Walking away from your mortgage

**detroitbred** · December-03-09, 09:43 AM

Wazootyman, there are many, many people who fall into the catagorie that you say are the " only ones you truly feel sorry for". I hope you never have the misfortune that many of them have experienced and have to make a similar decision. The people I know who have been forced walk away did not want to, and never thought they would be in that position. They played by the rules...and had been in their houses for many years, and thru no fault of their own, and circumstances beyond their control .........

**Pam** · December-03-09, 10:15 AM

Originally Posted by detroitbred

Wazootyman, there are many, many people who fall into the catagorie that you say are the " only ones you truly feel sorry for". I hope you never have the misfortune that many of them have experienced and have to make a similar decision. The people I know who have been forced walk away did not want to, and never thought they would be in that position. They played by the rules...and had been in their houses for many years, and thru no fault of their own, and circumstances beyond their control .........

The problem is in the blog linked to above, the author does not make a distinction between those who truly cannot pay and anybody who is just "underwater". If everybody who is "underwater" walks away it will destroy neighborhoods as Wazootyman points out.

**Kevgoblue** · December-03-09, 12:54 PM

Originally Posted by Pam

The problem is in the blog linked to above, the author does not make a distinction between those who truly cannot pay and anybody who is just "underwater". If everybody who is "underwater" walks away it will destroy neighborhoods as Wazootyman points out.

But for many who are just "underwater", the point of walking away is that there are so many homes out there so much cheaper.

So if I buy a home a couple blocks away from where I currently live, how is that destroying the neighborhood? There is still one maintained, occupied home and one vacant home. The only difference is the homeowner has jacked up his credit, but pocketed the 40% difference in purchase price.
This isn't something alot of people "morally" want to do. And its an easy choice to make when the dollar value you're underwater is $10K. That decision gets much harder to justify when that dollar amount represents hundred[[s) of thousands of dollars.

**johnsmith** · December-03-09, 02:02 PM

Originally Posted by wazootyman

Ugh. I cannot believe anyone recommends just "walking away". First and foremost, when you signed your mortgage papers, you KNEW that it was an investment, and like all investments, there is a risk for loss. But, unlike a typical investment, the consequences of walking away spread to everyone in your neighborhood. Your house has lost value. Suck it up.....

I don't like to look at one's home as merely an investment. But if looking at it as an investment, as many seem to do, leads me to these conclusions:

1. You don't owe your neighbors squat. They also "invested in the area." They took the risk and will take consequences of the neighborhood declining too. Why prop up other's risky investments with your own money when there is nothing in it for you, especially if you can't afford it?

2. You "invested" in your house. In an investment that tanks, a wise person takes the minimum amount of losses they're comfortable with then bails out while the losses are minimal.

3. When you signed your mortgage papers, the bank also knew it was an investment with a certain amount of risk involved. That's why they take the house as collateral. They agreed to those terms in the case of a mortgage default.

4. As in #1 above, the banks took a risk too. They accepted the consequences of mortgage defaults. Why prop up other's risky investments with your own money when there is nothing in it for you, especially if you can't afford it?

I had a few more in my head, but they flew away quicker than the State of Michigan's property tax revenues. And again, these are thoughts derived from looking at a home as merely an investment with the dollar as the bottom line in all decision making. I know there are other variables to weigh, but if houses really are investments like some people insist they are, then the dollar is all that matters.

**softailrider** · December-04-09, 06:30 AM

Want to hear a sad real estate story, in March of 1985 I bought my house for 111000.00- that was a helluva lot of money back then. After the down payment, closing costs, moving costs and everything else my bank account was wiped out. Still living in the same house, love it here, love the neighborhood, never had a bad word with a neighbor in all the years I've been here. About 4 months ago a guy down the block lost his house, sheriffs deed went through, they threw him out and put his furniture and clothing out on the lawn. That house got sold almost instantly for 108000.00! Plus the guy who bought it got the 6000.00 first time home buyer rebate or whatever the hell it is.

At one point, my house was easily worth 300,000.00, it's on a big two acre lot, beautiful subdivision, in mint shape, no issues at all. Now, I would be lucky to get 150,000.00. That's some investment- isn't it?

Bearinabox · December-04-09, 06:47 AM

Originally Posted by johnsmith

And again, these are thoughts derived from looking at a home as merely an investment with the dollar as the bottom line in all decision making. I know there are other variables to weigh, but if houses really are investments like some people insist they are, then the dollar is all that matters.

Well, that's kind of the problem, isn't it? Thinking like that is extremely dangerous.