patrick.net

Corporations don't feel guilty about walking away from a contract they don't like and they prey on the tendencies of lesser "persons" to wish to pay their debts. Don't do it if it doesn't make financial sense for you. Look at it this way: everyone will be better off when real estate prices are a third of what they are now, and you're helping bring it about.

Everyone is over thinking this. We walked away two years ago from two properties. The practical effect has been zero.
Making a stupid mistake is one thing. Continuing to make a stupid mistake when you know better due to cowardice is another.
People paying on underwater properties are fools. There is no such thing as morality when it comes to making a rational economic decision. Not repaying a friend or relative IS morally wrong but applying the same logic to an arms length commercial transaction is absurd.

Stocks and anyone else thinking of walking away,

Besides the obvious hiding HELOC cash somewhere, if you can HELOC out anymore money married couple can stash a total of 20K into IRAs for '09 and '10 tax years. I think the Supreme Court ruled a couple of years ago that IRA's are pensions and thus cannot be seized by creditors. Besides the IRAs, if you have a 401K loan you can also use the HELOC money to pay off that 401K loan to protect it from creditors, too.

Jerome says

With all of this in mind, we are going to strategically default. Our neighborhood is destroyed by foreclosures and values won’t be coming back for a decade or more. We’ve been here five years and never envisioned it going this way.

No your neighborhood was not destroyed by foreclosures, it was destroyed by buyers over bidding/overpaying on a home where the price wouldnt hold it value down the road. Paying $600-800K for a home which otherwise sold for 200-300K a few years prior is trouble in the making.

http://www.housingbubblebust.com/OFHEO/Major/NorCal.html

Florida is a recourse State 85% sure.

I was bombasted by Mortgage and Real estate Professionals on several occasions with "well grounded facts on why my house would only go up and then I could continually refinance if I bought the house".
I'm trained to think through that heavy sales pitch but I can easily see how so many Americans are in the foreclosure traps they are in... The pitch was extraordinarily well financed and pounded in to everyone by the money machine it was fed by. Of course though it's constantly stressed that Poor idiots bought houses they shouldn't have and it's their fault the whole housing collapse has happened.

Back in my old neighborhood in Texas, you can always spot a walk-away. Overgrown weeds and gang tagging on the house. This in a neighborhood that is only 5 or 6 years old. Wow. Glad I sold when I did.

What I find disturbing is when banks encourage people to cash out retirement savings, or college savings for their kids to pay for their underwater mortgage.

BTW, California is non-recourse, but only on initial "purchase money" loans. Refiancings, seconds, or HELOCs taken out after the purchase of the property are usually recourse loans.

It's the banks job to make certain the money they lend are for tangible solid investments.
Otherwise, then it is true, that the banks are no longer in the lending business, and are nothing more than Shylocks that wants the Vic on the money you pissed away on Gambling on the value of your house.

"Where's the MONEY! Lobowski?!?" (Punch punch punch flush)

"I think I saw down there somewhere, put me back in the toilet and let me see if I can find it."

LOL. Tenouncetrout says

“Where’s the MONEY! Lobowski?!?” (Punch punch punch flush)

Our choices have consequences. I chose not to buy a house but everyone is to blame. I just hope we have learned our lesson about greed and the thought that everyone can win. It all started when we begun handing out 16th place ribbons in school about 25 years ago. I remember because I recieved one. We need to teach our children that you can lose, and lose big.

What do you expect banks to do? They were pimps when they handed out the loans and now thugs when they want the money back. What do you expect?

kdkgf says

Everyone is over thinking this. We walked away two years ago from two properties. The practical effect has been zero.
Making a stupid mistake is one thing. Continuing to make a stupid mistake when you know better due to cowardice is another.
People paying on underwater properties are fools. There is no such thing as morality when it comes to making a rational economic decision. Not repaying a friend or relative IS morally wrong but applying the same logic to an arms length commercial transaction is absurd.

Very good point .. and a great example as to why social engineering being used in lending was a very bad step for the NRA / B.Frank machine to use to ram it to (pun) Fanny and Freddy (and ultimatly us tax payers, since we now hold all the bags (another pun) thanks to The Sodomite, B.Frank.

You see, if all loans were 100% colaterized, and 100% recourse, then the whole game of "walk away, it is not worth what it should be." goes away. But, as the game sits now, you make good points.

Bap33 says

Very good point .. and a great example as to why social engineering being used in lending was a very bad step for the NRA / B.Frank machine to use to ram it to (pun) Fanny and Freddy (and ultimatly us tax payers, since we now hold all the bags (another pun) thanks to The Sodomite, B.Frank.

lol--you still haven't given that one up yet, huh? Even after all the evidence that people here presented you? You're a very stubborn man, aren't you...

CommBap33 says

and a great example as to why social engineering being used in lending was a very bad step for the NRA / B.Frank machine to use to ram it to (pun) Fanny and Freddy (and ultimatly us tax payers, since we now hold all the bags (another pun) thanks to The Sodomite, B.Frank.

An example of the twisted idea of compensatory justice in the Anglo-American government system. How these things perpetuate over time and liberals use it to help the system but don't realize how they are killing the system.

tatupu70 says

Bap33 says

Very good point .. and a great example as to why social engineering being used in lending was a very bad step for the NRA / B.Frank machine to use to ram it to (pun) Fanny and Freddy (and ultimatly us tax payers, since we now hold all the bags (another pun) thanks to The Sodomite, B.Frank.

lol–you still haven’t given that one up yet, huh? Even after all the evidence that people here presented you? You’re a very stubborn man, aren’t you…

lol guess so.

HEYI appreciate the concern which is been loans. The things need to be sorted out because it is about the individual but it can be with everyone. i have taken alot of knowledge from it .
Cheap Loans

fredw says

Corporations don’t feel guilty about walking away from a contract they don’t like and they prey on the tendencies of lesser “persons” to wish to pay their debts. Don’t do it if it doesn’t make financial sense for you. Look at it this way: everyone will be better off when real estate prices are a third of what they are now, and you’re helping bring it about.

Hear hear! I'll just sit on my nest egg and wait to pick up apt buildings. Then those people who walked away can try to rent from me! I'm sure when this happens it will be my fault that I own they rental.