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BayArea
@
2012 Oct 30, 7:04am
BayArea
@
2012 Oct 30, 7:04am
How ever 10-15 years down the road, that girl wont stand a chance getting a job, when she shows up at that same persons office for a job interview.
I would expect that she would be the #1 candidate for the job, ahead of you and I.
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Why isn't everyone underwater on their mortgage strategically defaulting?
1. It takes the average foreclosure 600 days to complete. Rounding, lets call it 2 years. (Source: http://allfinancialmatters.com/2011/12/02/the-average-foreclosure-length-631-days/)
2. By definition of being underwater, the owners have no equity left.
3. Median price of a home in '07 was $247,900 (Source: http://www.census.gov/const/uspriceann.pdf).
4. Assume they had a prime loan, for some reason, @ 5% (Source: http://www.bankrate.com/funnel/graph/default.aspx?cat=2&ids=1,-1&state=zz&d=1825&t=MSLine&eco=-1) with 20% down ($49,580).
5. Their monthly mortgage payment is ~$1,0000.
6. After the 2 years, they would have accumulated $24,000 in cash savings. Not to mention not paying for insurance & maintenance. (I assume you have to pay taxes still or face prison time?)
Why the heck wouldn't you default and squat? Am I missing something?
#housing