taking a chance – that is why banks require PMI. Markets go up and down, when they go up, everybody is happy, when they go down, well……

We need to do whatever we can to ensure the system (government, banks, and Feds) will collapse. I strongly encourage all people, whether they can pay their mortgage, to walk away from their homes. I have already two good associates who have done this already. But before you walk from your home, you need to suck up as much CASH for a few months as possible – mainly by not paying the man at the bank.

If many people do that (in addition to NOT filing taxes this year), then we can accelerate the demise of this corrupted American economy. I want to see that, because only then can we rebuild…of course, after people like Bernanke and several dozen CEOs are hanged by a mob. It’s time.

Why not declare your current ‘underwater’ property as a rental property on your 2008 tax returns, go buy another property with a relative/friend/significant other, and once that closes escrow walk away from the ‘underwater’ property. Yes your credit score will be hurt for 5-7 years (or 3-5 if the bank agrees to a short sale), but then wouldn’t you be better off in the long run? Don’t give me all that “it’s morally wrong” because if you or someone close to you were in this situation, wouldn’t you do the same? Who is to say someone should ride this mess out just too prove to people that they are “morally right.” The sad thing is people with good credit and stable jobs are getting screwed. And banks will only talk to someone that is in default (my experience is with WaMu). How is it fair that someone that made a good decision, at the time, has no where to turn but to think about walking away?

My reaction to this is “you bought it, you keep it!!” This is going to those people that bought a very expensive house with a “low paying job” salary. I said this several times, Finances 101. If you can’t afford it, do buy it. Banks are to blame also, but the buyers helped them along by playing the game.

My heart goes out to those people who are trying to do the best they can to pay off their mortgage payments but can’t because they were let go of their jobs, trying their darnest to find another job but can’t. Not to those who lose their job but sit around their carcasses all day saying that the government will help me.

This is crazy. Most people don’t want to walk away from their home. Most people are forced to walk away because they no longer have the income to pay the mortgage. It’s not because you have better morals than anyone else it’s because you have the money to pay for your mortgage and they don’t. Morals have nothing to do with it. You people are ridiculous thinking just because the market has gone down and your house is not an instant gold mine that you can walk away and say “everyone else is doing it”. You will only contribute to this crisis by making such a foolish move. So what you are uncomfortable financially or physically because of the size of the condo you bought or the house you built. The people you say have no morals because they walked away or better yet were run away from there homes will be homeless. Count your blessings and pay your mortgage while you can because one day you may be the one that people are saying have no morals.

Why not?
Why would you keep paying for a bank asset that’s worth less than the mortgage? You don’t get paid a fee to take risks like the banks do. I’m not about to get all teary eyed for the bankers taking home hundreds of millions. I’ll keep mine, thank you.

Borrowing money from a friend or a stranger is still a debt that the borrower is responsible for – regardless of the market or the economy. People are walking away from their responsibilities and leaving the “other guy” to clean up the mess. Since when is it okay to steal – basically borrow money that you know you can never pay back? It’s not okay – it’s immoral and it affects everyone and it’s a terrible example for our children. Sure – it’s hard to make ends meet for all of us – but if we walk away from our debts then there is no integrity – no standard of ethics -These lenders should jump in and renegotiate EVERYONES loan – regardless of income or status. CD rates are paying only 1% – and if they renegotiate EVERYONES loan to 5% then there is a 4% spread for profit! They money we all will save will be available to purchase other things. That’s the quickest way to halt unemployment and bring health back to our dismal economy.

Don’t Walk away from your homes, live in a home, don’t live your life as an investment. Lets face this cruel wind with integrity and honesty ans lets set high moral standards for coming generation – Any CRISIS can be won by Honesty and Integrity.

“Integrity is not a conditional word. It doesn’t blow in the wind or
change with the weather. It is your inner image of yourself, and if
you look in there and see a man who won’t cheat, then you know he
never will – John D. MacDonald”

Don’t Walk away from your homes, live in a home, don’t live your life as an investment. Lets face this cruel wind with integrity and honesty ans lets set high moral standards for coming generation – Any CRISIS can be won by Honesty and Integrity.

“Integrity is not a conditional word. It doesn’t blow in the wind or
change with the weather. It is your inner image of yourself, and if
you look in there and see a man who won’t cheat, then you know he
never will – John D. MacDonald”

The Cruze family wants to ‘take the hit’ and move out of their existing condo and into a single family home. He mentions he has a 795 credit score. Does he not realize his credit score will go down the toilet if he forecloses? What makes him think he will qualify for another loan if he has already foreclosed on one?

I put 20% down on my home, I have a 30 year fixed rate, and at 5.375% as well! How ideal. My husband has been laid off now for 5 months, we are looking nationwide for a job. If we have to relocate I can’t afford to keep my home and pay for housing in another state. I’ve told my husband point blank that I don’t mind taking a few thousand dollar hit to sell the house, but I can’t afford to keep paying a mortgage and renting in a new state for more then 3 months. So if my house hasn’t sold in 3 months I’ll be walking away. You can’t convince me that in a few years any of this will reflect negatively on my credit considering HOW MANY are in this exact same situation. I did everything I was supposed to do in regards to my mortgage, I lived within my means. But now that we can’t find a job I am not going to feel morally bad by walking away from my home. It would be financial suicide for me to hang on to my home and continue making it’s payments month-after-month-after-month because houses in my area have right now, a 13-18 month sell time.

Unemployed since Nov 2008… I don’t want to walk away from my house, but I may have to…

There is a solution however…

If Congress will remove all taxes from my 401k withdrawal, I will use my own funds to pay off my mortgage.

It’s a great solution – I get out from under a $2000 a month payment, get the debt off my books, and also get the debt off the banks books.

Getting rid of the monthly payment will also allow me to source a lower paying job, more in line with “Global wages”, and still have a nice living… And here is the kicker – it will cost the US Taxpayer zero current expense…!

I’m willing to do this retirement
” asset exchange “, but it only works if the President and Congress remove all income taxes, and early withdrawal taxes, and also get states to remove their taxes.

I’ve written to all my Senators and House Rep in Massachusetts, and only got a response from Sen. Kennedy (because this guy actually works for the people of MA). Also wrote to Nancy Pelosi, who generated a polite thank you for contributing response…

I think the press and regular American Joe needs to start bringing this up… If there are a couple of million of us who are willing to “re-capitalize” ourselves, but with a little help from the US Gov, then they should help us… To give $Trillions to big business who in turn hold parties and pay the top exec’s billions in bonus awards just isn’t right…

Congress and the President need to do what is right for the average American for once !!!

Why are people saying ‘let the banks fail’? If that happens, we are all screwed. America has ZERO savings and HUGE debt. Without banks and credit, we wouldn’t be able to buy a pack of gum.

CNBC reported that 27% of homeowners are underwater. What if all those people walked away? It would be a total collapse of our finance system. Wake up and realize that your personal decisions can affect people in your community and your country

After relocating to Oregon in 2005 because of my mother-in-laws health and giving up my wifes business and a good job in Montana, we purchased a house at the peak of the boom in 2005. Since I had just started my job and my wife wasnt working yet, we purchased the house on my mother in laws name. After a year my wife and I purchased the house from her with A 40,000.00 dollar gift. during the next three years my wife became disabled from a work related injury and 2 failed surgeries on her C-5, C-6 and C-7 vertebrae. She could no longer work and is awaiting a disability hearing. We exhausted our savings over this time and have maxed out our credit cards just to live. We too do not want to affect our credit rating by walking away and because of the moral ethics we have. My lender told me, well call when you are 3 months late. We are still paying on time and living paycheck to paycheck. Once i get paid, i pay bills and have about 200.00 to live on for 2 weeks. it is difficult. I have hired people to re-negotiate my loan. If they do not succeed, I will have no option but to walk away.

I have to vent, so please bear with me.

I have always been a responsible person. Have I always made smart decisions when it comes to my finances, no, but I always took responsibility for it. After three years of renting, I felt I was ready to buy. I didn’t jump into the situation lightly. I did my research. I looked at the different types of loan options, cost of property taxes and insurance. I looked at my finances hard. I took into account everything to determine the amount I can afford. I didn’t listen to the lenders who were telling me I could get a interest only or adjustable rate loan. I wanted 30 years fixed without escrowing. So, on Feb 16, 2007 I signed on the bottom line. At the age of 27 and three years after graduating with my master’s in Electrical Engineering, I was now a proud homeowner. I paid $260k with a 1st mortgage at 6.125% interest rate, 2nd one at 7.79%, no escrow and no money down.

I was a little surprised when I looked at my finances again. I forgot to take one obligation into account. I didn’t account for my 6% contribution to my 401k. So, should I decrease or stop contributing to my 401k. No, it is my responsibility to prepare for my retirement.

House prices continued to fall, but I didn’t mind. I had purchased something that I could afford. I did get two roommates which resulted in an extra $800 a mth. I used the extra money to increase my 401k contribution to 12% and the rest went into a saving account.

I continued to be responsible when my 2004 Camry was totaled in 2007. The car was paid off. I purchased the new car in 2004 after graduating. After 6 mths, my mom took out a home equity loan to help me with purchasing a home. Since, the prices of homes was increasing I decided to wait. So, I used the money to pay off my car. So when the car was totaled I received 13k from my insurance company. I used the money to purchase a used 2007 Nissan Maxima for $21k. I didn’t want a car payment so I paid for the car in cash.

Home prices continued to fall. My $260k purchase is now worth about $210k or less. I was still ok with this.

Then something happened. The Making Home Affordable plan was released. Over night, I became bitter and down right outraged. Our government is assisting people who knowingly purchased a home they couldn’t afford. They are going to ensure that their payment isn’t more than 31% of their income plus there is an incentive for them to pay their mortgage. If they pay they get $1k per yr up to 5 years that goes toward their principal. Plus the same service providers who helped make this mess is being rewarded for helping to fix it.

This isn’t FAIR! I did everything right. I could have brought a $400k home with a interest only or adjustable rate loan, but I didn’t. I could have purchased a $50k luxury car, but I didn’t. I went with what I know I could afford. If they couldnt afford the house then why are we giving it to them now?

How is it just to help a person making $50k to afford a $350k home? Why should I pay for it? How can the government tell me bluntly, “Thanks for being responsible and living within your means. Sorry, your home is worth much less than you paid but you can afford it. We are going to use your tax dollars to bailout those who weren’t as responsible. Keep up the good work. Oh by the way, disregard the fact that their house may be better than yours. if home prices do rebound and part of their loan was forgiven, they may have more equity in their home while you are still underwater.”

Why should I work so hard to keep my good credit score and do the right thing? For the first time in my life, I feel like walking away from my obligation. Not because of greed, because I feel so violated it hurts. It really hurts. I may be over reacting but I can’t help it. I am trying to let this anger go. It’s not good for me.

I shouldn’t walk away, I shouldn’t and I won’t. I still have part of that reasonable person with me, encouraging me to continue to do what I know is right. But I am tired, so tired.

The people that just want to walk away from their responsibility to pay what they owe, should just take this opportunity to just walk away from this country. We really don’t need you here. You are making things worse here anyways.
And now some banks are not taking ownership of the abandoned houses which means it is still in the homeowner’s name and the local governments can charge you with neglecting your property. Think about the jail time you could serve. And what will happen if the US starts putting people in debtor’s prison? Are you willing to take that chance? Criticize me for my morals because I will pay my debt? And not only my debt now but yours as well. I hope your lack of morals gives you what your deserve. Maybe when you are out there renting the owner will turn around and not make payments til they get foreclosed on and you will be out in the dust in 24 hours with no warning. Mr. Cruz and family should just stay with his drug infested neighbors cause he is no better than they are.

I am a paralysed man for over 30 years, I am 52 years old. I bought my housein Miami in 1990, for 127k Sold it in 2005, relocated near Tampa and bought a house here for 175k and paid cash. Big mistake…I cant walk away, and I loose my money every month because of people who do walk away. I know people will say, why did you pay cash..the answer is the housing market created two things that usually work against each other..fear vs greed..with houses in 05, people felt compelled to but from fear, because the prices were rising so fast, that they would be priced out, and then people bought for greed….So I finally retired on my old companies disability policy..my provider is Hartford, and there stock is not below 5.00, if they go bankrupt, I am done..I do not qualify for any mortgage restructure, and my house is probably only worth maybe 110k now…and nobody has gone to jail..bottom line is people who overbought with none of there own money, will now be restructured and live in a much bigger and better home than me, and will still be allowed to keep there speed boats, suv’s and harleys…For the first time in my life I am not very proud of americans..so many have people have become scammers, from gvt, to wall street and main street brokers who helped create this whole mess..thank you all very much, for bringing this country down!

Back in 2004 when the real estate market was booming, I invested in a townhouse on the ocean with a partner, using money from the sale of a large residence. By the time the townhouse was completed and ready to close in late 2005, I could see the handwriting on the wall…the market was going to tank. I reviewed the mortgage package that was offered to me and quickly saw that it would be very expensive to take on. I told my partner that I would not close on the transaction and would forfeit the deposit. I was told I was an idiot but I stuck to my guns. Today my partner thanks me for making a wise decision. We would have been upside down by at least $200,000, and carrying costs would have been outrageous…more than we could have ever received for rents. The loss of the deposit did not impact my credit and I was able to get some of it back when the developer found another buyer (sucker) to assume the contract. I was one of the lucky ones. I took the remaining funds from my residence sale and paid off all of my obligations so that I could retire debt free. My investments are down like everyone else, but at least I can hang on until we get through this.

Everyone wants everything and they want it NOW. That is a big part of what got us into this mess, driving the price of a home well above what common sense told us it was worth.
If you are underwater, hang in there. Values will eventually return to your purchase price and above. It will take years, but prices will rise again. At least you have a home to live in. And don’t expect the taxpayer to refi those of you who can afford to pay your mortgage just because you want more disposable income. Be adults, do the right thing. Don’t expect the taxpayer to pay the difference between the original mortgage and the current appraised value (cram down mortgage). You signed a mortgage note and you are responsible for paying that note. Stay in the house. Be patient. The home will eventually regain its’ value.
All this will take time, a long time. But you puts yourselves and our country into this mess and I resent you expecting those of us who were prudent to bail you out after you made poor decisions. Kudos to those who are moral enough to stick it out and live up to your obligations.

I’m sorry, I can’t help myself. I wanted to add on to what I said yesterday, and respond to to what some other people are saying on this post.

I said yesterday that when I got divorced, I was paying 5 mortgages at once, and didn’t walk away from any of them, because I felt obligated to continue to pay. I admit I was blessed to be in a position to own 5 homes. And yes, I had equity in them (unlike many people these days), so it was in my best interest to not default.

But I am nothing if not consistent. Right now, in large part to borrowing against my house to pay for my divorce, I owe about $330,000 on my house — I would say it is worth maybe $250,000. So I am underwater, but I can easily afford my mortgage payments. If I chose, I could walk away, move into a rental house I own nearby, and cut my mortgage payment by $1,000 per month. I would “save” $80,000, and would be able to provide much more for my children, including investing more for their college education.

There’s only one problem; it will be a cold day in hell before I do that. David from Vallejo, CA (among others) asks, “why shouldn’t I walk away?” My answer (because obviously appealing to your personal responsibility in the matter doesn’t count to you): it’s selfish.

Why are many people so angry about the “octuplet mom”? Because it’s easy for her to say, “I just want to have a family”, when the government (read: taxpayers) are picking up the tab. You walk away from your mortgage when you can afford it, you are doing the same thing — you are no better than she is.

How would you feel if I walked away from my mortgage, knowing that your tax dollars are being used to fund my irresponsibility?

Why on earth were people allowed to purchase homes with virtually nothing down?

Those are the exact same people who are now walking away, because they have no skin in the game and next to nothing to lose by walking away! They were essentially renting that whole time, getting tax breaks and higher credit scores! Now the situation isn’t working out in their favor and neither money nor their own ethics will keep them there.

What they aren’t realizing though, is eventually in these overpriced areas, the market value will skyrocket again at some point. And the people who have money now to spend will buy at the bottom, rent to these yahoos who have ruined their credit, and make a killing selling when the cycle peaks again in 20 years.

In Denmark you can not walk away from your debt, but many would if they could -
prices would come down and you can buy back for much less !

The possibillity of walking away from the debt is driwing the økonomic crisis.

In my opinion Europe has to disentangle the economy fro the american economy – You cheat a lot – how can audition sign AIG ??? ENRON ??? remember WAMU
Everyday i feel cheated on mu american investments

greetings jacob schønberg

This is all fine and good, but what do you do when you bought within your means (1400 a mo), put 20% down, had 6 months of savings and still lost your home due to a lay off and had a 5.75 fixed rate?

Everyone is talking about morality and responsibility.BLAH BLAH BLAH!!! Doesn’t the same apply to all the huge corporate companies that have bilked the tax payers? I say give ‘em a taste of their own medicine. I have considered walking away just on a matter of principal. My score is well above 720 and my wife isn’t on the mortgage. I could have her buy a better house then what we have for far less then what I paid and return the current one to the bank. I have never looked at my house as an investment or source of cash. IT IS A PLACE TO LIVE

To all of the out of touch nerds who think they are direct descendants of Abe Lincoln himself: walking away from a mortgage you cannot afford and never should have applied for is not the immoral or fiscally irresponsible thing to do! Quite the opposite, in fact, as it would allow property values to come back down to reality — that is, in tandem with local mean incomes. Plummeting prices? It’s called market normalization! Even cursory research shows that the numbers are still way out of whack all over the country, including some of the major vortexes, like Florida and Arizona. Walking away would also free up the deed to a home for buyers who have actually saved money and don’t need to gig the system to get what they want. These buyers were essentially in collusion with banks when they goosed their mort apps. Most either embellished their gross income (fraud) or put nothing down, figuring it was pie in the sky from here on out; very few were actually seeking shelter because they were simply sick of renting and/or living the often semi-nomadic life of the renter.

As for buyers who paid to much out of hysteria and can still afford to overpay. That’s your call, but do not mistake this for altruism or high principal; you are simply throwing your money into a pit that will only widen over the next four years or more, trumping whatever black mark you find on your credit rating by walking away. Think with your head, not with your heart.

Most would agree that common sense was never the guiding light in this country. I see a misplaced sense of entitlement in many of these posts. It seems like only here on CNN is it considered defensible to put the cart before the horse and expect a rule change mid-game to suit individual needs. Not on my dime! Walk away and let the chips fall where they may already. The cat just ain’t gonna fit back in the bag.

I HAVE READ THE COMMENTS THAT MY FELLOW AMERICANS HAVE WRITTEN ABOUT THE CRUZ SITUATION. I AM DEEPLY DISTURBED ABOUT THE LEVEL OF IGNORANCE THAT IS DISPLAYED WITH THEIR COMMENTS. THAT IS EXACTLY THE ATTITUDE AND BEHAVIOR THAT HAS DRIVEN THIS ECONOMY TO ABSOLUTE RUINS. THE IDEA OF PUTTING YOUR FAMILY THROUGH UNNECESSARY PAIN AND SUFFERING JUST TO LINE THE POCKETS OF THE RICH AND FOLLOWING THROUGH WITH A RIDICULOUS QUALITY OF LIFE THAT NO ONE SHOULD EVER ENDURE IS PURE INSANITY. I APPLAUD THIS MAN ON HIS JOURNEY TO THE AMERICAN DREAM. THIS COUNTRY NEEDS MORE MEN OF HIS CHARACTER TO TAKE A STAND AND SAY “ENOUGH IS ENOUGH”.

What a horrible spin article.

2 years ago my lender called me to refinance into an ARM. They explained that there wasn’t any risk. A week before the loan closed, I received the loan docs to review. (This way the signing would go much quicker.) What I didn’t know was that EMC changed the docs the night before signing. EMC (Bears & Sterns) were later convicted of unfair business practices and ordered to pay $28 mil in fines but didn’t have to make good on the loans that they did this to. While the banks have received ‘free’ money to “renegoiate” the loans, Chase has informed me that they will never change the terms of the loan. My house was worth $780,000. It is now worth $375,000. I will never get my money back. The ‘orginal ARM’ I could afford. The ‘new’ ARM will be 60% of my NET income. I don’t have any choice but walk away.

The only reason to walk away is if you have lost your job and CAN’T afford to continue making your monthly payments. Otherwise, it is totally irresponsible to add to the mortgage crisis. While I have no love for the lenders and government for creating this mess; walking away because it is inconvenient not the answer.

These bail out programs are helping the wrong people….those who were making their payments before losing their jobs should be the FIRST borrowers helped. Not those who bought homes they could not afford and/or didn’t read their contracts. Where were their attorneys or representatives at closing. My tax dollars should not be used to help those who made a bad decision. Where has personal responsibility gone?

I may lose my home due to this mess…it is not by choice. The fact that I lost my job (and can’t find another) and my lender has no programs available to help me may make the decision for me.

If you can still afford your payments, good for you, don’t walk away!

I’m disgusted by the people who choose to walk away; I had to stop reading this article at David Cruz.

This man never should have bought, nor should he have been allowed to buy, a condo for 290,000.

When money was cheap I could have sold my modest condo and bought a house just like Mr. Cruz would apparently have liked to do.

But instead I did the prudent thing, which was to put another 10k towards principle and refinance into a 15yr mortgage. now I have more than 70% equity in my place and will have the note paid off in less than 9 years.

Anyone who walks away should not EVER (Yes, EVER) be allowed to purchase a home without SERIOUS government supervision and monitoring.

And for conversations sake, I think a person should have to be a “qualified investor” (per the S.E.C.) to acquire an Adjustable-Rate Mortgage. ARMS are the crack of the nation and should be outlawed. (Common sense; who gets and ARM when rates are at 1 or 2% and have no where to go but up?)

Walking away if you can pay your mortgage is morally wrong. During the run-up in the housing bubble, would any of these people voluntarily share the bounty with the mortgage lender? Of course not. The scenario is different if someone cannot pay their mortgage due to job loss, severe decline in income (e.g., sales commission halved), massive medical expenses.

I read lot of different comments. America is my home i just god my GC. My home value has dropped quite a bit.
Friends – now we have to ask ONE questions to ourselves ONLY – Is it right to Practice honesty and integrity?

Integrity is not a conditional word. It doesn’t blow in the wind or change with the weather. It is your inner image of yourself, and if you look in there and see a man who won’t cheat, then you know he never will

Lets Live our lives honestly, because whatever we do, mistakes we make, one day will be found and payback will follow.

Living your life with honesty and integrity is a double-sided great gift.

Don’t follow others follow your Inner soul and offer your honesty and integrity to others. That is essence of being!!

Raja, Iqbal

There is a segment of the population that has not been represented in any of the real estate discussions. We bought a house in 2004 that needed significant renovations before we could move in. We decided to keep our existing home until the renovations were complete and then the 2004 hurricanes arrived. It was 18 months before we could complete the renovations due to lack of contractors. By the time we put our home on the market, real estate stopped selling in our area in early 2006. I cannot sell the other house and have been renting it. It does not cover our expenses. I work in the financial industry and could lose my job. My husband is in real estate and has not made any money in over a year. If the economy does not turn around, I could lose both houses. Several of my co-workers are in the same situation. There will be a second wave of foreclosures of the people who are paying our bills if our economy does not recover soon.

All these people dragging the rest of us into their pit. I especially LOVE ‘Ben Franklin’s’comment about how the government is only helping the “irresponsible.”

“I was a young bachelor with meager income, poor credit and no down payment. I had not intended to purchase at that time, but because the loan qualifications were so minimal and the prospect of rebuilding my credit so attractive, it seemed like a smart decision at the time to pay a high interest rate for two years and then refinance. ”
This is the picture of irresponsibility and the reason why my taxes are bailing out these deadbeats!

I walked from my house and I would do it again in a heartbeat. I have my reasons for doing it. I am not going to say it was an easy decision, but once I made it I have no regrets. My credit score was in the upper 700s, too me, that is not worth $150k! Now I am renting in a way nicer neighborhood and paying half the rent that my mortgage was and keeping this house occupied. I look at it as a win win. You can argue that my old neighbors are upset, but they already left!

Moral obligation my rear end. If you are 200k underwater that means you paid too much and you were stupid. Don’t compound the stupidity by staying in a losing proposition. Run, don’t walk, away from your your house. The Bank may come after you, your credit score might stink, but not for too many years. Also you can take that money you are not throwing down a rat hole and start anew.

The bank knew what they were getting. If the borrower fails to pay, they get the house.

I would rather not be poor than have some of these commenter’s respect.

No, I am not one of those people. I didn’t buy a house when it was obvious to everyone that they were overpriced. My point is that it is purely a business decision. Cut your losses.

I will probably walk away for the following reasons.

1. I honored my obligation to prove I was qualified and had the ability to repay the loan. The banks were negligent in their responsibility to ensure they were lending to qualified buyers by accepting stated income loans. This caused prices to inflate artificially.

2. The banks claim they are in trouble and need taxpayer to bail them out. My income is about to drop 30% and when I did the math I figured out I only need a small mortgage reduction to make it. Current mortgage rates are 1 point under my rate. A simple refi would allow me to make it but the banks won’t hear it because I haven’t missed a payment.

I don’t care that I’m upside down, but we are all in it together and clearly the banks have no interest in voluntarily working with people. If my salary allows me to make the payment I will continue to do it…but if my salary drops a little I will not sacrifice anything just to make the mortgage. I don’t live extravagently but I will not kill myself to make the mortgage note.

You are all forgetting a huge point!!! Just because you walk away doesn’t mean thats the end of the story. Depending on the state you are in you may still owe the bank the difference between your mortgage and what they were able to sell the house for, plus interest. So if you have a $400k mortgage balance, you walk away because you think the value is only $350k, the bank ends up selling the house for $325K, they can still come after you for $75k!!!! So in summary you will have lost your downpayment, have a bank after you for another $75k plus interest, decimated your credit for years to come, will no longer have the tax advantage of the mortgage, you don’t have the asset (the house) anymore, you may never own a home again without 20, 30, 40, 50% or more in a downpayment, and last but not least your personal honor will mean nothing and most of your neighbors will dispise you for having to bail out the banks loss with their tax money.

Its is heartening to see so many comments about the moral responsibility to not walk away from a a home loan. To be frank I find it amazing that such a system exists! In Australia this is not an option there is no such thing as a limited recourse home loan.
If you borrow the money for a home loan you owe it, of course some people go bankrupt and find other court based options to avoid the debt, but for the most part you cannot avoid it. I suspect that this then lends itself to less abuse (certainly not no abuse) of the system and perhaps more thought about getting into a loan in the first place.
Australian’s have a very similar national dream about home ownership to American’s for us its called the Quarter Acre Block, you know house, fence, dog in the yard, etc. Its hard to acheive and its a lot harder to walk away when you are going to take that debt with you, as a result many family’s hold back until they can afford it and are now fighting like hell to hold on.
It wasn’t until the last few years that what are commonly termed Sub Prime loans started to become more common, but the result of your debt always belonging to you is going to be a lot more fiscal responsibilty as a nation that is we own our debt, as it should be I mean lets face it we choose to take the debt on in the first place, our choice doesn’t that mean its our responsibility?
I understand why people walk away, I mean if the rules allow it why not? your responsible to your family and as such you have to make a desision in there best interests, but it clearly leads to bigger a much mess such as we Australia, the USA, the UK and most of the rest of the world has got ourself’s into.
Unfortunatly for the USA many peoples “Moral Code” doesn’t appear to be as strong as a lot of the readers who have commented on these pages and I would suggest that perhaps the USA as a whole needs to think about moving future home loans away from the limited recourse type loan – some short term personal pain for your nations long term finacial health?
Wishing you all the very best from the land down under – lets all work to “get the show back on the road”

I bought my house in 2006 with an adjustable loan. I planned to refinance into a fixed loan, but of course market crashed. I put $100k down on my house. I have lost all of my downpayment and now the house is worth 200k less than what I paid. I have been thinking about the effects of walking away, but I don’t think it is right morally. The bank won’t refinance, and only way to get the loan modified is to stop making monthly payments. I think this is wrong as well. The problem is if the payments increase again, then I won’t be able to afford it. I may be forced to walk away. I’m single, have great credit and no car payment and no credit card debt. I don’t have enough money now to buy again. I’m hoping the Presidents home program for home owners who are current, will help me out.

So many different ideas and concepts are being thrown that I feel its important to break it down to basics. 1. A house is not an investment. If you speculate, be prepared to loose.
2. Upside down on your mortgage?-forgot about it and make your payments. It will come back. You signed the note in good faith. Honor your debts.
3. We are all resposnible for our own actions. Failure to plan, read, budget and seek assistance when buying a home is the buyer’s fault. 4. Walkaway- consult a lawyer. In some states mortgages are non-recourse(lender can not touch other assets)in other states lender can seek judgment on personal assets. 5. We need sensible compromise from all parties. “Sticking it” to the so called greedy bank will only make matters worse. It most cases banks don’t even own the loans anymore. 6. Homeownership is not a right. The sad truth- not everyone will own a house in their lifetime.

I am upside down in my house appox 100k. I took out a home equity loan of 75 k which is what is difficult to pay.

However, that 75 k allowed me to expand my business and purchase my warehouse.

While home values have droppedb, as long as my business can afford to pay the home euity line, I will stay. If business gets worse, I’ll cross that bridge when I get to it.

I pay almost 3k per month. I can rent the same house for about 1k less, or a nice condo for 1500 less. However, my moral obligation to staying here won’t allow me to leave as long as I can pay. I have more than money invested in this place.’

I won’t walk away if things stay as they are.

At some point, the market will bounce back somewhere near what I own. Maybe a few years as I have a very nice house in a desireable area that will grow.

Man, the people in the article are annoying. You have the one guy expecting a government handout and getting pissed off that he can’t get one. You have another guy claiming his moral standard is too high to walk away, but he might have to. Where was your high moral standard when you got into a loan you couldn’t afford?

Where do these people plan to live when they do walk away? They still have to pay rent when they move to another place.

I just hope that people that walk away from their homes get hit badly on their credit scores. There really needs to be some repercussions.

Walking away is wrong. When values went up did people give the extra money back to the bank? Now that the values went down, they think it’s the bank’s problem. Bottom line – it’s morally wrong to agree to pay then bail out. You are no different than a common thief. I’m upside down but will continue to pay because I gave my word.

You fools…the very same banks who duped everyone to buy with zero down have your credit rating? What does that tell you? Do you really believe it is worth something? Everyone is saying what is right to do…NO ONE is saying that this should have been prevented in the first place! Banks need to lend money to make money, I would not worry about a credit rating. Your system says the minute something you just bought is $10 cheaper, you demand the difference or you’ll return it…so if those saying you should keep your overvalued house believe this, then they should NEVER go back to the store for a measly $10 credit right? Same principle! I’ll bet too it is mostly those who ARE staying in their overvalued homes that don’t want more to leave and leave them behind!

I so admire the ones here who have written to say that “it is morally wrong to take the easy way out when you made your bed” I especially tip my hat to the comment Posted By Jim Styers Springfield, VA:

We are AMERICANS – if we don’t have MORALS, VALUES AND INTEGRITY – what is the point of our lives and our nice house. What shall we teach the kids.. that mom and dad took the low road, the easy low road. Yep that mom and dad had no integrity and they did so thinking about you the young ones…

I for one, applaud the folks who suck it up and do the right thing even though it is painful. They are to be commended and they should hold their heads up high – very high. How you look at yourself in the mirror at the end of the day is what counts. Many Americans are lacking in this area.

How many people out there would take 300 point hit on their credit if they were given $300,000 or $400,000. Because that’s what we’re talking about here. Morals, stupidity, and ethics aside, I guarantee most people would take the money and run.

I would walk away… I keep hearing a lot of people saying they would stay… I can understand some of them but it is not right that “someone” didn’t pu the brakes from this happening…
Here is my situation. I purchased a townhouse 3 years ago for $213,000, today it’s valued at $77,000 (if i’m lucky)…My payments are $1,850/month… CAN SOMEONE PLEASE CONVINCE ME WHY I SHOULD STAY???…The appriased value of 3 years ago, is now meaningless. If the city/government had gone ahead and somehow “frozen” the value of homes we would be seeing such a down turn in the housing market….Look at what is happening in California, they are certainly seeing there home tax base shrinking. If they had some type of “guarantee” to protect home values…
My father use to say “NEVER buy a car and think of it as an investment because cars don’t hold their value, a home is an investment that helps build wealth and you can count on it to hold it’s value but never depreciate”…This is what my dad always told me… NOW his advise doesn’t mean much in today’s economy…The banks, the appriasers, the mortgage companies, the city and some government agencies, DON”T care that our homes have lost their value…THEY just want you to stay in your “underwater” home and “take one for the team”…

I’m walking away from my home and buying another one accroos the street. my new mortgage will be $487 and my home insurance and taxes will dramaticaly decrease…

What would you do???

Ben Franklin… more like Ben Dover. Take some personal responsibility in life, ya jerk.

We DID walk away, It was the best choice for me and my family. People have trouble jumping from sinking ships and crashing airplaines, I think the same applies here. Do what is best for your family.

Some of you idiots really need to get off your highhorse! You think it’s easy for the walking away decision to be made and your holier than thou attitude can be taken and shoved.

i agree with squishy in az and john in tampa!!!!!!!!!!!!!….the banks screwed all us tax payers SO SCREW THEM AND LET THEM FALL!!!………..and to the corrupt crooked politians and bankers that created this mess……….HANG THEM!!!!…….

Anyone who walks away, while being able to continue to make payments, should have permanent, severe credit score reductions. Part of owning a home is the huge boost to your credit score just for having a mortgage! If that is taken away by self centered neighbor hating Americans, they should be financially punished for life. I’m underwater, and I would never dream of walking away. Because it is the WRONG thing to do.

Whatever happened to morality and responsibility. If I had my way anyone who “walks” when they can afford it would lose their citizenship, be sent abroad, and their place would be filled with an “undocumented” alien who is willing to accept responsibility.

I look into the crystal ball and see legions of people walking away from mortages. The losers that could not read a McDonald’s menu and signed a sales contract, did so without a gun to their heads. Educated, financially savy and well raised majorities had the credit scores, paid their bills and worked hard for their homes. The rest of the unwashed hiphop and illegal types will just walk away thus perpetuating their well deserved stereotype of irresponsibility. There is no saving these people.

Sorry their homes are worth less than they paid, but that’s life. Why is it that people expect the value of their homes to increase when everything else you purchase DEcreases in value. If someone borrows $250,000 whether for a home or whatever then they should have to re-pay $250,000. I paid $150,000 for my home 2 years ago, I don’t know what my house is worth now on the market-to me it’s pricelss -and I owe $130,000 regardless of it’s worth. Why should I have to pay to bail out people that made mistakes?????

I’d actually love to hear what people think… I bought my townhouse in January 2005 for $410,000. While I went in with 0% down, I locked in a decent rate and am paying well below 33% of income, still today.

My problem? The place next door just sold for $175,000. I’m $235,000 underwater.

What’s my incentive to stay there? Why shouldn’t I walk away? I can’t refi since I still can afford my $2400/month payments, but I can’t really see the point in staying there.

I can’t stand this anymore, including CNN’s propagation of the concept, that somehow it may be defensible to walk away from your mortgage/deed of trust. Let me preface what I am about to say by noting that I have a 9-year old son and and 8-year old daughter, and therefore I believe that I understand the need to do what it is the best interest of oneself and your family.

Having said that, it is not OK to just walk away. Do what is in the best interest of your family, but not at the expense of others. If people begin walking away in droves, and their houses are sold at foreclosure, short sales, etc. at depressed prices, that drives the prices of neighboring houses down. So you are, in effect costing all of your neighbors money in the name of doing what is best for your family.

Maybe worse yet, based on our government’s response to this whole mess, taxpayer money is being used to subsidize the losses incurred by lenders as a result of all the recent foreclosures. If you walk away from your mortgage, you only add to this problem. So once again, you are hurting your neighbor — their tax dollars are being used to support your actions (not paying your mortgage as agreed).

I divorced my wife 4 years ago. During the time I was negotiating an agreement with her, we owned 5 houses. I was the only one on the note for all of them. I continued to pay on all of them (my now ex-wife was not working at the time, and was unable/unwilling to help me — can’t say I blame her as we were separated), even as my credit card debt swelled to $80,000. I could have walked away from one or all of these houses, but I didn’t. Why? Because I signed a piece of paper that I said that I would pay back the money.

Besides, I believe that the logic in some of the examples in this article are flawed. If you want a bigger house for your family, even if you have good credit now, what do you think your credit is going to look like when you walk away? People with excellent credit are having a hard time getting loans in this environment right now, let alone those with poor credit. If you have poor credit and are going after a bigger house, you likely will find (1) no one will loan you money at all, or (2) banks will loan you the money, but only at rates such that you can’t afford it. So in either case, your “dream house” is out of your reach anyway.

And please, please, quit blaming the lenders. Yes, if people were lied to at the settlement table, they have a legitimate complaint (I don’t know for sure, but I don’t think that acutally happened very often). And yes, it is unethical (and probably should be illegal) to underwrite a loan to someone that the lender knows cannot repay the loan. But the blame game has got to end right there. Nick from Boston has it right: nobody put a gun to your head, if you didn’t think about the worst thing that could happen, if you assumed that property values would go up forever, if you didn’t hire a lawyer if you didn’t understand the papers you were signing — in short, if you didn’t think about what likely is the biggest financial decision of your life — whose fault is that?

All investments carry risks, including your home. So you are telling me that you want to comply with your lending agreement when things go well, and bail when things go poorly?

So quit trying to make excuses in the name of doing what’s “best for your family”. If you honor the family you purport to serve, then you will choose the responsible and just, not the quick and easy, path. Grow up and be a real role model for your children!

Everyone is so concerned with their credit score…for what I know they mean nothing anymore…nobody will be able to use them.

New way to look at your home. When you buy a car, a refrigerator, a computer, or a boat, it is worth less the day you walk out the door with it. We buy our houses to be homes…if you want an investment…buy an investment. Your house is your home and it shouldn’t matter that today it is worth less than you paid for it…in fact most likely everything in the house is worth less than you paid…quite worrying about the house value and worry about achieving new successes and endevor to find passions and satisfaction in you career and or what you do which makes you happy. If you’re worried about your money tied up in your home get rid of it and buy a tent.

I saw one person write that he had no reason to stay in his condo. Really? Didn’t you sign a contract? I guess the fact that you pledged your name means nothing; therefore, you name means nothing. I don’t understand what goes through a person’s mind when they decide to become a dishonest, untrustworthy person. These people that breach their contracts should be sued to the fullest extent of the law!

The question of walking away really comes down to the question: in the long run, is it worth it to stay and wait for prices to recover, or should you lock in your losses now and pay the price in 7 years of hard-to-get and extremely expensive credit?

For some people who are way underwater, it might be worth it in the long run – but that’s what you have to look at: the long run. Losing 40% of your paper value seems like a major loss, but over 7 years it’s entirely possible to get most of that back.

Ben Franklin should really consider changing his name. It’s a insult to one of our founding forefathers. He should be ashamed of himself. Sounds like he had no business buying a home, getting married,or having a child! He’s been responsible for 4 years? What a joke. BUCK UP PUNK!

What I do not see, and regularly do not see, in this article or the regular financial press, is the lessons that people need to learn.

Buying a property is and always has been a long term decision. You have to be prepared to live in the property for 10 years, minimum. If you can’t see that happening, don’t buy it. Rent instead.

It seems that both condo families in the stories presented violated this rule.

Another buyer works in a very cyclical industry [recruiting]. Yet he loaded up on fixed expenses when he should have known that his future income isn’t assured. Oops — you lose. He should have been renting as well.

Both families in single family homes seem to have made better decisions. If they can keep their jobs and incomes, they’ll be able to make it. Yes, the house appraises for less than they currently owe — that’s why buyers need to closely examine the current level and trend of prices in their target area and keep their payments under 28% of sustainable income before taxes.

The rule I was taught is to buy only when rent will make the payments for you, plus at least 10%. Owning costs more than renting and there’s a terrible temptation to buy too much house which will cost you too much to maintain.

Rule: Save your down payment cash and rent unless and until the PITI payments are under the rental the property will command.

If all of these buyers had observed this rule, none would have bought and they’d all be ok today. [I'm not so sure about the South Dallas property -- rents do go down during a recession -- and that's why you have a margin for error plus a cash down payment.]

The fundamentals of successful family finances still work. But they can’t work for you until you learn them.

***
Yes, I agree that lenders were irresponsible. I agree that appraisals were unrealistic, despite what current sales prices were.

And the government was irresponsible (to the max) — there are a lot of people whose situation strongly suggests they should be renters, not buyers. The political goal of increasing home ownership from about 64% to over 70% turns out to have been foolish. Alas, this is the usual outcome of government meddling in the markets for political purposes.

As families, we need to be wary of the goals of politicians and make sure we don’t follow their desires — our futures aren’t about getting re-elected, they’re about providing for our family. There’s a world of difference.

I bought my condo a couple of years ago for 250K. The value has declined steadily. The same condo’s are selling for less than 90k. I can afford my mortgage and am very responsible with 720 credit score. People on this board are saying that guys like me should stay in my condo because it is my home and bla bla bla. But, the value has dropped over 160k from 250k. When I first moved here there were very few renters and now I am one of the few owners left. The renters that are moving in are the kind of people I wanted to get away from which is why I bought in what I thought was a nice area. There are mulitple families living in 2 and 3 BR condos here. There is more and more evidence of drug dealing, potential gang activity and vandalism. The place started turning this way several months ago and now seems to get worse weekly. Condos with the same floor plan as mine are now renting for almost half of what my mortgage is. So, do you think I should stay here ? Really ? I’m beginning to dread coming home. I cannot park my car on outside of my garage for fear of vandalism. I cannot invite friends over because there is now no where to park and our HOA does not enforce the parking rules that were in effect when I moved here. My HOA has has doubled in 2 years. SO – you say I should stay in my house ?

The very next news line on your website states that 11% of mortgages are in foreclosure or in late payments (out of 20% that are under water.) Most people will not pay a lot more than their homes are now worth. Today’s New York Times Op-ed has a great graph showing this. Anecdotes do not trump data. We can either decide to reset their mortgages and let the creditor get MORE than in foreclosure or foreclose and cause further damage to everybody. We have to choose between justice and damage control.

I’m 34, have a credit score of 833 and my mortgage company was contacted back in Oct. 2008 about what was going to be happening with our jobs/income. They “Declined” us for any type of help. I called back every month to check in with them and they finally told me that I had to be 3 month’s past due on my mortgage to get their help.

I told them that it was wrong to force me to damage my credit score. You don’t get a 833 credit score by not paying your bills! It pisses me off that all these GREEDY companies are getting our tax money, money that should be going right back to us to save our homes instead of CEO’s and their bonuses or the “Big 3″ then we are expected to also turn around and buy a new car to help them that way??? I say SCREW YOU!

I bought my house in 2007 and was 50,000. to the GOOD! The house was a brand new home in a new sub. and the builder went under. It was going for $320,000. I got it for $270,000. and now it’s worth $210,000! I owe $265,000. It is CRIMINAL what these banks are doing by not helping their customers to modify their loans.

The banks have made too many mistakes already and we are paying for it in two ways, they get our tax dollars and we loose our homes!!! If they would have been “PRO-ACTIVE” and just sitting down to modify their customers loan on a short term basis, I don’t think as many people would have walked away from their homes.

I have been told by my mortgage company that I would have 6 months. There is a freeze on foreclosures right now for 3 months and it would take another 3 months to process the foreclosure. So to me….I could put almost $14,000. in the bank, turn around and put that down on a brand new home 3 houses down from my current home that was priced at $300,000. and is now going for $159,000.! I don’t want to walk away from my home….I have a responsibility to pay for it and I would but the bank is not willing to help.

Also even if you have a good credit score and it does become damaged because of this whole housing mess, instead of the 7-10 years on your credit history, it really going to be more like 3 yrs. now because of what is happening. They look back at my score and see 833 and then it sharply declines because of the housing market and economy, point being, they are going to have to start lending to everyone sooner or later or this will NEVER get any better.

The U.S. government is INSANE!! The U.S. Treasury is being
robbed blind while everybody just stands by and let it happen. The thieves, crooks and liars are plundering it
24/7 with impunity. Why should anyone claim value (?) on
a tangible asset? Like real estate. So the fisherman comes in with a load of fish to sell and gets to partying so long on shore that the fish rot. By the time he sobers up an realizes he no longer has anything to sell, he has to go to sea and start all over again. Or maybe he wasn’t looking, or paying attention, while someone stole his fish, whatever. Now then it’s time to tear all the houses down, salvage the burnable wood for heat, go back to the forests, start cutting down trees, cut them into logs, send the logs to the mill, cut them into lumber, and start building homes again from scratch. Think of all the work that would create. And the first one that comes by to make you a deal you cannot refuse, shoot dead.

In response to Cicily Hurst:
You are absolutely right: There’s always a bailout for corrupt bankers, but not for honest families. So always put your family first, and don’t care about those corrupt bankers; they can go to hell.

Housing in this country will not recover until banks come to their senses, and realize that it is better to write off a portion of these mortgages and keep some of borrower than to force the borrower out and try to sell the foreclosed home in this terrible market. As far as feeling an obligation to pay – corporations do not feel any such obligation to you as an employee or a customer, and they avail themselves of bankruptcy and other such tools daily. You all should view your finances no differently. It’s just business. It was business when the banks extended bad credit, and it will be business when they lose because of it. Keep in mind, your financial survivial may be at stake. I would say it takes more courage to swallow your pride and walk away, then stay in a house throwing good money after bad, dragging your family down with you.

Interesting that most all of these individuals cite personal ethics as a reason for either not walking away, or feeling bad about making the decision to do so. Interesting also that Corporate entities, in spite of being formed by and peopled with actual humans, rarely (if ever) seem capable of making the same ethical call. For instance, lenders are reluctant to refinance their existing clients to keep a foreclosure from happening. It’s all bottom line economics. One standard for humans, another for human organizations. We are interdependent. Free market capitalism is an illusion.

Maybe people just put more value on home, family, friends, and community than your greedy commentators think. Maybe this is why they elected a former community organizer president. There is more to life than the constant chase for the best deal…

I have been paying on mortgages for 35 years while raising 2 children. My husband lost his executive job in 1994 after 19 years with the same company whose former President is now a democratic state senator from New Jersey, Frank Lautenberg, proporting to care about the little guy. He never recovered even 50% of his former earning power. I hit the bricks and went to work. Somehow, we were able to carry our primary residence mortgage and mortgages on 2 rental properties. We were paying 9.75% interest at the time and banks wouldn’t refinance because of they way they calculate the rental income against the mortgage expense. We were penalized for having rental property, even though we had never defaulted on mortgages, credit cards or any kind of loans, ever!!! 6.25% interest never existed in our married lifetime, let alone the current 5% fixed rates. We thought 8.5% was a steal. In 1982, interest rates on mortgages were 17% and yeah we bought a house due to a coporate move and had negative amortization so we could have an 11% interest rate. We were able to re-finance several years later and thought we were in heaven with a fixed rate of 10.75%. Oh, and the Democrats were in control and Carter was President creating untold runaway inflation. But, whatever happened to working 2 jobs, even 3 jobs to make ends meet? I am really tired of hearing all this whining when people have interest rates 3-4% less than we were paying. Also, your home is supposed to be your home, not an investment. That is why we are in this mess. The housing market is cyclical. Suck it up. Over 30 years time, you will not be upside down on your home. It will be paid off. That should be the goal.

I am a mortgage broker in Singapore and I am really amazed at how these poor folks are paying a rate of 6.5% while in Singapore it is only 2% now. If their interest rates are much lower they would be able to pay their installments and keep their homes without being foreclosed. Most people would keep paying if they know that in the long run that they would be able to regain the value that they have lost in this downturn. Options like borrowing in yen or other currencies where the local rates are much much lower will help these folks too.

What is wrong with everybody?? A home is where you live, so what if your house is worth less than you paid for it. You need a roof over your head, right? If you can afford the payments, what’s the problem?? The value of your home is only relevant when you NEED to sell. If you don’t need to move any time soon, stay put. And besides, you can write off the interest payments. The people who decide to walk away should probably never own a home again. They’ve proven they aren’t responsible enough to cope with problems that arise with home ownership.

Aren’t many or most home loans underwater as soon as they’re granted? If you stay with your mortgage you typically pay for two or three homes because of interest before the mortgage is retired. If you don’t need to move then you shouldn’t be so alarmed. Housing prices will go back up and you’ll eventually own the place.

Car loans are underwater the minute you drive the car off the lot. We’ve accepted this for years so why all the fuss.

Granting sub-prime loans at a higher interest rate was criminal in the first place. It’s racketeering—the loan companies justified the higher interest rates by saying these borrowers would have a higher default rate, but the high default rate is really caused by the sky-high interest!

Sara from Plymouth, you say “We had been given a predatory loan in ‘04 (the lender had our backs against the wall or we would have walked away)”

Can you explain how your backs were against the wall? Was someone holding a gun to your head forcing you to buy a home you couldn’t afford? Do you consider any loan given to someone who can’t afford it to be a “predatory loan”? “Victims” of predatory loans are just as responsible as the lenders for their mess.. No one forced you to buy your home. If you buy a home you can’t afford, if you don’t read the fine print, if you don’t hire a lawyer, and if you don’t take the time to make sure you understand the biggest financial decision of your life, then you have no one to blame but yourself and you don’t deserve to own a home. Stop blaming others for your irresponsibility, and stop expecting others to bail you out. Grow up and get a life.

I very much enjoyed your story.
I did think it interesting the Condo owners seemed more inclined to walk than single family residence owners.
Has anyone done a study to determine if that is the case? The implications could be reflected in that Condo financing in Central Florida has all but dryed up. May it be that if condo’s are easier to walk away from supply of condos will surly contribute to the on going problem and lowering of Condominium pricing.

5 years ago we built our house doing most of the work ourselves, we finished with a value of 525K and spent 345K to build it. we always put the max in the 401k’s and in early 07 had a net worth of almost 500K with a responsible 70% loan to value. my job finished and am unable to collect. I called the bank two months early and told them I needed some help to shift a few payments to the end of the term, their response was I should rent out a room. I needed 2 months to be able to access 401K funds.
meanwhile a neighbor had enough and sold his 10 year old house for pennies and even though the houses are no where near comparable guess what the banks use to value my home, you guessed it his sale. so my house now is worth 300K and dropping daily.
after missing a mortgage payment before I could access my 401k all our other credit was shut off even with 0 balances, and any debt we had immediately went from 3-4 % to 30-32 %.
my business has been suffering from the economy and what business I get is payed slowly.
so off to the lawyer we go and low and behold we qualify by 20 bucks a month for chapter 7. so last week we filed.
our lawyer tells us we can stay in the house until the last minute which at the present moment is 4 to 10 months.
with the spring coming which is the start of the busy time for my business, tax return, and my wife’s bonus, and the total destruction of real estate values, we are able to purchase for cash a larger building lot for cash. which we will build a smaller low cost house also for cash.
when all is said and done, owning a house outright even though we are doing chapter 7 we will have credit in a few months.
It is a business decision, it makes the most sense, someone took our net worth drained our retirement plans, stole our credit rating and we did nothing wrong.
it is just a house a pile of sticks nailed together, if the bank wants it so bad let them have it.
if you are going to walk away from it walk away from everything, push the big reset button in the sky.
oh and short sales we looked into that gets you a 1099 so you can pay taxes on the difference, without interest from your home you could pay 30 or more %.

To Jason in Cincinnati, you say “I am actually kicking the idea of walking away from my mortgage and letting my wife purchase a home through all the perks offered for First Time buyers.”

I don’t think you’ll have too much luck with this. I believe that for a married couple, regardless of whether your wife’s name is on the mortgage now and whether your name would be on a new mortgage, both of you must meet the qualifications for first time home buyers in order to get any of the incentives.. Thus, unless you plan on lying on the paperwork, your wife is not eligible.

Also, I think you are underestimating the importance of good credit in the future.. The fact is, the actual percentage of the population that is being foreclosed on is not that big, and this portion of the population will find it VERY difficult to buy a home any time soon in the future. In the past, banks may have been lenient about poor credit, however this will not be so in the future.. If anything, good credit is going to be so much more important in the future.. And even after this economic crisis, there will be plenty of people with good credit trying to buy houses so the banks will not “have to” make loans to those with bad credit. Even if you think it won’t be a problem since it won’t effect your wife’s credit, that could change. What if your wife loses her job, which you admit could happen soon? Banks will not lend to her if she does not have a job, and they will not lend to you if you have poor credit.. Banks will always prefer to lend to two-income familes with two good credit scores, and with anything less than this could make it very difficult to be approved for a loan.

I say, walk away. Even those who can pay for their mortgage should walk away and let the bank absorb the loss. In my opinion, all these banks need to go DOWN. Only after the big players like Citicorp, BOA, and including AIG, are dissolved can we rebuild our economy based on sensible finance stewardship.

WALK AWAY
STAY
I dont know which is the best way to go. I think the part that makes me want to walk way is that I stayed within my limits and now I am watching others get twice the house for half the cost of my house. Its like a thorn in my side. You do the right think and budget correctly, but then your left behind.
On the other hand I do like the house (I have some doubts about the direction the subdivision is going) and I can afford it. Its not my dream house but its a roof over my head. If I stay I would pursue a loan adjustment to get out of the interest only and into a fixed 30yr.
But in the end the final decision maker will be the economy and if I keep or lose my job.

Les Christie:

Being “underwater” is not synonymous with “negative amortization.” Negative amortization is the result of any loan product that allows you to pay less than the full amount of interest or principle and interest which results in the unpaid portion being added to the loan balance. The end result is that the loan balance is not reduced (i.e. “amoritized”) and we have a “negative amoritization” loan.

One could be “underwater” with ANY type of loan (i.e. when housing prices drop around you).

Just wanted to claify that point.

By the way I love how Mr. Flores states he can afford his loan and then whines about being unable to get “assistance.” Why should he?

Reading these stories, I’m shocked at how many people think they can “walk away” with no consequences. The reality is that their credit rating will be hit hard (and the higher it is, the harder it will be hit), and their ability to get a loan in the next 7 (seven!) years will be more difficult and far more expensive (expect a rate at least one if not two or three points higher).
One guy who bought a house before he married thinks that only his credit rating will be affected – sort of true, but does he think any future loan application will only have his wife’s name on it? Only her income would be counted in that scenario.
“Walking away” should be looked at with the whole financial picture in mind – of course, if these people were capable of doing that, they wouldn’t be in their current situation.

I’m impressed by the underwater homeowners whose moral standards won’t let them walk away. I had the same situation with student loans in the mid-1980s. When everyone else was declaring personal bankruptcy and getting their student loans erased free and clear, I saw declaring bankruptcy as a moral failure and refused to do it, believing instead the old line that with enough determination and applying myself I could get a decent enough job and pay off my loans.

But this was the early and mid-1980s and I remained severely under-employed and low-paid for years despite having a university degree. I joined the military partly for the money alone. Various collection scams extracted down payments from me on a repayment plan but then cancelled because the loan was already in default—which they knew at the outset but didn’t say it would disqualify me. None of that money was ever applied to my loan balance. No other partial repayment plans for military or nonprofit service would apply either because the loan is in default. My loan debt of $3000 or so in 1982 has now ballooned to almosst 50,000 because of interest and fees. Meantime the bankruptcy laws have been changed so I cannot now declare bankruptcy like all the college grads without jobs in the 1980s were doing and getting their loans erased. I’m stuck with this on my credit record and still have to look over my shoulder for collection scammers. Oh and any tax refunds are automatically confiscated by the IRS too because of the student loan debt. And buying a house with this record? Forget it.

The unfortunate lesson is that moral values mean absolutely nothing in the financial and government world. The system does not take them into account. And debt can hound you forever like a never-ending load on your shoulders, 24/7. Just as my life was irrevocably damaged by the recession of the 1980s, and in many ways prevented me from becoming what can be called a “sociological adult,” it can happen to you, too, now. News stories in the media will change, the economy will “improve” by some metric, and the plight of those under- and un-employed and foreclosed upon will evaporate from public awareness once again. The media will no longer be sympathetic after a while. You will be forgotten about and society will move on.

And there are many like me out there, late baby-boomers or later, riding on the virtue of being college-educated and self-made but struggling for decades trying to make it, putting their lives on hold while they scrape by hoping for a break, unable to marry or to fully participate financially or socially in life as a true “sociological adult.” We have NOT recovered from the economic recession years of the 1970s and 1980s and the social and personal disaster that became our lives to one degree or another. So watch out.

I have been through this in the 1980’s in South Louisiana. My $60 thousand house was suddenly worth 30, and I owed 54 thousand. Walking away was tempting, one of my mortgage companies actually, they were failing every other month, actually suggested it. But after some soul searching, I could not do it. Why? Because I wasn’t raised that way. My parents taught me when you sign your name to something, you do what you say you are going to do. I had to leave there and work on the road to make the payments on that house, but I did it. I sold the house 7 years later for what I paid for it. Sometimes the “easy” way is not the “right” way.

All you walk-wayers are kidding, right? If you’re going to walk away, you had better not have any other assets (outside of retirement plans), because the lender can, should, and probably will successfully sue you for the shortfall which you will then have to pay out of your other assets. And the shortfall will be more than it otherwise might be, because the bank is going to dump the house for a firesale price.

Bottom line, unless you’re in a position to also declare bankruptcy, you had better think long and hard before walking away.

Our financial system is failing because of people like the Cruz`s. Its amazing reading his story, how he rationalizes it. Be a man and own up to your commitments. You can explain this to your kid when he has to spend his life paying higher taxes because of people like you

Mr. Cruz and Mr. Franklin bitch and moan about their growing families and their desire to move out of their townhomes/condos to buy a single family home. Someone needs to remind these people they signed a contract to repay the money they borrowed. No one ever promised these people that the value of their properties would go up. No one ever said life was easy and without problems. We all have to do things we don’t want to do, it’s called being an adult. If these two families “walk away” while they are still able to pay i thing we should put them and people like them in jail. Borrowing money and not paying it back is the same thing as stealing to me. If you can still pay but choose to walk away then you are a thief.

I am glad to read that most of the people interviewed were not inclined to walk.

The decision will haunt a homeowner for years to come, so unless there is no way to swing the mortgage and help is unavailable, then you must not walk away. You will not be able to buy a new home for years – so the man who planned to walk on his condo and buy a single family home is irrational and unrealistic to think it would make sense to walk. His sense of entitlement and idea that you HAVE to have a 3 BR home to raise a family is bogus. This is no reason to walk. Families in Europe manage to inhabit small homes; try a professional organizer or visit IKEA for ideas on how to maximize space.

Yes, the situation is awful. I am personally hurt, being the owner of a 1970s fixer that is now underwater to the tune of $50,000 or more and I now cannot afford to modernize. Yes, it is unpleasant, and demoralizing, but I gave my word and my professional future as well as credit would be harmed by a foreclosure on my record.

We are one of the ‘lucky ones’ in that we were ‘borderline’ [according to the tighter banking regulations] but not ‘under-water’. Our First Mortgage was at a pretty-good rate [5.125%] fixed for 30 years, but our Home Equity Loan added enough balance and rate to make the combination unaffordable. Since our first mortgage was such a low rate, we were hard-pressed to find a new loan that would offer us much relief.

In December 2008 the rates dropped down to the 5.25% range and we calculated that we would save about $300 per month the refinance the whole amount. Once we applied, we learned that our Home Value had dropped [assessment was down $65,000] to a point where our combined balances would not fit under traditional [tightened] banking standards. The rates kept dropping, but until our Appraisal came in the bank would not lock the rate with us!
We ended up having to bring $37,000 to the closing, but were able to get a lower rate [4.875% fixed for 30 years] than we would have received if we had locked at the beginning of the process. Due to our excellent credit rating [Score 820+] the bank [a local small bank] also decided to keep our loan ‘in-house’ to allow us to avoid a new ‘fee’ for refinancing Multi-Family homes. But our loan was considered a ‘cash-out’ transaction [even though we brought cash to the closing] due to the fact that we had a Home Equity Loan that was not used for the initial purchase. Much tighter regulations!
Our net savings ended up being more than $500 per month from what were would have been moving to in February 2009. We were also able to [essentially] skip our Feb 2009 payment, since the closing took place in late January 2009. So that helped, as well.
I would consider walking away from a mortgage, if I were underwater, but it would have to be as a last resort, and I would have to be in a situation where I could not sell the house nor afford the payment. At present, I have @25% Equity in my home [that is until any future re-assessments come in]

I’m 58 years old and not stupid. I;m single, I make 100,000 per year,I’ve been a homeowner before and had an adjustable rate mortgage. The rate changed each year on the anniversy of the loan. It could go up or down depending on what the prime was at the time.

When I purchased my condominium in 2004, for 488,000 my mortgage broker told me my loan was an adjustable rate, increasing 1.5% each year for 5 years. Putting the math to it(I receive between 4 and 5% increases each year), so I knew it wouldn’t be too much of a hardship. I was also told by the broker that I could refinance after one year if I wanted to go to a fixed rate, 30 year loan. I received my first statement, loaded the information in my computer for auto payments, and really didn’t think anything more about it until I filed my taxes that first year. I noticed my balance was more than the original balance. I called my lender to inquire about it and that’s when reality hit me. By the way, I do not have a ‘no doc loan’. I had to provide 5 years of tax returns, W-2’s, bank statements and current wage records.

I was told to refinance my loan it would cost me $25,000 in prepayment penalities. I was also told that if I didn’t make the full payments as listed on the statements,(I didn’t look at the statements after I put the payment information in my computer) that I would see “negative amotorization” for 5 year and would be upside down when the rate reset in July of 2009. I was so stunned, I really didn’t know how to respond.

I know if the broker would have mentioned “negative amortization” to me during negotations, I would have run out of the room.

As it stands now, my 488,000 condo is worth about 297,000. This was going to be my retirement investment that I could sell in 10 years, and move on. As it stands, if I lived to be 100, it would never regain the value it had when I bought it.

I’ve tried to contact my lender many times in the last 60 days, but they will not talk to me. I’ve spent my life guarding my credit and my reputation as a low risk consumer.
So I have to ask myself, why do I want to throw good money after bad? In 7 years I’ll be 66, and do I really want to own another home at that age?

I’m going to walk away, at my age, sacrifice my 792 FICO score, and be finished with it. I know my actions will only add to the dismal outlook on our economy and I’m sorry for that. Maybe if we had some leadership in this country that would stand up to the so called movers and shakers that went amuck when they were no longer regulated, we might get things straightened out again.

My only hope is this; there are people in this country responsible for the housing crisis. They’re rich and powerful and they really don’t care how bad they’ve hurt any of us. There has to be ramifications for the actions they’ve taken. We are a society that requires rules and regulations. We raise our families with rules, we’re managed by rules in our work places, we’re surrounded by them. And if we break those rules, we’re held accountable for our actions. Those who are at the center of this horrible problem belong in prision and stipped of all their assests and wealth. That way they might have something in common with millions of people they helped to destroy.

Wow. There seems to be a lot of finger-pointing in the previous posts, and usually at someone else. Sure, there are situations where someone will lose their job and have to foreclose, but who are all of you who are walking away simply because your house is worth less now? You obviously thought it was worth the investment at the time! Because you can now find a bigger house than yours for the same (or less) price you are going to break the contract that you signed? Hold yourselves accountable for your actions! Just because a bank told you that you can afford a payment of X-dollars doesn’t mean you actually can. Why would you trust anyone other than yourself as to how much you can afford?

These stories of people walking away from their home even though they can afford it is a prime example of America’s me-first attitude, and we need an attitude adjustment. No one held a gun to your head and forced you into an adjustable rate mortgage, and no one made you buy a house that was overpriced.

Obviously there are extenuating circumstances when in comes to filing bankruptcy or foreclosing your house, but I think it’s time for people to man up a bit and live with the consequences of their actions without looking to someone else to bail them out any time the going gets tough.

I used to be in banking. My boss, an Asst. Branch Manager, walked away from her house. Her reasoning was that she could get more house for less money than she owed on the first house. She planned it carefully, lying to the new lender that the original house would be rented out. That way, the short sale or foreclosure (whichever it turned out to be) wouldn’t be on her credit record until after the new house closed. I was appalled. She thought it was okay because her lender wasn’t our employer. I thought it was immoral and wrong. I quit because I didn’t respect her anymore.

The people who are walking away because they are underwater make me sick! This boils down to personal responsibility – so you owe more than the house is worth – who cares? Didn’t you buy it to live in? If you are not “forced” to sell due to job loss or other (that’s a different story), why should it matter if you are upside down. To use this as an excuse to bail and get a “better” home is BS! So, I should pay for your irresponsibility with my tax dollars and futher RE markdowns due to your now foreclosed property? You people are actually admitting that you can afford it but just don’t want to! Simply amazing, this should be criminal offense!

To the person who said they spend 80% of take home on the house – no, it’s not normal, it’s INSANE. Again, it comes down to personal responsibility and a lack of financial education in this country. It’s sad really. Again, I’m not talking about the real misfortune for those that got divorced, lost jobs, etc., but these people who are walking just because they can should be jailed.

Where do I begin? In 1990, I went through a bitter divorce in Indiana and moved to Georgia with my two young children with less than $1,000 in my pocket. My husband at the time didn’t want things to work out. I moved on to start a new life. I found a place to live, found a good paying job, and made new friends. Life was looking up for me. Over the years, I did what was best for my children. I kept my son in the same school through his elementary years. I totally believed in stability for my children and did everything that I could to support and raise them. In 1998 I built my dream home in Dallas, GA. My credit was established and I could afford this home. My careers changed over the years and I gained life-long work skills without really going to college. I refinanced my home into an Adjustable Rate Mortgage thinking that I would save money. I may have made poor credit decisions but was paying my bills on time and doing the best that I could. In 2004, I was faced with the decision to help my aging parents move to Georgia from Florida. The hurricanes caused too much stress on myself and my parents. I didn’t want them to live in a retirement home, so I decided to have them move in with me. We were cramped and my home really didn’t accommodate their needs. My son was still living with me and recently married. They were saving up some money to build a house of their dreams and have a family. The great American dream. We decided to build another home close by and use my son’s excellent credit. I could not qualify because I was over extended. We went this route to help my parents. Countrywide helped us finance this home. It is a 80/20 loan. I had all intentions of selling my original “dream home” and refinancing the home that I am living in now into my name. My parents provided the supplemental income to afford this home. Everything was on track until 2007. My father passed away in April 2007. My life changed forever. My job at Home Depot Corporate was threatened. I was always under the gun and feared my job was moving to India. I chose to change my career and took a chance in manufacturing. My income was slowing downward spiraling. I went from $17.05 an hour to $14.50 an hour. I still managed even with the loss of my father’s help. In 2007, I believe that a recession was starting. My job in manufacturing was fading away before my eyes and was laid off. I was employed through a staffing agency at the time. They were able to place me in a similar position for another undesirable company making $10.00 an hour. My skills were taken advantage of and I felt as if I was working in a “sweat shop”. When I started standing up for my rights, I was out of a job once again. As far as my original “dream home”, I have been through three different renters since it is impossible to sell this home. I am probably upside down in this home but still trying very hard not to lose this home. I have thought over and over about moving back into this home but afraid that I cannot afford it. I have been through 5 different jobs in 2008 still trying to survive. I have been going to school at 50 years old for Early Childhood Education hoping to make a difference in children’s lives. I have worked for Sears (dead-end job), a new grocery store (not enough hours to survive on) and a daycare for $7.00 an hour. Yesterday, I was told that I was no longer needed at the daycare. I am labeled “too military” with the children that have no parental guidance. I love children and would never harm them in any way. What is wrong with this world? What is wrong with America. Now I am faced with losing both homes, my car, my life as I know it. It seems that once you reach 50, you are out to pasture. My daughter, who is now 32 is faced with unemployment due to the housing bust. My son is trying very hard to keep up his landscape business. Both of my children have their own families now. I don’t want to move anymore and don’t want to live in a tent. I pray every moment of my life for things to get better. I read about life everyday and see how people are struggling. We all wanted a piece of the American Dream. My Daily Word for the day says, “There is always another method-to learn, remember, try, or apply. There is always another place-to work, live, play, or find support. There is always another friend-to contact, share with, or meet anew. There is always another work-to accomplish, contribute to, or receive from. My options and alternatives are limitless. In renewed awareness, I affirm: There is always another way.” God help us.

We all assume responsibility when we buy a house. It is both our home and an investment. When life changes, you have to do the best that you can at that time.

In the past, my wife and I moved to California for possible job promotions. We sold in the South, then faced the tremendous difference in real estate prices. We bought a three bedroom,three bath condo that we ould afford. In two years, the situation changed. 1. I lost my job. 2. My wife was employed on contract, at a slightly lower salary. 3. The two military bases in the area closed eliminating 40,000 + jobs. 4. My wife had been a chemistry major and National Merit Scholar at Michigan. She developed the brain tumor associated with organic compounds. She died. I left California to move back to the South. The only offer that I received on my condo was 30% less than what I had paid. I would have had to take $50,000 to the table in order to pay off the mortgage.

The honorable thing was to rent the condo and to lose money until the market returned. I was able to rent it at an average loss of $600 per month. But I did the right thing. I deducted the loss on my income taxes as rental income loss. When I sold the condo, I paid the lower capital gains taxes on the profits.

If people walk away from mortgages, eventually the new mortgages will require a very large down payment, at least 25%. Very few people will be in the position to buy a house. We will go back to the renter state that existed in the United States at the end of the Great Depression. We could see banks requiring shorter mortgages as well as a much higher down payment. It will depend on the HONOR of the buyers and how they react now.

If you are going to live in the house for less than five years, rent.

The average house in 1945 was about 1000 square feet, three bedrooms and two baths. You do not have to have a bedroom and a bathroom seperate for each child.

Now we have a small window of opportunity to learn how to deal with increasing utilities charges. How will you heat the McMansion in Minnesota or cool the same in
Florida, Arizona, Georgia, Mississippi? The cost of utilities will go up and probably as soon as the economy turns around.

Save up for the dwon payment of your new house or larger house. Live in what you currently own. Eliminate the waste of your life, be it cable, vacations, eating out, monthly charges for services rarely used, or my granddaughter’s favorite, “whatever!”

A house is both a home where you live and an investment. Some investments go up and some do not. But you can control the living cost with a fixed rate montgage on a house which you can afford. When you sell the house, it would be nice to make a profit. But controlling how much you pay each month beats the loss of rent and the increases of rent. Your decision.

Any time you make an investment you have market risk. Whether it be Exxon stock or a home. There’s a potential upside gain and downside loss. If there’s a gain you smile and use the gain as you see fit. We typically don’t feel a responsibility to share it with everyone. If there’s a loss, the same applies, you live with it, you don’t share it with everyone or expect someone else to pay for it.

While lending guidelines, to some degree, may account for some of the demise in the housing market, to my knowledge, NO ONE was forced to purchase the home they now can’t afford or want to pay for. When will we start to take a little more personal responsibility for our actions and stop blaming it on everyone else or expect someone else to fix it!

If you bought the home and have the ability to pay for it you have the responsibility to pay for it.

When we were reassigned to McGuire AFB, NJ in 1982 from Germany, our dream was to buy a home. We did so in 1983, when interest rates were around 13%! Even with a VA loan, the interest rate was 10%. The home we bought was $53,000 and monthly payments, with principle, interest and taxes, was just over $800. Our combined income was around $30,000 as NCO’s in the Air Force.

Fast forward to the mid 90’s when interest rates started to drop. People refinanced and many others were able to buy homes who thought they never could. Programs expanded, Congress – especially Barney Franks and Maxine Waters pushed the possibility of people to buy homes as everyone’s dream.

But could everyone afford to do so? There is all too much blame to go around. People bought homes initially that their parents saved up for and moved into over time. But WE didn’t want to wait. Advertisers on TV offered loans for 125% of what a home was appraised for – and people did it!!!

Granted – life happens – I know that all too well. I feel for some people, but not others. As I recently heard, there are so many people who purchaed “McMansion’s on a McDonald’s paycheck”!!! Now those people who saved for a home, bought within their means and kept up with their payments are going to prop up all too many irresponsible individuals.

Simply look at this article. The one family who is financially doing OK is the family that is going to walk away. I am proud of the individuals who feel a personal responsiblity to do the right thing. A systemic problem we deal with today is everyone has “rights”, but no one wants to take “responsiblity”. Good luck to those mentioned trying to do the right thing.

Ben Franklin, too bad you couldn’t live up to your namesake. You’re not really that hard up when you haven’t cut back on your discretionary spending one bit. You’re lying through your teeth.

Your house is for living in and raising a family, why do all of you people feel you should walk away just because the value of your house went down. That sort of greed is what has made this mess! Wake up

Your decision whethere to walk away being linked to contributing to the mess we’re in is, shall we say, naive. The mess we are in is a result of our political system. Too many people made too much money to increase regulation. That’s the reason we are in this mess. I say, keep your house. That way there will be less money available for you to donate to idiots on the so-called “conservative” side of the political spectrum.

Two words – Short-Sale

There are so many people to point the finger at. However, we don’t seem to. Lets thank the realtors for pushing the prices of homes up every month and of course the mortgage companies. How about the greedy home owners who sold their homes for more money than there worth. It’s seem all the “haves” are upset because they feel the “have not’s’” caused this mess. If your one of the “have’s” then you probably pay less taxes because you have one or more homes… please stop crying. Not everyone who lost their home wanted to. I never refinanced or pulled money out to buy more than one home or a toy. I lost because my ex-wife decided she wanted out. Sometimes in life, we don’t have total control and we can’t change the outcome.

I haved worked hard all my life, as a single parent/woman to keep my finances always and forever paid before they were due, working two jobs or three at a time, taking so much pride in everything I tried to accomplish in my life. All this with having kidney surgery, and even cancer at one pointthree beautiful homes and keep everything running above board, I was very proud of that fact. I was on my own for almost 28 years. I am not some woman trying to cheat the state of Massachusetts or myself and my only son out of something to be passed down for him. In December 2007 I married a Massachusetts Attorney, and trusted him. We were building a house, in which it was my down payment, and closing costs. I put far too much money into this house, appliances, lighting, furniture, and a host of everything else, and now he is leaving me, going to live in Rhode Island in another home he owns, and intends on filing bankruptcy. He is going to leave me alone to forclose on a 3,600.00 a month mortgage, go into bankruptcy myself for the debts I incurred while building and getting into our house, and finally a divorce. I will be totally wiped out, have no where to live, on make 20.00 an hour as an administrative assistant. I was very skeptical and did NOT want to be on the mortgage alone, but becouse I had flawless credit National City Mortgage and my future ex husband pushed it all along, telling me it would be just fine, it was my credit, my name on the mortgage, with his name on the deed. Now at 54 years old, my life is over as I ever knew it, becouse I trusted what I thought to be a kindly lawyer, as it appeared at the time, the legal fees I will have to face will kill me. The stress makes it so I do not eat and I do not sleep. I don’t know where to turn thus far. The attorneys I have spoken to tell me that my husband being a lawyer can drag this out forever. To forclose and go bancrupt is like being buried alive, never in my life did I ever expect to end up living in some low rent district, having my son visit me there for holidays. Is this justice? I had a little money tucked away, my friends told me to get rid of it, as this man would surely ruin me. I did as instructed, still not believing them. He will bring that up and try to make me pay, pay what? A 408,000.00 mortgage with the very fact that it was his income that was supposed to pay for this. I make 42,000.00 a year, that clearly does not support even half of that monthly fee. I am dying inside with the torment of ruining my life and my son’s chance at a future after I die, becouse I married an attorney of 30 years that clearly knew what he was doing, and that he wouldn’t get hurt. He walks away? Where do I live and go from here? All becouse of my poor judgement. But I am not a crook, I have never been on Welfare. My entie family is in law, my father is a retired judge. We do not do business dealings together, I am not close with my father. I am alone in this. Where do I turn for justice of any kind? Jennifer

Most retailers do credit checks in this area now.

FYI Dan: Many companies do check your credit report when applying for a job. My last employer did. I suspect for any job that comes with an expense account, the employer would like to know that you can handle your own money before letting you spend theirs. And yes, a crappy credit score DOES matter.

“As for the wingnut in Cali who repeatedly claims that credit scores are irrelevant in obtaining a job…

that is amongst the worst pieces of misinformed drivel in this entire thread.”

Mark,
Maybe if you are looking for a job in the financial sector this could be true, but I work in the tech sector and I know my company doesn’t check credit. I have also never met anyone applying for a job in the tech, bio tech, or medical sector that was denied employment based on bad credit. You morons act is if having bad credit the same as a felony and it simply is not a big deal for a job application. I don’t know what world you live in, but it doesn’t appear to be the same one I do.

“Will someone please explain a few things to me: There are many posts here claiming that “I am walking away and will save tons of money by the time they actually kick me to the curb.”

What version of math are you using? If you bought a house at 5 times your annual salary, with an arm or interest only loan, and cashed out every year like it was your share of the “Wall Street Bonus”. Now, all of the sudden you will live within your means for the next decade (cash only). In the next sentence you say that in 7 to 10 years you will take out a loans for your next house, car, etc.. which implies that you have no intention of changing your behavior.

Does anyone else see how out of touch this line of thinking is? If you can’t make it through the good times without someone else’s money (1st & 2nd mortgages, HELOC, numerous maxed out credit cards, car loans, etc..) how do you plan to get through the bad times alone? Do you think that prices will remain the same – while you may currently make more than your father, you are and have been spending a larger percentage of your income to pay for necessities. The Government is spending bailout money that it doesn’t have, which is being bought by foreign countries – do you think that bill won’t come due? Where will the money come from or will we all just walk away? To where?”

I have no idea if you were referring to me or not, but you have no consideration for people who just happened to buy their first home at the worst time in the history of mankind. I had only been in the workforce for 3 years at the time I bought my home and hadn’t had time to save any money for a down payment. I only explored the possibility of buying a home because everyone told me the best decision you could ever make was to buy a home. Unfortunately the bank found a way to put me in a home with no money down at the height of the bubble. I never refinanced, never bought any extravagant toys I simply dump about 80% of my take home pay each month into the house. I figured this was probably normal and as inflation adjust my salary up and my house payment didn’t change eventually it would be affordable. Obviously I was an idiot.

I do live within and generally well under my means. My FICO score had risen over 800 since buying my home with 0 credit card debt, 1 vehicle loan, and 1 student loan. You have to be a little slow to not understand the math. Housing will probably go down another 30% in CA over the next 18 months after already being down 60% for a total loss of about 70-75%(remember its 30% of the 40% that is currently left). After this point no one expects any appreciation of over 4.5% a year. To get back to where we were housing has to TRIPLE in value. At 4.5% this takes 25 years plain and simple 1.045 to the 25th power. I’ve done the math and I pretty much always come out 200-250k ahead by walking and re-buying in 5-7 years at which time I’ll easily put over 50% down. I realize its a terrible thing to do and if it were less money I wouldn’t do it, but I can’t justify giving up my retirement, my kids education, and a reasonable standard of life just to pay for this stupid mistake.

Don’t walk away — do the responsible thing that will allow you to buy a home again in as little as 2 years. Do a short sale. Free 7 Day Trial for online course at http://www.thenegotiatedsolution.com

When a person enters foreclosure, why do they wreck the house on the way out. Garbage, destruction of doors, walls, etc.

What is wrong with you people?

Yes, Walk away is the right thing to do, If the Banks didn’t care when you bought your home, because they became greedy, Now why you have to keep paying your morgage if lost hours of work or layoff, let them now help you to their mistake, they should resale the house to you at 90% of the current cost.
If every one asking for bailout, why not you.

If you owe more than your house is worth, please do walk away. Let the bank foreclose on your home, sell it at a fire-sale, and bring down the price. Home prices are still too high for most people to afford homes comfortably. So pack up, walk away, ruin your credit & good luck finding an apartment or a decent mortgage loan rate for another home. All those responsible people who saved money during the past decade can put big down payments on your former homes and enjoy them for a lot longer since they’ll actually be able to stay without being grossly underwater. They’ll keep their good credit, probably not suffer any loss of equity, and will thank you for walking. One person’s misfortune is another person’s gain.

OK, I’ve been told my husband is lazy and isn’t looking hard enough for a job. He spends every day networking, applying online, going to job fairs, or driving to possible places of employment to hand deliver resumes (most times he is told they only accept online applications). He has 25 years experience in warehouse management. My son dropped out of college to try to help us pay our mortgage but he only makes $300/week full time in retail. My husband and I drive cars that are over 10 years old and never go out to eat or on vacation. He is depressed and angry because he worked 60+ hours per week as a salaried employee for his previous employers and has been laid off twice in the past couple years. I’ll be sure to tell him when he comes home how lazy he is.

According to Mao, periodically society needs to go through cleansing periods such as the “Cultural Revolution”. This is where the masses purge the greedy and corrupt. During a period in China’s history, he encourage the masses to revolt against the corrupt and made it their duty to being them to task for their misdeeds. This resulted in many stonings.

America should switch to a 15% flat tax and put all the newly unemployed IRS agents to work for the justice department investigating mortgage fraud and conspiracy. People that walk away when they could have afforded to stay as well as those that lied to get a loan they couldn’t pay should be held accountable or you will only have greater problems in the future.

Whatever happened to integrity? My word is my bond! By signing the loan docs I agreed to pay it all back with interest. If my house is worth less than I owe then that is my loss but I still have self respect and a good example to my kids. After they devalue the dollar or hyper-inflation hits it will be worth way more again and I will be glad I still have a nice place to live and a clean conscience.

I know the situation is complicated,that’s why the thieves got away with it for so long. Loans are sold as ‘products’ the financier punches in a list of ‘requirements’ then, the unscrupulous ones, tweek the numbers to get you in. For example, I had a business that had done very well in the past. The banker explained that since I would expect to do better not worse, that he should increase my income by so much. Actually my business like many was in a down turn. Also they over, waay over appraised the homes. If you were wise enough or lucked out and got an honest banker, don’t beat you chest and pat yourself on the back buddy. It could just as easily have been you, never say never.I’ve been clear of my situation for years now but still have compassion for those caught in the web of these theives. While they sit exotic drinks on a beach small children everywhere are out in the cold. had a heart you bastard!

I wish people would stop being so self-righteous and understand that the housing market can affect all of us. I am a very responsible person who bought a house near Detroit for $130k in 2001 (this was way less than the $250k on the bank’s “pre-approval letter”, by the way), putting 20% down and getting a 15 year mortgage. Even still, with houses in the area now selling for between $5k-$50k – I’m underwater a LOT. We had to move, and couldn’t sell for a decent price. Looks like we’ll have to keep renting it out forever, praying we can get enough to cover the mortgage, since the Obama rescue caps out at 105% loan to value.

So I guess I don’t mind a plan that helps others avoid foreclosure, because they are wreaking havoc on the value of my home, no matter what I do. But I wish there was specific help out there for us innocent bystanders too. You may not think it’s fair – but life is not fair. The lack of government regulation, and lack of public scrutiny in what our officials are doing created this mess. At a very minimum, those problems need to be solved.

Will someone please explain a few things to me: There are many posts here claiming that “I am walking away and will save tons of money by the time they actually kick me to the curb.”

What version of math are you using? If you bought a house at 5 times your annual salary, with an arm or interest only loan, and cashed out every year like it was your share of the “Wall Street Bonus”. Now, all of the sudden you will live within your means for the next decade (cash only). In the next sentence you say that in 7 to 10 years you will take out a loans for your next house, car, etc.. which implies that you have no intention of changing your behavior.

Does anyone else see how out of touch this line of thinking is? If you can’t make it through the good times without someone else’s money (1st & 2nd mortgages, HELOC, numerous maxed out credit cards, car loans, etc..) how do you plan to get through the bad times alone? Do you think that prices will remain the same – while you may currently make more than your father, you are and have been spending a larger percentage of your income to pay for necessities. The Government is spending bailout money that it doesn’t have, which is being bought by foreign countries – do you think that bill won’t come due? Where will the money come from or will we all just walk away? To where?

Some of the Bankers are Economic Terrorists and should be sent to Quantanomo before it closes.
They have destroyed more lives than all of the other terrorists!

Very soon, the Media must get out of bed with the Banks and stop blaming the Borrowers for the Housing Problems.

The banks want you to believe that every borrower was running a Ponzi Scheme on the Lenders. – BULL

Even the dumbest Bankers are trained (hopefully) to NOT invest funds without doing the “Due Diligence!” to make sure that there is enough collateral and that loans can be repaid.
Why were the Bankers so stupid? – GREED!

The Banks also try to blame the Government for forcing them to make the loans! – CRAP!

Recently, the Government has given Billions to the Banks and they will NOT make loans.
They made the previous loans when the Government gave them Nothing but an opportunity to Fail! The Bankers are PERFECT Failures..
Now we cannot force them to make loans after giving them the Billions $$$!
What is wrong with that picture.
Their Greed made sure that those Economic Terrorist Bankers would fail!

How can the Bankers accuse the Government or the Borrowers for making the problems? – They cannot and should NOT.
Now, we must regulate the because we cannot depend on the Bankers to be Honest and Ethical.

I’m a 31 one year old with a wife and am a renter. My wife and I had looked several times at buying a home in the last couple of years. The bank would pre-approve us for 100k at 5.6, which meant we could buy a house in the worst part of our city, or we could look at “alternatives” where we could “afford” more. We told ourselves going in that if we couldn’t get something fixed, and that didn’t have barred windows, that we wouldn’t buy because it meant we couldn’t afford it. Of course we did not buy, and rent to this day in a very nice part of town in a very large town home. My wife recently had a work injury which WILL result in some level of permanent disability, so we have lost a huge amount of our income. Despite having to stop eating out, and roll all our credit card debt into one, zero percent card, we’ll come out just fine. The lesson in this ramble, if you CAN’T afford it at real terms, why are you buying knowing that you payments would go up no matter what? Oh, and thanks for the 350…I mean 150k house I’ll buy in a year or two.

“One fix at the beginning could have adverted most of this mess the banks and consumers got us into.”

I thought you were going to talk about the government not forcing banks into making bad loans to people who couldn’t qualify in the first place. THAT would have been the best fix.

Social Engineering caused this housing debacle, along with the “Keep Up with the Jones’” mentality. As such, this is not a problem of deregulation, as many idiots would have you believe. It is, in fact, a problem of too much government interference, along with an unwillingness to provide oversight during the process.

All the evidence you need is right here:

A Couple of Notes

* I remember buying my first very modest house for $65,000 ($20k down)back in 1992 with combined income of $70,000 and being petrified of the approximately $50k nut hanging over my head, because I felt that I actually had an obligation to pay it back!! I have sat back in utter amazement as I’ve seen other people making $70k in recent years, “qualifying” for a $250k house (no money down). I always wondered how these people slept … I guess they always figured they could just walk away.

* A piece of advice my father (a pre-boomer) gave me that I figured I’d pass along ’cause I listened to it and it has served me well: don’t buy a house more than 2 times your gross income. If a lot of people would have heeded this advice, this horrific economic meltdown would not have occurred.

“America…you are lazy. Get off your butts and make it happen for you! My Gramps worked 3 jobs to make a better life for my Dad. Dad put in long hours to make a better life for me. I hustle and work hard so my kids have a better life.
Lost your job? Go get another. No jobs in your industry? Look elsewhere. Mop floors. Mow grass. Paint houses. Buy cars, fix them up and sell them. Do something, anything to make some money.
Oh yeah, if you have kids, take care of them. Read them a book, take them to the park, teach them to be responsible.
All of our problems in America stem from irresponsible behavior and pure laziness.

Posted By Jeff Daney, Cleveland, OH: February 27, 2009 3:39 pm

I’m in complete agreement, Jeff. Irresponsible personal spending, a complete lack of saving, an addiction to credit (individuals AND businesses), and a general unwillingness to perform a “lesser” job is biting a lot of people in the butt right now. Times are tough, people. It’s time to get thrifty and pull ourselves up by our bootstraps.

To learn how this is done, talk to any survivor of the REAL depression. They have much to teach, if you are willing to learn.

There is no company in the world that would continue to make payments on a depreciating asset in the same way that people are being expected to do.

Like it or not, individuals need to compete against companies for resources. We cannot compete effectively if we make the rules for companies looser than the rules for people.

People should treat foreclosure like any business would treat it: When it is in your self-interest, you should break the contract, pay the fine and move on.

Responding to Robert in Laramie, WY and similar posters on the notion that borrowers should have the right to simply return the collateral to the bank when it’s convenient for them (i.e. when the mortgage balance exceeds the home’s value) When mortgage loan documents are signed, there is no provision that gives the borrower the choice between paying the loan back or giving the collateral back to the bank. Lenders lend money; not partner in real estate transactions. When a home is sold, banks receive only the remaining balance owed; they don’t have the option at that point to either the balance remaining or the full sales price of the home. This idea of a borrower having an option to pay back the loan or return the collateral would have sounded ludicrious 2 years ago when markets were doing well.

I truly feel compassion for folks that have homes that have fallen in value by 40 – 50% or those who have lost their jobs. For those folks, I hope that lenders will share in the pain. However, the notion that you have a choice to pay your loan when it’s convenient or profitable for you (i.e. when prices are rising) or to return the collateral to the bank when it’s inconvenient (i.e. when prices are falling) seems to me to be hollow justifications that people are making for indefensible decisions.

”

The question IS NOT “Would you walk away from your mortgage?”. The question IS “Do you honor your word?”. As is always the case, it comes down to fundamental ethics. A person whose ethics are swayed by circumstances has no ethics at all.

Let us all know who you are so we can all distrust you.
Posted By HYZ, Roswell New Mexico: February 27, 2009 5:13 pm ”

Bravo! Situational ethics = no ethics.

For those of you who claim no need for such in a “business” transaction, let me remind you that confidence and trust are the cornerstones of successful commerce. When trust in your counterparty is gone, so goes your economy.

As for the wingnut in Cali who repeatedly claims that credit scores are irrelevant in obtaining a job…

that is amongst the worst pieces of misinformed drivel in this entire thread.

Test his theory and find out.

I’ve read many of the comments and I admire the people who are staying put and trying to stay in their homes and mortgages and do the right thing.

I had a short sale on a house in 1994 when I got divorced and housing prices dipped briefly in CA. I took the Credit Rating hit from the short sale so my Ex-wife could get another house and take care of our son and daughter and never regretted doing that, although my credit took ten years to recover.

I am saddened to hear that some of you are well underwater even after losing equity.

Since you need to live SOMEWHERE, I’d try to modify my loan under the new programs that are part of the stimulus program–you have nothing to lose. From what I understand, you may get amodification of the principal down to what the house is actually worth now. It sounds like you have nothing to lose! Talk to a banker about these programs, just don’t get caught in one of the masy scams that I am sure are out there.

The only situation where you may as well walk away is if you lose your job and have little hope of gettting a new one soon–especially if you don’t qualify for unemployment. you’d be a fool to spend your remaining cash to simply delay the inevitable in that case. Get out, conserve your cash and wait/hope for beter days.

As several readers have pointed out, a bankrupcty, default or short sale will be a major ding on your credit rating.Remmeber that credit will be tight for many years to come. Just walking away without trying to renegotiate terms is short-sighted–who knows wheb you’ll get the chance to own a home again–remember when normal times return home ownership will still be a great way to build wealth!.

I was transerred to Las Vegas by my company (not gaming related) and we put our savings into a home in 2003 – 30% down with excellent credit. We have a good loan but I must move due to work and, due to the incredible real estate debacle which is beyond imagination in LV- cannot sell for what we still owe. So now our savings are gone with no hope of buying elsewhere and we’ll probably have to take a short sale and lose our credit
rating.

Yes, I must walk away and I am walking right now. I had to relocate due to employment and could not sell my old home. It’s listed as a short sale. I have not made a single payment when I realized that I needed to hoard cash in order to protect my family from an unpredictable economy. My priorities now are rent, food, education, savings. If I sell my home great, if not then bad credit for 7 years. Oh well, no big.

Go to:
http://www.loansafe.org/forum/deed-lieu-foreclosure-do-you-need-help-walk-away/

and read about people who are losing their homes to foreclosure help each other.

To those who say buying a home is just a business transaction and you should walk away: If you really believe that it’s just business, then stop playing the emotion card and asking taxpayers to bail you out. Walk away from your house then and stop whining. I hope the banks will remember this fiasco, see a foreclosure on your credit report for 7 years and never loan you another dime!

Wow reading through the comments. The one’s that really stand out are also the very examples of why we are in the current mess we are in.
One person posts – that he’s letting his properties go into foreclosure – yet collecting montly rent so he can go buy another home larger for less etc! I hope that your giving your renters a 30 day notice given not doing so is now considered fraud.

In addition to people walking away from their homes some having made money from paying nothing – I suspect that you’ll find policy changes taking place very soon that cracks down on this sort of behavior. There is a difference between a family who truly looses their home and a person who games the system to get ahead. The gamers need to face stiff penalties cuz the tax payers are the one’s bailing your asses out.

Whats completely unacceptable are unskilled workers with zero skin in the game selling loans and telling people they can afford the loan. I met a guy a while back bragging how he left the loan biz before it crashed and now he is a bill collector!!

The only fix to this issue is to crack down on the loan abuse – crack down on those that walk away from their loans having made money on it. Which will basically bring us back to those that can actually afford a home and bring home prices back down into the normal range for the given income in the area.

Irresponsible Loan issuing and irresponsible loanee’s together have brought our entire country to its knees. Irresponsible Financial CEO’s cashing in on the quick buck based on convoluted money schemes also contributed to this issue. But there are thousands and Thousands of loanee’s who have failed their responsiblities vs the few 100 or less CEO’s who have looted the failed companies or failing companies.

I am also in a negative equity situation. I bought a house far less expensive than the bank said I could buy, but the market has fallen so far here in Ottawa that I am now in a negative equity situation. As an honourable man, I will pay off my debt come hell or high water. I made a poor financial choice and the consequences are mine to deal with.

it’s a good thing that more people wake up to own the truth that capitalism is fundamentally fraudulant and immoral, though it’s a shame that it takes so much pain and hardship to realize suc a pl;ain truth. it’s a start. it’ll only get better once we the people accept the truth.

CNN is censoring this blog. I posted a comment 20 minutes ago and it’s gone now.

Probably because I mentioned Ron Paul.

God help this country.

To John in San Diego, kudos to you!

Screw the banks, they gamed the system with their toxic SIVs, CDOs, and POS (that’s piece of sh!t, by the way). Nothing wrong with using the situation to your advantage.

Anybody who thinks the banksters wouldn’t sell their own mother to make a profit have blinders on.

Oh but I forgot, we’ll be paying those same banksters to maintain their plush jobs with taxpayer bailout money.

Just who’s ripping off who?

I was a purchasing analyst with benefits who was laid off. I have 3 kids and wife who stays at home (day care is so outrageous) and bought a 4 bedroom home in 2005 for $225,000 in Addison, Illinois. I got a fixed mortgage and my payments are $1350 per month. I can’t afford these now that I have been laid off.

I need help from the gov’t to reduce my payments to about $900 a month.

These kids need a place to sleep at night. I can’t have a 2-bedroom apartment with one bathroom for all these people.

We need free health care, education, and housing in this society.

Do you really want children running the streets killing and robbing people? We gotta do whats best for the nation.

SAVE US OBAMA!

There a lot of good comments here, but most of you still don’t realize that our current economic institution that was based on perpetual credit and debt is at the end of it’s sustainability.

To understand how we got here, you have to learn what the Federal Reserve is and why it was created (not a government agency, by the way, and no more “Federal” than Federal Express–it’s a banking cartel that holds US monetarily indebted to the families of the Roshchilds, Rockfellers, and the like). An understanding of how fractional reserve banking works is also necessary.

The continuation of capitalism as we know it depends on an infinite supply of new industries, which essentially must convert infinite new realms of social, natural, cultural, and spiritual capital into money. The problem is, these resources are finite, and the closer they come to exhaustion, the more painful their extraction becomes.

To those who think we will pull out of this in 3-5 years, sorry, but you are wrong. A totally new system will be required. The gov will try to pump (and pimp!) it’s way out of this but it won’t work. A few people understand this and openly talk about it (Ron Paul, Mish Shedlock, Nouriel Rubini), but they are the exceptions.

Please take the time to read the article at http://www.realitysandwich.com/money_and_crisis_civilization. It really “nails it”.

Let’s not judge Jason, but act to put in place a sustainable future economic model.

In the 30’s the people that walked away were the best off , after it was all over ,I think it might be the same now. Let the banks have the loss, they have bled the people long enough.

I think it’s interesting that in the boom market, nobody ever offered to give some of their increased equity to the bank that made the mortgage and allowed them to get the loan. But now the market has fallen and everyone expects the banks to make concessions and help them out.

I agree that a lot of people bought houses they couldn’t afford on mortgages they didn’t understand. I also agree that many realtors and banks made bad mortgages. I just don’t agree with bailing out the banks and the homeowners. We often looked at real estate listings but decided to be content with the house we had. The on-line calculators showed that we could afford a much bigger, better house. We’re comfortable during this crisis because we didn’t overbuy.

Folks, the Banks aren’t holding the majority of the mortgage paper…it’s in mortgage backed securities and it’s very likely your 401K funds are invested in some of these. The Banks are suffering now because of the liquidity crisis and the downward spiral of the economy affecting all of us, who then in turn can’t make timely payments on our non-residential mortgage debt…our credit cards, car loans, and small business loans. In return, it’s harder to qualify for any credit these days. The inventory of foreclosed properties, most of which are again just serviced by Banks, not owned by them, is staggering. Many of these foreclosed homes are not being bought because few folks now qualify under the new mortgage guidelines and even folks who are currently employed are worried about the stability of that employement. The investors are the ones who have held up mortgage modifications, not the Banks. I would say that whether or not to give the Bank the keys to your house is a personal decision, but one that holds consequences for your ability to buy a house in the foreseeable future unless you do a rent to own or get a privately held mortgage. As far as folks blaming the banks for all of this, remember that consumers weren’t complaining about pretty much everyone with a pulse qualifying for a huge mortgage a couple of years ago. The guidelines for most mortgages back then (as well as now) were put in place by the investors – mainly the quasi-government enities Fannie and Freddie Mac, not the Banks. There is certainly plenty of blame to go around, but it is heartbreaking to see American families homeless in this day and time. There is always a silver lining, and perhaps the morale to this story is that a house does not make a home and that however bad off you are, there is always someone else that is worse off. Perhaps we as Americans will re-prioritize and be better for it. It’s just a shame that it takes something like 9/11 or an economic collaspe to bring out the best in us.

Its a real sad statement that we in the USA cannot control ourselves. I for one was able to afford three times what I actually bought, as I saw through the ridiculous statements lenders were saying I could afford and everyone else down the line willing to oblige. Now many are losing who actually were contributing to the problem. Poetic justice I guess. I don’t want to pay for those who way overbought. The one thing I dont see people realizing is all those who did not pay their mortgages, when they go to file taxes will not have interest payment writeoffs and will actually end up OWING taxes. Let’s see what this does to the economy when that reality hits home. A few weeks ago I said we are peering over the edge looking into the abyss. Today I say we went over the edge and are falling. I dont think anything can save us from an even more severe downturn that I originally thought. I think the President needs to step in and say “We will not nationalize the banking system”, “We will do so and so”, and we as americans need to stop panicing. Trust the system that I am going to put in place and the spending cuts I am going to make. Trust me, it is critical that you Trust ME NOW.

“The last comment is absolutely wrong.. If the bank forcloses and has to sell your home and they receive more money than you owe…. by law they must give it to the home owner. If they lose money, they can file suit to recover the loss. Walking away is irresponsible and wrong. It does nothing but devalue your neighbors home. Nice way to treat your neighbor. Also, we are about at the bottom of the housing decline. If you want to see your investment make money, hold on.”

I’m sorry but this is completely wrong though it does vary from state to state. Many states like California have non-recourse laws meaning that the bank has no recourse but to take the property as long as the loan was used as purchase money. That being said banks aren’t really going after people because in 99% of cases the people have nothing for them to go after and if the banks did go after them they’d just declare bankruptcy so there is really no point. Don’t let people scare you into thinking the banks will sue if you walk away from your home, if you live in CA you are protected. If you live in a state where they can come after you if they do you can always file bankruptcy. In my case it would stink if the banks could come after me because I’d lose all the money I’m saving during the foreclosure process, luckily for me they can’t do anything in CA. And by the way… most of my neighbors were foreclosed on last year so the only people who I’m screwing over are the ones who came in and paid half of what I did.

There are obviously a multitude of situations…some where walking away is unavoidable, and some not.

My biggest issue is with those who choose to walk away out of convenience. An example is a friend of mine, going through divorce and therfore now renting their former home. Because they have no equity left in the home, they are choosing to stop making payments to their lender yet continue to take the $1,500/mo rental payment from the renter. They blame it on the divorce… that it’s just too difficult to deal with. If they had substantial equity in the home, do you think it would be “too difficult” to deal with then? Of course not. Keep in mind this is a person who continues to drink $200 bottles of wine and his highly capable of making the payments. Another example is from a friend of mine who is a Realtor. She was involved in a short sale (her client was the seller). She had to laugh at the irony of the situation as they were closing the deal, and her client was in Maui, HI sipping Mai Tai’s at the Grand Wailea while the bank took the hit.

These kinds of actions make me ill and angry that I am paying along with my kids, grandkids, etc. for this type of irresponsible decision making. Our society makes it too convenient for people to “legally” skirt their responsibilities and leave others holding the bag. Make no mistake, it isn’t the bank left holding it, it trickles down to all of us.

We had to walk away from our home because our interest rate shot up, increased our payment by over $1000 a month (of which I paid on time until I went through all of my savings.) We could not refinance due to the fact my home depreciated in value over $200,000 in 2 years. Mind you, it was our fault we got into an ARM in the first place (I’m in the mortgage biz so I know how it works) but I and most homeowners had no idea when getting into an ARM that we would be unable to refi when the time came. Wasn’t even a possibility in my mind. I tried to do a loan mod with Chase and they refused saying we did not make enough money. We paid them $2700/mo for 2 years and yet “we didn’t make enough money” for them to keep our payment the same. Our payment went from $2700/mo to $3700 a mo and then to $4700/mo. I told the loss mitigation agent that we would have to walk away from our home and go rent if they could not lower our payments and she said go right ahead. So now we’re renting for $2200 a mo, our home was foreclosed on and sold for $230,000 (we initially paid $474,000.) Now, if they had been willing to accept the $2700 a month we were paying them on time every month we would still be in our home and they would’ve made their money in the interest for the next 30 years. But they and their investors backing the loan are greedy. They turn you down for a loan mod, put you through a foreclosure or short sale process, receive .50 cents on the dollar (if that) and the rest of America foots the bill. That’s how it works.

I take full responsibility for making a stupid decision to get an adjustable rate mortgage, I should’ve known better. I never thought in a million years that would happen to me. Lesson learned. Unfortunately many homeowners are learning the same hard lesson.

The answer to this problem is for the government stop helping the banks. If they only assist in providing options for homeowners through government insured mortgages or loan mods with their existing lenders that will help alleviate the foreclosures. If the banks continue turning people down for loan mods, the bleeding will never stop. Our entire financial crisis is because of greed and bad loans. It’s time someone put a stop to it and made the banks pay for their mistakes. I’m still paying for mine.

I bought a condo 5 years ago. I tried to sell it 3 years ago. The neighborhood has really deteriorated. The complex has been infested with college students. A 300 pound person moved upstairs from us. When he walks, the whole place shakes, the windows rattle, and his footsteps are really loud. When his friends are over, they party, smoke week, and drink all night. I’m 60% underwater. The bank will not work w/ us to to lower our payments so we can rent it out. I care more about my son than I do the economy, my credit score, let alone my bank that was already seized by the Fed. I know what I’m ready to do. What would you do? (Please have kids before answering this question).

You want a solution?
It’s not the foreclosure that is hurting the market; it’s the sale of the foreclosed home at a loss.
So.
Let the banks foreclose on delinquent borrowers; it IS their right. Just don’t allow the bank to sell the property for anything less than the outstanding loan. It can sit vacant on their books OR they can re-negotiate the loan with the original borrower; their choice, but the house doesn’t devalue those around it.

If you do not pay your mortgage, then you just don’t care about your family. This is where you’re going to raise your children, and where they’re going to sleep at night and feel safe. Anybody with an ounce of morals would work three jobs if necessary to keep a roof over their family. How could you put your children through an ordeal like that. You’re nothing but a LOSER for putting your family in that position to begin with. And don’t give me that line that you were fooled by the lender/real estate agent. That’s YOUR FAMILY! They look to you for leadership. My father would go to the end of the earth for his family, and so would I. I would do whatever it took to stay in the family home. There’s one word and it’s called BUM. That’s why you’re called MOMMY and DADDY because you’re supposed to protect them and lead them. Unfortunately, you’ve lead them to a homeless shelter. You may think that once conception takes place at the picnic that you’re done, but guess what, for anybody with honor the job has just started! I take better care of my dog than some of you folks care for your children.

I will Never walk away from my home unless I have too! Having been in the real estate business since the early 80’s i have seen the deterioration of the qualifying process for a mortgage. it was beyond me how anyone would be able to get a loan without income verification or up to 120% of what the property is worth. why! were interest rate kept so low, and WHY!would anyone be qualified without verifying their ability to pay for the loan. this gave a lot of people the ability to purchase a house they could not afford. and now we all have to pay for the mess. this recession is not the problem this is the fix let the banks fail/let the speculators loss their money and for investors that should have known better let them learn their lesson. investing is a risk sometimes you lose sometime you win. I wish the president would have said during his stimulus speech the other day “IT ALL ENDS NOW” to all those bankers/investors, and help only the people that have loss their jobs because of this mess. People most pay for their lack of vision

One fix at the beginning could have adverted most of this mess the banks and consumers got us into. If the government had forced the banks to roll back mortgage payments to the initial amount we could have frozen this problem in its tracks. This would have set up a disadvantage to the Bank who lent more then the consumer could afford and left the consumer who bought more then he could afford paying for a property and not accruing any equity in the property. To be honest

I purchased a house during the boom and I opted out of what my mortgage broker offered and settled for what I knew I could afford. It pisses me off to no end that the action of greedy or stupid people have left the global economy in shambles. It pisses me off that the same individuals are the same people who are getting help, being supported on my dime or throwing lavish parties with the money take from my taxes. If you lost your home when your balloon adjusted, I am sorry for you but it’s not my damn problem if you bought more then you could afford and I should not have to pay to support you. If you are loosing your house the same rules apply for the same group of people. If you were greedy and wanted a larger commission because you could sell some sucker a house they could not afford, I hope you have lost your job and your house (serves you right).

On a lighter note, if you are loosing or have lost your house, because of the actions of others have forced your employer to reduce staff and you were laid off or fired (and not part of the banking industry) I truly wish I could help you out ,but the idiots have left us all in such a state we are struggling to survive. If the government is going to help anyone, it should be you and I apologize that they will most likely ignore you as you were not part of the cause.

I have to agree with Valeriy from New York, A house is a home first, investment 2nd. It should not be used as an ATM or short term investment.

People have to recognize that it’s only a lose if the sell now. On average home prices double every 12 years. For people that expect and thought it was an American right to refinance every year to pay off credit cards, here is your wake-up call….Live within your means, and save for a rainy day.

The banks are getting the money (and not the people) because they are the mechanisms that allow business to borrow money to finance new projects. If businesses don’t have the capital to start/continue ventures then unemployment will go through the roof and we will see another depression. The economy is in bad shape now, but it pails in comparison to what would occur if none of the banks were willing to lend to businesses. Think 30% unemployment.

So it is not rich, fat cats getting more money from uncle sam. Instead, the government is trying to make sure that businesses can still hire people. Bailing out banks stinks. But there is a real reason behind it. Does no-one understand anything.

I’m a home owner and my payments are current and are paid on time every month. No one should be pointing the finger at the next person. I pray to God that I keep my job. I’ll never walk away from my home, I signed the contract without a gun to my head. My home is just that a home not an investment. Stop looking at the value of your home in dollars and start looking at our home value in a sense of memories for our children and grand children. Greed is to blame!!!

God Bless!!

Buying a home is not a moral decision; it’s a business one. Educated people lent money with the home as collateral, and the mostly modestly educated made a business decision in good faith. It was a business decision between two parties…now it appears both have made bad ones. At least the banks get the homes back…the borrower loses all. In short, the pros got it wrong, but they will recover some of their money, the borrowers will get 100 percent of nothing. The borrowers made poor judgements, the pros did something closer to criminal.

Other commenters have said that it’s wrong to walk away because the borrower agreed to pay the loan back. But the bank also agreed to take the house as collateral.

As far as I’m concerned, it’s the borrower’s option to either pay back the loan or give the collateral to the lender in lieu of repayment. It’s the lender’s responsibility to ensure that the value of the collateral is sufficient to cover the risk that the borrower may do this. That’s why banks require a 20% down payment or mortgage insurance. Yes, the value of a house can fall more than 20% as many have, but why should the bank’s end of the agreement be risk free?

There is nothing wrong with giving your lender the collateral instead of repaying a loan, and if you are current on the loan it shouldn’t even hurt your credit rating. I know that under the current rules it does, but it shouldn’t.

I signed the loan docs, my lender arranged for the trumped up appraisal, and I used the cash from my HELOC on things I could not afford. Now I’m under water. Like the little mermaid, at the bottom of the sea. I will take a 3rd and 4th job before I’ll walk away from my obligations as a man. My kids will learn by example how to make a $6,200 mortgage payment on a house I paid $164,000 9 years ago. Yes, we got ourselves into this and we’ll get ourselves out. We don’t need your bailout money.

Lets do the math. Most people posting are make descisions emmotionally.

I bought my house $500k in 2005..now its worth about 225k….over $220,000 negative. I am paying 3.6k down. I put down 50k on the house btw.

Lets see if this makes financial sense to stay in my house.

It WILL take 5-10 years for my house to come back up to 500k. I can leave my house now by doing a shortsale, damage my credit by 150 points for 2 years and buy another home! I rent the same size home now for 2k…for two years while I pay off debt with the 2k savings. or just save the 2k i save a month.
Year 3, I have either 48k in CASH in the bank, my credit is back up to were i can buy a house!

Plan B. Stay in the house..dish out 4k a month for 7-10years while i wait hoping the market goes back up to were it was when i bought the house.

Walk away PEOPLE! You lose more money staying in your home if u are tremendously upside down like my example. Credit is just credit.you will damage your credit with a short sale but you will save tons of cash. and your credit will only be messed up for a few years..2 or 3!! In my example you are paying yourself 55k+ to walk away now. …
Treat a home like a investment and it makes sense.

The question IS NOT “Would you walk away from your mortgage?”. The question IS “Do you honor your word?”. As is always the case, it comes down to fundamental ethics. A person whose ethics are swayed by circumstances has no ethics at all.

Let us all know who you are so we can all distrust you.

Oh, those evil banks. They only treat people like numbers. They won’t renegotiate a loan with me. Blah blah blah. When was the last time that you told the bank that they only had to pay you 1% on a 10 year CD that you bought when you were originally guaranteed 5%. The banks are falling on hard times. Be kind. You have a job. The banks and all of their stockholders will go under if they have to continue to pay 5% for 10 years on your CD. Tell them you will happily accept 1% to help them out. You know, it is inly fair.

What, you don’t like that? Then why does every crybaby think the banks have a moral obligation to rip up their agreement with you and give you whatever you can afford!

Not only am I underwater on both my properties. I am letting them both go into foreclose while I am renting them out. I have not made a payment on them in 12 months and have been collecting rent on them. Call me greedy but it’s the smartest thing I can do right now. By the time the banks even finish there foreclosure process I will have enough cash to go buy a house twice the size of the one I had before for a third of the price. If anyone can look me in the face and say they will keep there 500K mortgage on a house that is worth 250K when they make about 60K a year is stupid. By walking away that’s like saving 5 years of strait work right into my pocket. The bubble had to pop sometime I am just cashing in while we have a chance. I also work for a loan modification and I will tell you this we are no where near the bottom with the amount of calls coming in everyday of people who are doing the same thing out of greed. 1 out of 100 clients get a good deal the rest will be going into foreclosure this is just postponing the inevitable so for all you investors out there I would hold of until the real bottom hit’s. I would forecast another 40% decline in housing prices.

I consider house purchase is like any other investment like stocks, bonds, cars etc. As long as we do not bring emotions into this, every one should be fine. If we loose in an investment, we close it and move on. There is no need of big discussion about it.

P.S. No I will not walk away. I made a deal, and I took their money and I plan on paying every penney back!

Why didn’t the Government take that money and offer lower or no interest loans to HomeOwners instead of the banks? They threw all that good money after bad. At least giving cheap loans to American instead of free money to banks we would have, could have used it to fix things on our own. Why do the banks always get it… I’m upside down, underwater and over done by this whole mess. I work 70 hours a week and had my 401k turn in to a .01k. They should have made the money directly available to all the people.. We’re the ones plus our kids and their kids that have to pay it back.. GOD Bless you all. Remember this.. We are Americans and we will survive and come out staonger, so let’s all complain now and then let’s get back to work making this the Country we know it really is….

I read some comments referring their mortgage payment as a moral issue. Wake up, people, all transactions are business. You are willing to pay your mortgage to live in the same house which you can pay much less rent without a property tax bill is because you BELIEVE your house will worth more than the savings from renting. On the other hand, the bank who lends you money is because they are making 6% from your mortgage rate when they only paying their customer at 2% CD rate and BELIEVE the 20% downpayment is enough protection of their loan.

That is just so simple. A transaction between two parties who all believe they are making the sound inventment decisons. So, please, stop saying those moral reasons of a simple mortgage transaction betting on the house value will only GO UP.

Some folks speak about “business decisions,” but it’s a wrong parallel. When you buy a stock and it goes down, you don’t just throw it out, nor do you stick it back to the seller. You either sell it or hold it. When you buy a suit on a credit card, you don’t bring that suit back to the bank because there is a better deal in the store now. Nor do you stop paying the card because your last month’s vacation isn’t worth much today. And you shouldn’t be skipping your payments to the government backed student loans because the salaries in your field are lower today.

Banks are not perfect but it isn’t bank’s fault that you picked a property that was oversized or overprised for you. And it wasn’t entirely bank’s fault that value of it went down. Should it have gone up, you would have been glad the bank was there and let you get in in a first place. And those folks who also had a chance to pull some equity out of it by refinancing and cashing out, those shouldn’t be complaining at all.

The today’s value of your home shouldn’t be a factor as long as you can pay for it. The home is not only investment, market value, or financial instrument. It’s a place to live first of all, a home. And those people who cite “business rational,” you are just playing a day trader with your homes. How responsible indeed.

It’s sad to see that the issue like this is even being discussed. If the so called “business decision” justifies screwing someone who helped you, I’m not sure what is the story with our values today.

Wow unbelievable venom. Please those of you who have never done anything wrong cast that first stone. I pray that you never have anything go wrong in your life and that you saints continue to walk on water. The terrorists must just be sitting back in glee watching how this economic situation is ripping this country apart. This is more effective at pitting neighbor against neighbor (American against American) than anything they could ever hope to dream up.

The toughest part of this from my perspective is that innocent people will be faced with terrible decisions to make. Even people that took out a responsible loan in comparison with their income could never have thought they would be faced with the type of unemployment and inability to find a job that we are faced with today.

So there are many people faced with a mortgage they cannot “afford” because their job has been eliminated or the company they work for has reduced salaries by 20% or more. Is that their fault? Is it their fault if their wife loses her job (say, 40% of their household income) because her company cuts back or closes, and their own job cuts their salary by 20%? They could be staring at a loss of 60% of their household income because of this economic climate. And they may be unable to replace the income at all, or at least not for 8-10 months. And sorry, but everyone just doesn’t have 12 months of salary tucked away.

These are hard times. And I don’t think anyone has a good answer. Any answer is painful. Obama has mortgaged our children’s future and has used this opportunity for the Democrats to push through many of their spending plans they have had for years, if not decades.

But even Republicans are not willing to stand up and say that sometimes the best thing you can do is allow a terrible situation to run its course.

I am afraid we are just seeing the beginning of a very hard lesson that we and our children are going to learn. I just hope we are able to recover from the learning process.

The banks are to blame. Period. Case in point. My wife and I can afford our home if they refinance at current 30 year fixed rate. WE CAN AFFORD IT! But they refuse to finance because our home has dropped by $200k over the past 1.5 years.

We are not behind on our mortgage, we have good jobs, we have a good income and credit. So why won’t they refinance us?

What do they have to lose? When our ARM adjusts in 8 months we will have a hard time be able to afford the payment.

If the bank refinances us at current rates, we can keep the house, honor our committment, pay the bank their money.

If they don’t refinance us…the worst alternative is that they get the keys, which they don’t want.

At a time in this country when the jobless rates are soaring, wall street is crumbling, the auto industry is failing…

Where’s the compromise? It’s good for banking, good for the borrower, gfood for the economy.

The housing bubble happened because there were no checks and balances in the lending system to give you a warning that you paid too much for a house. The government property appraiser would not reduce your value because it would reduce his tax collection. The bank appraiser only got paid if he could get the loan approved by the appraisal being what the house was being sold for. And the bank did not give one ioda whether of not you could afford it. Throw rediculous laws in that forced banks to make loans available to anybody and you have the toxic house formula

They need to make it a crime for a person to misrepresent their financial history and a crime for banks/lenders to misrepresent their clients finances. There should be stiff penalties(hefty fines and jail time) against individuals and companies. There needs to be more government regulation on determining someones credit/loan potential. Individuals, banks and lenders weren’t doing it so the government needs to lay a foundation so that this doesn’t happen again. This is something that needs to be regulated because I don’t want my tax dollars going to pay for someones/company mistakes. They really need to find the originators of these loans and put them in jail. I know many of these loans were given without any documentation of income or financial status.

“Bottom line here… who signed the loan documents (the contract to pay back the amount borrowed)? Regardless of what anyone told you, YOU signed the documents and promised to pay it back. The bank has no obligation to work with you to reduce your payment.”

Correct. But it is in their own best interest. And the bank took that contract on the assumption that the collateral (house) backing that contract was worth the loan amount. I guess they were wrong.

Normal people who buy a home would expect the gradual appreciation eventually beomces your retirement nest 30 years later. However, like all investment, you need to set a stop-loss point. There is a very good reason why people need to set a stop-loss point on all investment. The reason is very simple because you don’t know if it is a bubble and you need to protect your hard earned money. If the housing is a bubble (I saw a RE agent bought a $750K house and resell it 30 days later at $850K), it would never come back to the old price again. Then, why do you still want to take the risk on your life investment plan on your monthly mortgage payment on a valueless property? What is a bubble? Like BRCM being $250/share and YHOO at $375/share, price up and down $50 each day, that is a bubble. A RE agent made $100K profit in 30 days from buy and sell of the same house, that is called bubble. If it is a bubble that can’t be sustained (becasue the prices are beyond average salary affodability), why government wants to stop the housing prices from falling? If it is a bubble, we just have to let it burst and then get back to the reality that your home investment is only 10% a year instead of 300% in 8 years.

Like all politicians, all they want to do is to cover and prevent the worst of their terms. That is why, even a simple theory like I described, those Phd group still want to prevent the bubble from bursting.

Bottom line here… who signed the loan documents (the contract to pay back the amount borrowed)? Regardless of what anyone told you, YOU signed the documents and promised to pay it back. The bank has no obligation to work with you to reduce your payment.

Many folks here start by assuming that the homes are banks’. Wrong! They are YOUR homes. When you buy it outright with cash, it’s your home, no one to step in and if the value of the home drops compared to what you pay, you don’t think of walking away from your own home. Now, when you don’t have enough money to buy YOUR home, the bank helps you realize your dream by financing you. It’s still YOUR home. Walking away and dropping it on a bank that helped you when you needed it simply because you can do it now is unjustifiable. Agree that some individul owners are in severe crisis and for them failing is the only option to survive. But for those who are solvent, walking away is outrageous.

You destroy banks’ ability to lend and make future borowing extremely difficult for every bona fide borrower (watch for those 20% interest rates in the future), you make responsible owners foot the bailout bill, you destroy the neighborhood by leaving abandon houses, thus driving the prices even lower. Responsible, nothing to say. Change we can believe in, indeed.

My family lives on one income: Mine. I commute over 60 miles to work every day. I’d be stupid to admit that I haven’t made any mistakes. I have an ARM, but I’m holding my own. I know I’m underwater, but I plan to live in this house until I die. Walking away with children is something I never considered. I was brought up to do the right thing. That means taking care of my family and paying off my debt. I made the debt, no one else. I refi’d twice during the bubble. I felt I had to. We’ve changed how we do things out of necessity. I’m current on all my debt, credit cards included. My credit score was 725 the last time I checked last summer. Some of my amounts are high, but I don’t charge much now and am working to pay them off. I, for one, own up to my mistakes and would pay the price. But, is it right for my kids to pay the price, also. I can see the criticism if I was a person who didn’t pay for anything or was always late. I’ve been lucky so far…the question is how much longer can be get by? In this, or any other economy, it’s damn hard to save anything. I’m trying but things pile up.
If you ask me, it’s those who were never taught to take responsibility for their own actions. People are always looking to get out of their skin, to feel or be something else. Happiness is defined by someone else, either the Jones’ or the media. Those who endeavor to rise above that will make it. I’m trying….

There is a lot of anger surrounding this issue.
Anger from fellow tax payers who don’t want their money to go to bailout homeowners or the banks.
Anger from homeowners who followed the rules, but have found themselves in an unimaginable financial position.
The underwater homeowners are trying to work with the banks to come to an agreeable solution. But as you can see from all of these stories, the banks (for the most part) refuse to take any responsibility for their part in this mess. Why should they? The government keeps pouring money at them without resolving this issue. A bank can foreclose on a house with an underwater mortgage holder, even though it is financially more beneficial to keep the current homeowner than to foreclose. Then the bank turns to the government and says “give us more money because we can’t stop these foreclosures”, and the government says “oh, ok, here’s another $500B”.
It is absolutely in the bank’s own best interest to resolve a possible walk away by modifying the mortgage instead of letting it foreclose. Yet they refuse to do so, why? Because they will get the money they need from the government (tax payers) to stay in business.
Everyone should be angry. But the group that is most angry? The “responsible” underwater homeowner. Not only is their tax payer money also going to bailout the banks and the irresponsible homeowners, but they are left holding a home that has suffered so much in value, that they do not qualify for any assistance.
Now, I do not agree that any tax payer money should be used to help the under water homeowner or the bank that holds their mortgage. This issue is between the homeowner and the banker and can be resolved without using any tax payer money. But the banker is unwilling to take any responsiblity in the value lost, because the bank also holds no position in the upside if the house appreciates in value. What needs to happen is that the bank and the homeowner to need to share in the current loss and share in any future appreciation. It doesn’t have to be equal, but someone needs to give. I read this article/paper from the University of Chicago that basically proposes using legislation to force the banks to modify mortgages. For those of you who are “responsible” underwater homeowners, I think you will find it absolutely fascinating. And for those of you who are not, you should tell your Congressmen/women that the country should do something like this, instead of throw more tax payer money at the problem. http://faculty.chicagobooth.edu/brian.barry/igm/Chapter13prepack.pdf

I am underwater in my mortgage in the Phoenix, AZ area by 45% or ~$100k. I have not missed a single payment on anything, ever, and I have perfect credit. But I refuse to continue paying for the situation I am in when I had aboslutely nothing to do with the cause. The bank’s lowered their standards to unconscionable levels and have created this mess that I and many others are in. They need to share in the responsibilty of their actions. And I will share in any future “windfalls” that may happen if prices go back up. However, like many others here, I do not believe that is going to happen. If they refuse to work with me, I too will walk away.
Blame the banks for refusing to work with the homeowners. Blame the government for throwing tax payer money at a problem that does not need it. But don’t blame the underwater homeowner for being stuck in the middle of the fallout from a money-making scheme that the banks created.

I hear alot of complaining and a lot of self righteousness…but so few solutions!

The last comment is absolutely wrong.. If the bank forcloses and has to sell your home and they receive more money than you owe…. by law they must give it to the home owner. If they lose money, they can file suit to recover the loss. Walking away is irresponsible and wrong. It does nothing but devalue your neighbors home. Nice way to treat your neighbor. Also, we are about at the bottom of the housing decline. If you want to see your investment make money, hold on.

I purchased my home in 2004 with my then ex-wife. Upon seperation the home still had a little equity, but we still would have taken a small loss. We attempted to sell, but no one was buying mid 2006 since home prices were still relatively high. She eventually refused to pay and walked away leaving me with the full responsibility. The house was well upside down by then. I am in banking and understand the importance of strong credit which now more than ever is important to have. Lenders are much strict and scrutiniz every part of your credit report and loan application. I opted to try to keep the home to protect my credit and honor my commitment to my lender.

My lender(Aurora) has refused to work with me since I am current. I have made several request to modify my loan. I have not asked to reduce my loan balance. I decided to move out and rent and have someone rent my home. I found a rental for $700 per month and I am currently renting my home for $1300. The difference has helped and I have benefited by writing the home off as a loss. This does not cover my net loss, but does help. I am paying off my debts and expect to have equity in 5 yrs and no debt except for my first mortgage. Home values then will still be affordable and I will likely have an investment property by that time with equity that I will likely keep to benefit my taxes. I will probably purchase a new home at that time and stop renting. It is difficult in the short term, but I have made a lot of sacrafices which will benefit me in the long run.

Admittedly, the presidents new proposal is interesting, but since I can’t afford to live in the home I will not qualify.

I understand to a point why people walk away, but I also know that they will struggle in the future. Their immediate gains will not worth it in the long run especially if they can afford their payments now. Try buying a car, getting a job, or insurance. Yes, you legally can apply for a new home loan with in a certain time period after a short sale or foreclosure, but good luck. Poor credit will affect you in more ways then you ever imagined.

The only people I can support walking away are people that have the ridicoulous loans with payments that double or triple. They were wrong to take these loans, but often suckered by the brokers and lenders.

When you buy a home, the bank makes your home become the collateral for the loan. When you walk away, they take the home; if it appreciates, they keep the money; if it depreciates, they chose poor collateral–a bad business decision on their part. Walking away, this may be your family’s best business decision!

Very soon, the Media must stop blamming the Borrowers for the Housing Problems.
The banks want you to believe that every borrower was running a Ponzi Scheme on the Lenders.
We do NOT invest funds without doing the “Due Dilligence!”

Why were the Banks so stupid? – GREED!

The Banks try to also blame the Government for forcing them to make the loans! – CRAP!

The Government has given Billions to the Banks and they will NOT make loans.
They made the previous loans when the Government gave them Nothing but an oppurtunity to Fail!
How can they accuse the Government or the Borrowers for making the problems?

Whatever happened to personal responsibility? Funny how when the market is down, you people want to walk away. But what if the market was up like a few years ago, would you welcome us to your house and share your profits? Stop asking for others to bail you out, take some responsibility to your own action so our kids can learn from it.

Here’s the scary thing that no one seems to recognize: the impact of owning an underwater house on your ability to repay new debts. Credit scores are used to assess your ability to repay a debt. So, don’t you think the credit bureau’s will eventually take into account how far underwater you are? If you have 750 credit today but are $200K upside down on your mortgage, won’t banks want to take that into account when you apply for new credit? I’m not saying that it is currently the case but eventually the FICO score is going to have to change to reflect this reality. In other words, everyone that is sticking with their upside down home in hopes of “saving” their credit will likely be screwed soon anyway.

ya know I am tire of folks telling others that they should play by a set of rules that are own government does not play by. My wife and I waited for this crash before we bout. Even so we are still losing money on this house. Oh well I did expect that. However to bail out others who had no reason to be in the homes they live and pay down their mortgage is total shit. I have lost about 20 k so far. Its like buying a car LOL. Maybe Obama will pay off some of my principle too.

“Bad Credit equals no new job, no new car, no new house, some won’t take you on a rental.”

The only part of this statement that is true is the no new house, but who wants a new house in this market it will drop 30% by next year. Now new car is really a favor more than anything else as it will allow you to save more money. No credit cards is the same thing, without credit cards you are less likely to get in trouble… though I will continue to have my credit cards and not carry a balance getting paid $400 a year by the credit card companies to use their cards. Hardly any employers check credit records so its unlikely a bad credit score will make employment more difficult. It might be harder to rent, but if you don’t have any evictions from previous landlords you will probably be fine.
Also we paid into social security like everyone else. I’d gladly stop paying social security if the government wants to walk away from me on it.

I have read alot of stories about people walking away from their homes. My first ? I bet most people had heavy dept before you bought your high dollar home. Rule 1 how to clean up your mess you got your self in. Look at all your bills how munch interest per month are you paying out. How much goes on principle. Bet interest is alot higher. 6-1/2 years ago I had 2 car payments 27,000 credit card bills Harley loan. One day I took a good look at the mess I was in and was paying out almost 2,300.00 a month on interest did not like it. told myself what a dumbass I am. Total household income at that time 42,000 paid all credit cards of paid off all car payments and harley also. Income now around 65,000 give or take a little. Worked my but of but did it. Also at the time owed 60,000 on the house. Now less than 38,000 on the house 07 Tundra 05 Astec 02 harley all paid for 07 tracker boat owe 13,500 onley bill. 16,000 saved it can be done

Do not touch your retirement money. If you have to file for bankruptcy they will not be able to touch it. That money is exempt.

Anyone thinking about walking away from their home needs to realize that they’re walking themselves in to bankruptcy. You will have to file or face repaying the amount lost. Foreclosures just don’t go away. It may take years for them to come after you but the bottom line is they will come after you at some point to try and recover their losses. It’s not a good feeling knowing they can come in to your house at any point and take your stuff and auction it off or garnish your wages and bank accounts.

If you’re ok with filling bankruptcy do some research to know what you’re going in to. You may be forced in to a chapter 13 which means the courts are going to be controlling your income for the next 5 years.

This whole situation can be extremely stressful and drag on for years and take a real toll on your health. I wouldn’t willingly walk away from a house I could afford.

Doug Mitchell from Dallas, Texas – I COMPLETELY agree with you. I am 30 years old, degreed, and have been saving for the right moment to buy a home. However, it seems that moment will never come around since I’m bailing out those who shouldn’t have purchased a home in the first place. If we continue to bail out the banks and other reckless borrowers…. what kind of message will we be sending to our children? Speaking of kids, at this rate, I realize I’ll never be able to afford kids of my own because I’ll be paying (via my taxes) college tuition fees for Suleman’s 14 children…. So now, all you folks whining about being victims of the housing market, quit your crying… the real victims are the honest, responsible citizens who waited and are still getting burned.

If you bought a home and no longer can afford it you should not be bailed out. Instead you should be forced into bankruptcy and not allowed to buy again for 7-10 years. Obama and his cronies are teaching American’s that accountability is not important and that “poor me” is the new way of life. I don’t want to subsidize my neighbor!

America…you are lazy. Get off your butts and make it happen for you! My Gramps worked 3 jobs to make a better life for my Dad. Dad put in long hours to make a better life for me. I hustle and work hard so my kids have a better life.

Lost your job? Go get another. No jobs in your industry? Look elsewhere. Mop floors. Mow grass. Paint houses. Buy cars, fix them up and sell them. Do something, anything to make some money.

Oh yeah, if you have kids, take care of them. Read them a book, take them to the park, teach them to be responsible.

All of our problems in America stem from irresponsible behavior and pure laziness.

Ruth-

I would have your husband find any job that. Something that will pay the bills so you don’t have to access retirement. I can’t speak for what field he’s in or the searching he’s done, but from what I’ve seen in my area people just aren’t looking hard enough.

Most people are looking for things that will be the dream job

People were offered 100% loans and at short term interest rates to match their existing rent payments. They had nothing to lose when they walked out.

Hey Anonymous who wrote” No, the solution is for those who cannot pay to walk, and to fulfill your destiny, and become RENTERS. Then your payment will be what you can afford.” You clearly aren’t thinking this through and didn’t buy at the height of the market. Unless the market takes care of the people who are struggling due to buying at such high prices, the economy will dump and your house, which you claim you can afford will be worth nothing too. We need to fix the housing situation if any stimulus or bailout is going to work. We are in this mess b/c of the housing market. Everything is a result of it.

Had my home re-appraised for a refi this past month. The thing appreciated by more than 10% over the past 13 months I’ve owned it. I’m lucky to be where I am and I still have a job to support my family.

All of those thinking that the best thing for them is to walk away from their homes and their commitments (you did sign a contract, did you not?) are only stabbing their neighbors and friends in the back because you may get a black eye on your credit score for the next 10 years, but THEY have to deal with a foreclosure next door dragging down their property values even further! Shameless and narcissistic is what that is.

To everyone out there that says walk away you will have no bills and save a bunch of cash, this is a tired argument and this is what is wrong with this country, a bunch of people that feel as those they are entitled to something. This is the result of schools not allowing dodgeball or tag to be played on the playground because they say that it hurts kids feelings. Well guess what kids, this is the real world and there are losers. These are the times that really show who is able to face adversity. I know that the job market isn’t doing well but I garuantee that if you go on Craigslist right now there are a ton of job openings, it might not be in the field that you currently work in but its something. People think that because they have an MBA they are too good to be serving people food at restaurants, but sometimes that is what you need to do to survive.

And to everyone that is saying to walk away and that your credit score will only be low for 3-7 years, ha, good luck with that. I hope that everyone realizes 2 things, 1) that foreclosures and short sales, while there are a lot of them, they represent an extremely small percentage of the mortgages out there. The reason this crisis is so bad is because of the globalization of debt i.e. derivatives. So when this country comes out of this there will still be over 90% of people that are paying their mortgages on time, so that is what the banks will be basing their decisions for credit on. So don’t think that you are going to be 1 of 30 million people that has bad credit, you are going to be 1 of 3 million and the banks still won’t lend to you because the other 90% still have good credit. 2) That there are a lot of new young people coming to the market such as myself that have good credit and are going to or have bought houses, so we will replace all of you that walk away, you think that the bank is going to miss your business, not really because I am stepping in to take your place. So go ahead walk away and rent for the forseeable future. But just ask yourself one question: If you had a friend that borrowed $1000 and he paid you back $200 and said well I can’t afford it or I don’t want to pay it and walks away, would you loan him another $1000 or even $500 3 years later? What about 7 years? What about 10 years? Banks have a long memory, thats all I am saying.

Everyone can keep complaining about the banks but you signed the contract they put in front of you. So if you don’t want to deal with them buy a house cash, end of story but don’t put me and all the other people that do our jobs and pay our bills and taxes on the hook for your tab just because you want to be part of the latest fad, but I know that I am wasting my breath.

I totally agree with Doug Mitchell.

This nation is becoming more divided and polarized by the day and the endpoint of that should be obvious.

The atrocious decisions being made now are going to destroy this nation and the United States of America is finished. Just a matter of time now.

You all are going to have your children and grandchildren suffer the horrors of being conquered. Yours may deserve it due to your ignorance and stupidity, mine do not.

If our economy was an actual “Free Market”, which it is not, businesses and individuals that took on too much risk would suffer the consequences of their decisions. Plain and simple.

The great beauty of a Free Market is that it provides an incentive for smart investment decisions by allowing the consequences of poor investment decisions (bankruptcy, foreclosure, liquidation, and etc) to occur.

If our Federal Government would simply GET OUT OF THE WAY and allow the liquidation of bad assets to occur, we would actually find a bottom in the economy to which we could begin rebuilding.

The result we experience from continued government intervention is a much a longer recession.

Don’t get me wrong, this recession will be very painful for some businesses, individuals, and families. An while I do empathize with those who are losing their homes and jobs…I absolutely do not agree with removing the only incentive for making smart business decisions…which is the risk of failure.

Our Federal Government is creating too much moral hazard in the economy, and we witness its effects each day as the Stock Market goes up and down based on the content of speeches that are delivered by our Elected Officials.

If our Federal Government wants to restore Confidence in the market it should do so by making sure that we all play by the same rules, that businesses and individuals, that Wall Street and Main Street are accountable for their decisions.

The key word for 2009 is – ACCOUNTABILITY

April 1, 2009. National Walk Away Day!

You all have wonderful stories ..but this is a market..if you cant afford something you move out and rent or trade down..

People need to be responsible for their own finances. Im looking forward to when the government cant give you any more freebees and you have to eat cat food when you retiree.

Cause remember,its OK to walk away right ? So when it comes your times to collect social security the program will walk away on you.

Thats OK,, Enjoy today !! Dont save for the future…

I have a question. My husband was laid off last November. We have gone through our 3 month emergency fund. Should we start accessing our $40K in retirement funds to meet our “moral obligation” to pay our mortgage or let the bank have our house? I know we will have to pay a 10% penalty and taxes if we withdraw (it’s not a Roth). I am 37 and my husband is 42. I have a job for now (I’ll find out if I’m laid off next month – it doesn’t look good). We bought the house 4 years ago and have little if any equity.

JERRY FROM WARWICK,

“To say that this crisis was predicated on homeowner’s decisions to purchase more home that they can afford is ignorant and unfounded”

SO YOU ARE TELLING ME THAT YOU CAN AFFORD AN LEXUS ON A $30,000 SALARY BECAUSE THE BANK SAID YOU CAN? ARE YOU SO DUMB THAT YOU CANT MAKE YOUR OWN DECESION? THIS IS WHY WE ARE IN THE MESS WE ARE IN.

Why should anybody be bailed out? Why should stimulus money be given to people who owe more than their house is worth? What if I put down more money and have been paying extra to pay down my mortgage, but I paid the same price as you who want free money from taxpayers?

No, the solution is for those who cannot pay to walk, and to fulfill your destiny, and become RENTERS. Then your payment will be what you can afford.

People have been losing their jobs for years, and have lost homes as a result. Don’t know of any “government” programs that pay off people’s houses who lose their jobs, if so, I might lose my job soon.

Looks like the overwhelming masses of debtors have nationally unionized, and become so powerful that they are raiding the national treasury. That means you.

Sorry….I must say that America is no longer a dream… You have to swallow it….

By the way….I paid my home in CASH…

GO Ahead and walk everyone…..It should effect everything you do for the next 10 years owning a credit card will be a privilege in a couple of years. Bad Credit equals no new job, no new car, no new house, some won’t take you on a rental.

You will have banks coming back sueing you for years when they get caught up.

I BOUGHT MY HOUSE TO LIVE AND AND INTEND TO PAY IT OFF. ONE YEAR ITS $425,000.00 one years its $300,000.00
one years its $500,000.00. you people are all idiots. I always looked at I would raise my family and die here.

Hint you are an idiot if you ever get an ARM that means you can’t afford it. A first grader can figure that out.

The way it looks we are going to have alot of people roaming the streets. Just gotta gun you won’t be staying here.

Damn right we are greedy unethical bastards with no sense of right and wrong. We’ve been studying from the masters of the universe since the Reagan revolution and are only now figuring out the real rules of the game. Get what you can while the getting is good. To hell with everyone else and society at large.

I don’t like it either and I’m in fine shape. But if this ethic is going to change, I’m not asking an unemployed howowner to start this new trend on his own. An it’s damn sure business won’t take the lead, they brought us here. As soon as the Merril bonuses are all returned we can start discussing this again.

I have seen a lot of comments talking about a homeowner’s moral obligation to remain in their home. What about the immorality of usury or the offering of credit to earn interest? If a home is a place to live and provide shelter, then how moral are we to rob people of their quality of life, so that we can make a profit?

I really laugh hard at many of your comments. With the amount of money I am saving I won’t need credit. I have a great job and I’d venture to guess even if I didn’t about 90% of employers don’t even run a credit check. The funny thing is I probably have a better credit track record than most of you. My FICO was 810 before I decided to stop paying on my mortgage. I printed it out so I could show a potential landlord when I go rent in a few months. You can cry all you want, but people who walk will make out ahead of people who don’t over a 5-7 year period plain and simple. I would owe $355,000 on my mortgage in 5 years, but based on how much I am currently able to save there is a good chance I’ll be able to buy a house outright in that time frame. You aren’t bailing me out, you are bailing the banks out. I don’t need a bailout because my purchase was protect by non-recourse laws.

My comment/question is Why do either the credit card companies or Transunion actually penalize me for paying down my credit card balances? By actually lowering my FICO score, seems this is a must to look into.I am fortunate to have this ability, I pray for the rest of the World. Have a good day.

Everyone who owes more than the house is worth should walk away. Eventually Obama and tax payers will take care of you.

I own four houses, am single with one home with a 5 year arm, that at the time was pretty standard. I have A paper credit (760 FICO) and am current on all mortgages with a six figure income. However, one property in Las Vegas (where I used to live and I rented because I could not sell it in 2006) has devauled about $200k, so I am upside down by $100k. Since my arm becomes due at the end of the year it will keep adjusting from 5% on up. I have asked the bank to refinance at the same rate or close to the one’s I have on my other 3 properties (5-6.5% 30 year fixed). The same bank (wells) holds all 4 mortgages. They won’t budge because I have no equity in this property. I am not asking for anything extrodianary, I can pay my loans, but I won’t make a payment at 10% for a property that I am upside down in by $100k because the bank refuses to refinance at a resonable rate. So they take the payments on a loan that is representative of my income, payment history and FICO, or I walk away because it keeps adjusting well beyond what is realistic on a what is now a bad investment. I am not cryin, I made a lot of $, but I won’t throw away an extra $500 in interest payments because the bank thinks they can get it. When that happens, I go buy a new car, a new house, then walk away and eat a forclosure for a few years until my credit rebounds! Not everyone who is in a shady situation did shady loans or is broke, some of us won’t accept Bank BS. The irony, I applied for a 30 year fixed and wells fargo talked me into an arm. So Wells says if I fall behind for 90 days, they will consider refinance. REALLY-GOOD PLAN!

Every day that I read the news I smile. Suckers bought homes in the worst market EVER. You were stuipid, now you can reap the rewards of being STUPID. You either did not or did not care. So you get what you deserve. I am in CASH. For 5 years I saved the money I would have spent on a a home and it is safe. one day I will get the deal of a lifetime thanks to the idiots that bought and then had to walk away. So leave your home today- DO IT NOW! Thank the God for stupid people.

My husband and I bought our house 7 years ago. I never in a million years thought that i would be approved as i had a bankruptcy on my credit. We were approved by citi at a 10% interest rate. We have fallen behind,struggled to get caught up,been taken to court and threatened with foreclose by citi. But my husband and I feel this is our home, we are raising are children here. I feel we were taken advantage of by citi,I feel we were not educated about buying a home so yes we do accept some responsibility for our very high mortgage that we struggle to pay. But this is our home and we will continue to pay our mortgage even though it is a struggle.I would like to see lenders work with those who do want to do the right thing instead of threatening to take their home.

I am totally against the government bailout, but I am also considering walking, not because the price of my home has fallen, but by the way my mortgage company has treated me over the last 4 years. 4 years ago my wife became ill, and my youngest son was diagnosed with Autism and The dot com bust basically left me going from contract to contract that had me out of work 12 of 48 months. They would not work with me then, and now that my wife has gotten her degree so she can work again, and I finally have a steady and somewhat recession proof job, my house is upside down and the bank just wants to raise my payments. To the banks I am just a number, no moral compass what so ever in what the did or doing now. So why would it be a moral question on my part? This is strictly a business deal, nothing personal, so saying that if you walk away it’s immoral is like saying illegal parking is immoral. No it’s business, and If a company was selling you a shoddy product you would take it back right?? well why is a house different?? they sold shoddy mortgages so give them back to the banks and let them learn to do them right and give better customer service and quit trying to hide and cheat people.. then our banking system will be whole again….

Americans seem to have it easy when it comes to getting rid of debt obligations. I see this new 8000 first time home buyer credit and that you guys can deduct interest paid on mortgages….simply amazing. We don’t have that here in Canada. Then again things are much stricter here.

This is the ultimate example of people with no patience at all. Of course many things we buy either lose or lose and gain value. All cars lose. Most mobile homes lose. But htey have utility and I consider that to be value. I sold my house in 04 and did not buy. When things get less expensive, I will buy again.

That makes sense to me.

But if I had a house, I would look at its value and my signed obligation to pay for it.

Val.ues may or may go up. I expect them to increase.

But that is not the point.

Utility counts, too.

WISH I HAD KNOWN ABOUT WALKING AWAY BEFORE I GOT FORECLOSED ON, WOULD HAVE BEEN BETTER FOR ME. HAD TRIED TO RE-FINANCE ARM MORTGAGE, WHEN CALLED MORTGAGE CO, WAS TOLD THEY WEREN’T DOING THAT IN MY AREA, AND THEY HUNG UP ON ME. DIDN’T CARE AFTER THAT.

I wish I had walked away. Instead after putting down 25,000 and living in my home 3 years, I lost my job and foolishly refinanced with an ARM. in 2 years my morgage went from 1500 to 3600 monthly. We threw everything we could at it including our saving, stocks at 16,000, family loans then finally left flat broke in 06. See they would not refinance because we, by now, did not have excellent credit. Basically, they stole our home by at first over appraising it so we could not sell it, then refusing to refinance. I owed 177,000 when I moved in and after paying 140,000 I now owe 165,000! I wish people would understand what is going on out here instead of pridefully judging those of us who have suffered at the hands of professional thieves.
I pray for those whose families are in the same predicament.
Denise in Texas

From reading here it is quite clear that the majority of Americans have no ethics. Bad lending is just that bad lending. It takes two to make a loan. The borrower and the lender. No body held a gun to your head an forced you to sign a contract for a house loan. You dumb people who paid $300K or more for those houses in the 90’s and early 2000’s deserve what you have now. Banks who made loans with nothing down deserve the reposessions and losses they are getting for that stupid practice. And frankly, I’m damn madd at having to bail all of you dumbasses out……….

I have to laugh at some of the comments which both champion the free market and criticize those who would walk away from their mortgage. Using free market ideals, each individual would make the decision which is best for their own interests — which in many cases is walking away.

In fact, saying that someone should hold on to an underwater mortgage ‘for the greater good of the country’ is socialist ideology.

To all you arrogant “angels” that are walking away from your houses, Thanks.
Thanks for making the problem worse.
Thanks for making my property worth even less.
Its time for all of us who are doing things right to take a stand. I personally hope you all end up living in your cars and cardboard boxes. You dont deserve to be homeowners EVER. Its too bad I can sue every last one of you for everything you have. You all make me sick. Pathetic wastes of oxygen. Blame everyone but yourselves.

My family farm is bought and paid for, no debt, I personally love these short sales and foreclosures. Everybody needs to walk away please! If the auditor valued the thing at 50 dollars I would be ecstatic, because that is less taxes I will have to pay! PLEASE WALK AWAY FOLKS! I’m not greedy, and I’m never selling, so all of you walk away, drive down the values and save me some money! To all the morality folks, you voted for the wonderfully moral right wing nuts who started this mess, so go preach your morality to someone who CARES!

stop paying for massively underwater loans and have them force you out or walk. $5B in “performance” bonuses when the company loses $18B and needs $120B in fed guarantees as well as losing tens or hundreds of billions of investor funds? Greed is good is the recent American motto. The system is rigged so the rich, greedy, and unethical win. If you are ethical and responsible you lose. You would feel stupid to continue to pay somebody who steals money from you and won’t even talk to you. Pay cash, live independently, start shopping the underground economy.

First off, that dude from Brazil’s an idiot. Secondly my family just went through a year’s worth of mortgage hell but we made it. In 2006 I was forced to take a large paycut (somehere in the neighborhood of 20k). We found that we could no longer afford our home so we put it up for sale early the following year. Then we were informed that our property value had plummeted and were in no way going to be able to pay off the mortgage with the sale of the home. So I contacted our lender and entered into a short sale agreemtnt. Two written CASH offers later, and a continuing refusal of acceptance by our lender I attempted to initiate a modification diologue with the bank. HA! They stated that they “did not DO modifications or payment deferrals.” You know what? That was a load of horse***. I immediately contacted my state’s attorney general’s office, the department of banking, the state’s housing & finance administration, and the housing & urban development department. I then went to court with my lender because the state of Connecticut demands mediation concerning these types of matters. Two weeks after my initial court date and by direction of the state, my lender came back with new terms, a 4.8% interest rate for the life of the loan, set the years to 25 and wrote down 185k. Our payments dropped by 1900 a month. The lesson: banks initially want to play hardball but once your state gets involved, they’re toast. DON’T GIVE UP HOPE.

Since October 2008, We have refused to pay another dime to WELLSFARGO on our mortgage.
WHY?! The Government bailed out the cirminals and sent us the bill .
ENOUGH! is ENOUGH !
We now receive harassing calls daily, threats, and tell them that soon they too will be put out of their misery.
CORRUPTION ! From the President to the Priest.
CFeld – Washington, USA

I have been in the mortgage industry for 13 years now. I have seen many different situations from many different people. The bottom line here is GREED. This is why our economy is the way it is right now. Nothing is ever enough for most people out there. Credit does not mean what it used to anymore. I can give someone a better rate on a loan if they have a 580 score then I can to someone that has a 739 score. That is what does not make sense. Why spend your enite life building your credit when the Government will give you a loan as long as your score is 580. And at a better rate. If any of you that are not behind on your mortgage have called your lender and asked them for any help I can guarantee that they told you to call them after you miss two payments. Let’s contuinually reward the people who have made bad decisions and are not real good with their money. I have come up with an idea for April 1, 2009. This could be the biggest April Fools joke(but not a joke really) in years. What if every single person that owns a home decided not to pay their mortgage that month. On top of that they do not pay May as well. This may be the only way for us people that live within our means and are responsible to get our piece of the bailout. Keep our money ourselves. This would force the banks to do something if they were getting no money from anyone. If the banks are going to give me a 4.5% rate if I miss two payments, I am in all day long. Yes it will negatively effect my credit but at 4.5% who cares!! I will never have to refinance my mortgage ever again because rates will never be in the 3’s. Not too mention you can get an FHA loan as long as your mortgage history is clean for 12 months. And credit is about the most screwed up system as well but that is for another day. So 1 year from May 1, 2009 you could qualify again for another mortgage. God bless our government. It is all about knowing the system and how to work it. For those of you who pay your bills, let’s face it we are not going to get anything from this bailout. If we all quit paying our mortgages then something drastic needs to be done by then or then they all go out of business and no executive gets any bonuses. I have spoken to numerous people who think the April Fools’ joke makes a lot of sense. Let me know your thoughts. You can email me at brich@fobanc.com. That would wake this country up and the greedy banks and government very very fast. They want to play hardball with us, let’s play it right back and put the ball in their court. If they want all of our homes that have less value then come get them. Here are the keys. They do not want the homes. This bailout is supposed to help so let;s call their bluff and find out. Good day.

I walked away from a home about 15 years ago. I realized that no matter what I had gotten in way over my head with the house. I knew I could struggle along before I lost it, but in the end I knew I would. I made every attempt to sell it to no avail and then lost it.

It was a hard decision, but I now know that I have to be realistic when I buy something. Sure I might be doing well today, but tomorrow, who knows.

In the last 3-4 years anyone with a pulse could buy a home and did. Now they are learning about payments, missed payments and foreclosures. But there are a lot more out there that are in over their heads and headed for forclosure that would be better off getting out before they lose everything.

We are barely making it. We bought the $350K house on 2 incomes, primary residence. Then we both got hurt and had 2 operations within 90 days. Not elective surgery, unbearable pain, required surgery.

Even at 90% medical coverage we had to spend our entire emergency fund.

As a result of the medical condition, we lost one income for good. I just got hit with a pay cut.

Skating on thin ice is a stressful place to be.

To sum it up, this is one of the big reason’s this country is in the shape it is,IT’S NOT MY FAULT!Let someone else take care of it.This country is doomed and being dishonest is just a way of life now from the top to bottom.The sooner it implodes the better, we need a good cleaning of the gene pool.

America is no longer a dream? Learn from Brazilians you say?? you can’t be serious Edson. Try moving to a civilized and Democratic nation before you start making such asinine comments. Being an American, I can’t even walk in the streets of your country without being held at knife point for my pair of Nike’s. So before you start criticizing us Americans for not being responsible you need to look at what’s around you, a land of poverty stuck with technology and recklessness from the 19th century….

Many of the comments here are beyond disgusting.

Those of you who are contemplating walking away and think that all you will suffer is a “ding” on your credit ratings are still as delusional as you were when you committed yourselves to a house you now want to walk away from.

Going forward, credit scores will define you and your character in most all things. Tried to get a job lately? How about insurance?

Once we (if) we make it through this crisis, caused by many of you who now want to lay blame everywhere else but on yourselves, the banking and credit industries will be absolutely unsympathetic to those of you who stiff them now. They will remember you. That “ding” will be an ball and chain around your necks for many years and will demonstrate itself in insurance refusals, job application rejections, and of course, absolutely no affordable credit whatsoever.

This isn’t about morality, it is about self interest, it’s about actions and consequences. If you really believe that you can pull this off and get away with it long term, I am not in the least surprised that you are in this trouble to begin with.

Listen up…you guys are the problem, you are making the problem worse for yourselves as well as everybody else. The problem is now global and if you think you will walk away and it will solve all your problems is the height of arrogant denial.

Enjoy your new found “financial freedom” from the perspective of the permanently unemployed. At least you’ll have lots of company.

Self centered morons.

Walking away when you can pay for it is violating your legal obligation. Shows lack of integrity and responsiblity.

If someone had a contract with YOU to pay back a $300k loan, and they stopped paying, you’d press criminal charges. But when you do it it’s ok? I say double standard. People want to have their cake and eat it too. So sad. That’s becoming the American way tho.

Every one loves to talk about how irresponsible we are.
I am 25 years old living in NYC.
How am I irresponsible? I can not afford a house on a decent salary. Homes here are still at $450K after falling quite a bit. Median home incomes are around 60-80K. So almost all homeowners here would be classified as irresponsibl because they really cant affor the home.
The problem is that home prices went too high to unaffordable levels, not that anyone was irresponsible.
Furthermore the same older generation who same ones who are blaming us all.

Walking away is nothing more than a criminal act….the same as shoplifting or robbery….you are doing it to those of us who work hard, pay our bills and make smart decisions. When you bought your overpriced house did you actually think it was going to keep going up in value. Give me a break. One of the problems in this country is people like this who would walk away and let the rest of us pay for their stupidity. You made a decision, signed a contract and at the time were happy. Now you need to fufill your commitment no matter how tough it will be. Those who do not should be thrown in jail and barred from ever getting a loan again.

And I would like to know if any of the appraisers, real estate people and lenders who helped in this bubble will ever be held accountable…..they should be tossed in jail too. But I have yet to see where any thought is even being given to holding those people accountable. So who is dumber, those who work hard and do not hold the loosers accountable or the loosers themselves.

No, I haven’t walked away from a home, am not underwater, and am not considering walking away from a mortgage.

If I had paid twice what the property was worth, and was deeply underwater, I would definitely consider giving the property back to the lender (who already holds the title) and walking.

Lenders were in cahoots with the sellers and appraisers to try to drive prices (and their fees) up; I have no sympathy for them.

The lenders have much more money (billions) than the borrowers (little or nothing). The lenders really need to sit down and renegotiate with the borrowers: lower interest rates, longer terms, lower principal, etc. If the lenders won’t negotiate, the borrowers probably should just give the property back and walk. No foreclosure, no bankruptcy. It’s all in the contracts.

Guy from Pomona:
How did you get them to do that? I heard that Wells Fargo does some weird deal where they take your home and essentially short sell it back to you. They are pretty much the only lender I have heard of that does principle mods though. I haven’t heard a single person with Countrywide that has actually gotten a principle reduction.

Reading through these comments makes me sad for our country. Why isn’t financial education required the first or second year of high school? Why wasn’t a law passed along with the bailout requiring a personal finance course to graduate high school? Personal finance is not calculus; it is not difficult!

It doesn’t take a rocket scientist to know that an adjustable rate at a time when rates were near historical lows was a bad idea, or to understand that someone selling you a loan is in sales – you don’t rely on them to tell you what you can afford!

People are so short sighted, which is what got them into this problem to begin with. The real estate market has always gone in cycles, just like the stock market. Prices will rise again, but not at the idiot pace they had during this decade. Walk away and see the cost of loans skyrocket. By the way, our children say thanks in advance.

I agree if we as americans were more responsible and didnt take in as much as we needed we would probably be in a better much smarter situation. I am blessed to say im in good standing. I dont need a big house or to fancy car many should learn from the well thought out.

Notice how many of the people who are far underwater and want to walk are form some very specific states. California, Florida – where speculation was rampant. This problem is isolated to certain states, and those states should have to deal with it.

I feel sorry for the individuals in the difficult situations I have read about here.

However, the lack of accountability I am seeing in many of these posts really scares me.

Too many want a “heads I win, tails you loose” scenario.

Do what you need to do in your individual situation and do not listen to what some of these people think is right for them. Some people followed all the right rules to purchase their homes but thanks to MR BUSH and his 8 years of ignorance and war, many of those people have lost their jobs and can no longer afford their homes but they did qualify and could afford them originally.

Jason,
This housing market will not ever recover. If the economy starts chugging along again tomorrow and housing stops falling it won’t suddenly gain back all the value it lost. For many who bought at the height of the bubble you are looking at 2 decades to see the price you paid. It isn’t really anything like the stock market because you put your own money up when you buy a stock and many people will pull the money out if they believe it will do better somewhere else. Essentially by walking you are pulling your money(the monthly payment) out of the housing market and putting it back into your pocket. For people like me that can rent for half the price you pay on a mortgage this is the only choice that make sense. I guess it would be more like the stock market if you put 20% down, but most of the people who bought at the peak put little or like me nothing down.

You have to wonder if people fully understand what is going on out there? People blame the sub primers for starting the mess, but what about the banks that changed the debt ratios from 36 % of gross income to 52%? What about the bank that would allow a house to close in the morning on any given day, and then turn around and finance it for 100K , to another buyer THAT afternoon?? What about the car dealer that would get people financed up to 120%, with nothing down???? Drive it off the lot and not only does it depreciate in the first mile, but your still paying for your old car in the price of the new one!! Beleive me, it went on, I witnessed this first hand as an employee for several major builders in Florida. How about the builder that dropped its base price 100K on home in neighborhoods they were half done building? Then filled for bankruptcy because they couldn’t manage the business, leaving home owners with half done homes as the neighbors, unfinished amenities that they paid for in the closing costs. It amazes me the comments and the opinions people have, when in fact all they are hearing is what our government is telling them or what they have heard second hand. Most don’t really know what they are talking about. They live their own little world, thinking what goes on outside their back door, is what goes on in the rest of the world. I do forclosed home inspections for a living, most of these homeowners are or were hard working peolple that made a mistake, one that was held out there like a big juicy steak in front of a dog….one that was pushed by the banks, the realtors, the builders and good old Uncle Sam. I am looking at more houses now that I was 2 months ago, it used to be that there was one house in a neiborhood, maybe three or four in a town, I looked at 3 on one street today, 24 between 9am and 1pm, I have 9 guys working under me, 40 plus in three states, they will all do approximatly the same amount, 7 days a week and we are one of many companies out there…..wait and answer this question in a month or two. I hope all of you trying to shame these people into keeping their properties, or telling them to do the right thing never end up in the situation. I speak to people all day who are humiliated this is happening to them, they don’t have it easy….ever try to even rent with a foreclosure on your credit? Thier hard time are only begining!

I think that americans should learn from brazilians how to live in a responsible way.
Our banks are strong and I do not know anyone that is “underwater” down here. To get a loan in Brazil is a very difficult task, and we are used to live as we earn and save. You cold say we that’s why we are a poor country but I would reply saying that we are poor because we did pay too much interest of our foreign debt to Citibank and others during th 80’s and 90’s.
Sorry to say America is no longer a dream….

I agree with Paul in Denver. So many people have the idea that they are entitled to everything. That is a completely wrong perception to have and it only rubs off stronger on the next generation.

A lot of you are talking about the value of your home. There is no value until you actually sell it. It’s just like a stock. This is an “unrealized” gain or loss. Right now your home may have an “unrealized” loss, but in time when the economy turns around this will change. Then you’ll be happy about all the equity you have. Don’t walk away from your home because of some number you have been told.

I am walking. I laugh hard at some of you idiots on here calling for people to work 3 jobs to stay in their underwater house. Have you looked at the job market lately? A lot of people are having trouble getting 1 job much less finding 3 employers willing to work around each others schedules to provide you with 3 jobs. That is idiot talk. As for me I have a fairly stable job and make decent money, but I am walking. My house has fallen 60% since I bought it with no money down. I’m fine if I never get a loan for a home again because quite honestly with how much they have fallen I will probably be able to pay cash for one within 5-6 years. Saving 40k during the foreclosure process goes a long way when the median home has gone to from 400k to 180k and keeps dropping 5-10% every month. To the people crying the morality in America has changed you are dead wrong. The only thing that changed is that banks stopped requiring people to put 20% down. If this had happened in the 80s the crash would have been much worse. Why would I stay in a house worth 200k less than I owe when I put absolutely none of my own money into it.

I was in a similar situation in 1995 (unemployment was quite high then within a recession). I had no income, no job or alimony, divorced, and had no choice but to sell my small rancher, but I got a nice profit because we had purchased the home 19 yrs. before that. BUT SELLING THE HOME WAS THE BIGGEST regret of my life! The day I handed over the keys I knew that real estate would bounce right back and I’d NEVER be able to afford to buy another property! I rent the same crummy place to this day and cry every month that I write my rent check! Don’t sell if you can afford to keep up with the costs of staying in your home! Real Estate will go up, it always does! Good luck to you!

Here is one more for all you angry responsible people; I planned on walking away from my 308k mortgage I was paying 2200 a month. I have not paid in 13 months. When I first decided to stop paying on something that was worth 150K i tried to make arrangemnts with Wells Fargo, they practically laughed at me the rept said “when you had equity we did not ask for our share why should we lower your debt now just because you lost equity” After that phone called, I ignored them and just waited. House was set to auction on Dec. 2. I was ready to move out with my 22k that I had saved. Never heard anything from them. Two monsth later I get an offer from wells fargo. (hold on to your seats it will make you angry) they agreed to write off 153K off my loan plus all delinquent amount lowering my debt to 155k with payments of 704.00 a month! with an interest rate set at 4.5 for life!! So my suggestions to those people who are underwater, credit is good but is not worth struggling to make a monthly payment on something that has no value and will not have value anytime soon. Banks created this mess by lending and making a quick profit out of us now the government should have been watching them and prevented them from making these poor lending jusdments!! Im happy i have my house paying 1500 less a month and my savings account has 25k more. Oh and my credit is ruined! Guess I will be making cash purchases now.

If I were in that situation, I would walk away instead of ruining my health and stressing out over it. If GM goes bankrupt, I will be giving my car back to them. If they can’t honor their commitment to me, I won’t be honoring mine to them. I can understand why everyone is frustrated, because all of the big banks and corporation are being rewarded for their bad behavior. In today’s economy, you have to think about yourself and what is best for you, because no one else is going to do it for. Walk away, move on and start a better life for yourself.

For Jason in Cincinnati, OH.

Your wife would not be eligible for the First-Time Home-Buyer tax credit. Or maybe you know this and you don’t care because you’ll take your chances that you won’t get caught in an IRS audit.

I think there is a common theme here… people hate taking responsibility for things and making good on their own mistakes. This goes for the lenders, the buyers, the government, and I’m included. We just need to learn how to admit to our own mistakes and learn from them BY TAKING RESPONSIBILITY FOR THEM. IF WE DON’T TAKE RESPONSIBILITY FOR THEM (OUR MISTAKES), WE WON’T LEARN FROM THEM.

We’ll just keep making these mistakes well into the future.

Why walk away The new President will just pay for your mortgage if you can’t. Gotta Love the U.S.A –United Socialists of America. Y’all watch what happens when this goes in effect, more and more people-myself included- will stop paying.
Honestly if you can’t pay you can’t stay. NO way we should be paying for other people to have a home. Its not a RIGHT its a priviledge.

We saved for years and finally bought a new construction rental property in Perris, California in July of 2005 from the builder. The builder agreed to rent it back from us and keep it as a modle home which they did for the next 16 months. We put down $115,000 on a purchase price of $459,900. I have seen us and those like us described as “Yuppie Scum” on TV by Ann Coulter and others because we made such and investment. In November of 2006 the builder completed their lease and we spent every week end for an entire year trying to sell it and it is 62 miles from where I live. I am a mortgage broker so was qiuckly able to qualify those potential buyers who had an interest and have never seen such a large assortment of people who couldn’t buy steam off a hamburger.
The values started falling and business was very slow so I was draining my savings until August 2008 to make the payments. I then contacted Suntrust Mortgage to try to modify the loan or give them this New Model house which was now worth about $250,000 called “A Deed in lieu of Forclosure” but thet refused. They said they wouldn’t work with me till I was 2 payments behind so I stopped making payments. Then in October 2008 I called them to try to modify the loan. It was then they told me they wouldn’t work with people who owned an investment property. The home is now worth perhaps $190,000 as virtually all sales in the area are forclosed or short sales. I have now lost $157,000 and now labeled Yuppie Scum by TV commentators and even the President as his home owner rescue plan specifically exempts investment properties from help in his spend all the money we don’t have bill.
Now it looks like when this finally forclose’s I will get a 1099 from Suntrust for debt forgiveness of about $135,000 because again investment property owners are specifically exempt from the new IRS ruling stopping debt forgiveness be passed on to people who are losing their primary residence in foreclosure.

It’s irresponsible that CNN would even be putting this nonsense out there. Your mortgage is a contractual agreement. You either go into bankruptcy or you pay your mortgage. Anyone who bought a home in the past 7 years because they thought they could get out in a couple years and make a buck are nothing more than Speculators!!!! There are risks and rewards for being a speculator!

I don’t see this dilemna as a “moral” one. I see it as a “contractual” one. Each individual has to make their own decision about breaching a contract and the consequences they will face if they do. I also think this nation has become a “give it to me now” country. If we don’t see results immediately, we dispose of it and move on. Owning a home should not be viewed as an investment, per se. It should be viewed as a place to live…period. Greed got the best of many people and dollar signs from potential appreciation in a short amount of time. Restraint and, quite frankly, any intelligence, were thrown out of the window in favor of keeping up with the Jones and getting a piece of the greed pie. We buy many things in life that DON’T appreciate in value. I don’t see people complaining about the “negative” value of their car, jewelry, furnishings, etc. It’s greed and stupidity that got us into this (lenders, brokers, banks, consumers). Those who “lost” will have to suffer and feel pain – and maybe they will be smarter next time and not so greedy.

I purchased my home in early 2006. This week a house down the street from me, which is exactly the same as mine sold for 125,000 less than what I paid for mine! My family has decided to walk away and use the money we save this year to buy again in 2 years. We will be able to buy something larger for less or buy the same as what we have now for about half the price. WAKE UP AMERICA your mortgage company only cares about your money and what you can give them! I feel we are doing the right thing.

I purchased my home wi