New York Times: Walk Away From Your Mortgage!

[DeadManCrawling]

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html

[OHBOY]

Right On............yah, I REALLY like to hear lectures from somebody like Paulson, who in my eyes is nothing more than a scumbag

[HHM]

Here Here...Good Article.

[AngelinaCatHub]

Thank you DMC for bringing this to my attention. I am usually too busy to read a lot. 'Hub

[justbroke]

I love it. This is the strategic default. I despise the HMA person who tries to use "guilt" to keep people in homes that they can't afford.

[LimpDisc]

Great article. Have a friend that did a strategic default.

[Mi Bankruptcy]

excellent article.

[JRScott]

I think this is a good article

[momisery]

Growing up we had hero's, people we wanted to be like. Superman, Superwoman, Rifleman, Lone Ranger.. etc. We learned strong good morales from these people and we have lived our lives by those principals. Americans in general do not like someone "getting away with it". We like honesty, and respect, good clean living, good jobs, good education, good opportunities for our children, and we love our Red White and Blue strong hard working fun loving nation... if we have gone down a less than moral path I will suggest it was set "by example"... That example has been in Washington for 30 years, in business for decades as they could care less about Red White and Blue and their country, and more about "theirselves" It is the "trickle effect" that was so wanted by Bush, the we could care less about if business or government survive or fail, in fact we want the other party to fail so we look better and that has trickled down. Of course we have also enjoyed the Clinton effect of trickle up, where our money trickles up to business, government and in building other nations .. building their factories and using cheaper labor on our wealth... So, there you have it.. it is the economy ... lol

[HakunaMatata]

My strategic default was wrapped up with a big BK bow.

Thanks for sharing DMC!

[PoorGrammyinBK7]

Here's a scenario for your comments: I have friends who bought a small home in 2003 for $88K, with 10% down. They made a few improvements (carpet, bathroom remodel - about $4000). In 2006 I think it was, they refinanced to consolidate some other debts. At that time, it appraised for $142K. They borrowed $112K. They recently received their tax notice, with the value at $62K. This, unfortunately is in line with recent sales in the area. They have been paying, but its a struggle and their credit card debt is rising because thats making up the difference.

If - and only if - they should ever ask me, what would you tell them? I am thinking they really might be better off to just stop paying and live there as long as possible and let the house go. The neighborhood is really going down with so many foreclosures and the properties are not being cared for. I don't see it going back up for many years.

What other repercussions would there be, besides the hit on their credit?

[DeadManCrawling]

Grammy,

If they are eventually going to lose this place anyway, and it sounds likely, I would suggest they move on as soon as they can and save money that would otherwise be spent on the house, maintenances, HOA, taxes, etc. Now, I would qualify that by saying that they should also be able to rent for substantially cheaper, the same or equivalent home. If they cannot, then they have larger problems to address as well.

Repercussions are ruled by state law, mostly. In a recourse state, the lender could sue them for a deficiency. This is almost unheard of, but who knows what the future holds. Is there a 2nd loan, HELOC, or any thing like that? If so, that could be pursued for up to 20 years or settled. If they could not settle, the lender for that 2nd loan could sell it to a collector who would hound them.

If any of these are an issue, BK is a good deterrent for collectors.

It is more detailed, but this is a general roundup of the bigger issues. All in all, they need to do what is best for them, and that is definitely not feeding the credit cards to try to stay in a home they cannot afford.

Best,

-dmc

[bktmom28]

This was a great article. I am so confused as to why all these mortgage giants don't save themselves some time and money and help struggling homeowners. We too bought our house back in 2003 and refinanced it and this year it has plummeted from being worth 180K to 123K. We owed way more than it was worth, mortgage company would not modify loan which caused to us to walk away. Our monthly payment doubled and we struggled for 2 years to keep up with the payments maxing out our credit cards to stay afloat. I wish we would have stopped paying right away and then maybe they would have helped. After we filed BK and surrendered the house, THEN we received a document stating that they would love to modify our loan. OF COURSE they would! It just seems so messed up. Owning a home used to be the American dream, and yet, we are more happy now, after filing bk, and knowing that we don't have any credit or mortgage. One day, I know we will buy a home again, but for now, we are getting our finances on track and I just wish that there was a REAL person out there with some real practical advice for the middle class family. My heart breaks for those familes who have been ripped apart by this horrible time in our country. Credit scores are just a scare tactic to keep people in debt!

[Lynnin]

I think that yes we do send messages to our children...however no one just stops paying there bills..there has to be a reason and CFO might want to look and see who got the "Bail Out"

[albacore44]

My story.

I have lived in the same 1/4 mile area since 1988 which is the year we bought our 1st home, a brand new one in a growing area of the IE. I paid $133K for a nice 1800 sq ft 2 story, on a nice cul-de-sac. During the recession of the 1990's following the 1st gulf war, prices stagnated, and came down to the point where i was slightly under water. this lasted almost ten years. In 2001 homes in the area started selling again climbing fast. in 2002 a few blocks away, a builder bought an old orange grove, cleared it out and started building Mcmansions. we went to see the models,fell in love with one of them, and decided we would try for it. One problem. these suckers were selling like hot cakes, and there was a 25 person waiting list for a limited supply of the model we wanted. through some networking i found out a friend of mine knew the builder, and through some back door politicking, i was able to move up on the list and secured the next avaliable model released for sale. We promptly put our house up for sale, and it sold in 60 days for $270k more than double what i paid, and to think 2 years before it was worth less than i originally paid.
During the next 3 years the builder continued to develop these semi-custom homes, and always had a waiting list. Each new phase released would be priced at least $100k more than the last.Soon they were selling my model for $1m where I had paid $400k. There was constant traffic of people driving by looking at the nice neighborhood hopeing to get in. and the builder was still selling them as fast as they were released for sale

now fast forward to 2007. housing market is in a downturn. some who had moved in and thought they could lock in there equity, sell quick and move on are stuck. nothing is selling. some are stuck in bad loans, cant sell, so they cut their losses and walk away.my house is at or below what i paid in 2003. many neighbors are in forclosure, and i assume are trying for loan mods. unemployment is at 16% in this area. and its not getting any better