Another late note: Berean, if you're in Washington State contact the attorney general's office if you think you got a bad loan. Rob McKenna's been on a tear about predatory lenders. Even if you're not in Washington, you might contact your AG about your loan. It's a hot button issue just now. The government might as well be useful for something once in a while.
Should I walk away from my "underwater" home?
by The Berean 113 Replies latest jw friends
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dissed
Robdar
My neighbor wasn't a crook. He didn't make the payment AND negotiated a bonus settlement for leaving the house in good condition = $18,000
And to add: He also avoided bankruptcy.
sorry for the confusion
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Robdar
Dissed: sorry for the confusion
oops! Sorry 'bout that!
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leec
I just wanted to say that, even though I may seem antagonistic at times, by the fact that I owe more on my house than it's currently worth, you should all realize I am your Underwater Ally, and to all of you who seek peaceful existence with me, I wish Scotland's local wizards to cast protective spells over us.
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restrangled
Pffft...I was a happy Wamu customer...and it went to Chase....as far as I am concerned they are absolute crooks.
Never had a late payment or missed payment, but they had the nerve to jack me up to 29 percent interest before the new rules went into effect.
I was at 9 percent. Not pretty but tolerable.
Assholex, after they got bailed out by my tax dollars,..... dammit.
r.
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Robdar
Dang, Restrangled! That is pretty shitty. I had CapOne and Juniper try that with me (although they didn't jack it up to anywhere near 29%), I took out a small loan, paid off both accounts and then closed both of them. I pray I do not have to do that to Chase, they are the only credit card I have left.
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sammielee24
You really need to separate the moral from the legal and logical.
It makes no financial sense to keep paying on a property that has devalued to the point that in 20 years, you might break even or still have a net loss. Not sure if you have seen the article about the expensive real estate in NY and the company walking away from it - morals don't factor into it - it's a business and no business will operate negatively.
Call a legal expert and ask for a free half hour consultation on the legalities of it all, the best way to proceed, the ramifications of leaving - just don't stress out too much. Life goes on. It's a house and a learning experience. Good luck. sammieswife.
NEW YORK — Tishman Speyer Properties walks away from 11,232 Manhattan apartments because it can't pay its mortgage. That's good business.
Rick Gilson, a college custodial supervisor in South Dakota, wants to walk away from the mortgage on his mobile home. If he does, he'll be a deadbeat.
Those two borrowers face the same financial dilemma: Their mortgages far exceed the values of their properties. Yet one gets to walk away without guilt, while the other can't.
Gilson is too scared to dump the mortgage on his mobile home. He owes $31,973, but the home is only worth about $14,000.
"I have 12 years of money put into this property that I will never get out," said the 50-year-old Gilson, from Rapid City, S.D. "But I am still paying because this is what I have been told to do. That's what I think is right."
Until now, the focus of the real estate crisis has been on individuals. One in four U.S. homeowners, or nearly 11 million Americans, are underwater on their mortgages. In some parts of the country – Florida, Nevada, Michigan, California and Arizona – the share tops 40 percent.
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BurnTheShips
Should I walk away from my "underwater" home?
I would never advise defaulting on your obligations unless you have no choice. It's a moral thing for me.
BTS
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VIII
There is a college professor who writes an Ethics column. Some of you need to read it.
Here is his blog, which, oddly enough covered this question very recently:
http://jeffreyseglin.blogspot.com/
One of the byproducts of the recent financial turmoil has been a precipitous drop in home values in the United States.
As a result, some home owners are finding that the value of their houses is less than the amount they owe on their mortgages.
A reader from West Virginia writes inquiring about the ethics of homeowners who default on mortgages that they can still afford to pay but choose not to, because the underlying property values have dropped so precipitously that it is financially preferable simply to walk away.
"Is this kind of 'strategic default' blameworthy be cause it constitutes a failure to keep a promise?" my reader asks.
"Or, since the borrower is willing to accept the contractually mandated consequences of defaulting, is it simply a reasonable economic response to the invisible hand of the marketplace?"
The practice the reader describes is legal. The question is, is something ethical simply because it's legal?
If a homeowner cannot afford to make payments on her mortgage and cannot sell her house at a price that will yield enough cash to pay off the mortgage so that she can move on, she might be left with no choice but to default on the mortgage and turn over the house to the bank. There's obviously nothing wrong with this from an ethical standpoint.
A key component of my reader's question, however, is that he's talking about homeowners who "can still afford to pay but choose not to."
It might be a reasonable economic decision to walk away from the property, but is it ethically acceptable?
I think not. A mortgage agreement is not a promise to do one of two things, either to make the payments or to give up the house. It's a promise to make the payments, period. Giving up the house to the bank is a penalty for not keeping the promise, not one option within the promise.
In this regard, the situation is comparable to the law: The fact that the law imposes a penalty for, say, stealing someone's car doesn't mean that a person can ethically choose to steal the car if he is prepared to accept the penalty. The requirement of the law is not to steal the car, and the implied promise of citizen ship is to obey the law, not to weigh the costs and benefits of breaking it.
Every mortgage comes with the risk that the value of the home might go down during the course of the mortgage, and the homeowner knows that going in.
The homeowner promised to make the payments, in return for which the bank advanced the purchase price of the house. The bank has lived up to its share of the agreement, and the right thing for the homeowner to do, if he can afford to make the payments, is to live up to his end.
He should honor the commitment as long as he is financially able to do so.Whether or not the property is worth anything in 20 years is irrelevant. It is a contract that was signed. Like the contract for purchasing an automobile.
Do you purchase an automobile believing that it will go up in value? Do you default on the loan because you decide that the value of your Dodge Dart is now less than the car salesman and your BIL told you?
If you purchase a piece of property thinking that it is always going to go up in value you are stupid and should only be a renter.
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