[Beena]

Originally Posted by Randy Culture

Anyone who keeps paying a mortgage on an upside down house is a fool and deserves poverty....which is what they'll get.

Be a man and take your losses and walk away. House prices aren't coming back.

Be a man, take your losses, and walk away......yes that is one possible choice.

But I really hope nobody will rent to you with your single digit credit score and you have to move in with mom and dad.

[kainers]

This is a serious shades of grey area... morality doesn't have place in business...but I can see the ethics of the situation and trying to do "right". The fact is, for some people, walking away provides a substantial amount of savings, short term, and long term...but it does snowball falling values for the surviving owners. Kind of like, all these companies cutting hours, and laying off..then wondering why people don't have money to come spend at their own company...

Is there a maximum credit score boast per year? Someone asked me this the other day...I should look it up. Just wondering if people could counteract the negative aspects of foreclosure with being a super consumer?

[ClarkGrisowld]

If you have a negative net worth, then it's hard to argue with walking away. But, personally, I think bankruptcy court should take every last penny you have.

Definitely a gray area for someone who is still making enough money to comfortably cover their payment. That person might be 200k or more in the hole, but I guess if you crunch the numbers and still figure to come out ahead with a higher borrowing cost after defaulting then more power to you.

The numbers in favor of walking away are fairly staggering, even with a high interest rate once you factor in a much lower mortgage and the potential upside from a recovery in prices.

Kind of a bum deal that people who were responsible get the shaft, but I'd rather be underwater and still have some savings then be bankrupt (which anyone who walks away should be taken to court to collect every last dime).

[dgrilley]

Originally Posted by ClarkGrisowld

If you have a negative net worth, then it's hard to argue with walking away. But, personally, I think bankruptcy court should take every last penny you have.

Definitely a gray area for someone who is still making enough money to comfortably cover their payment. That person might be 200k or more in the hole, but I guess if you crunch the numbers and still figure to come out ahead with a higher borrowing cost after defaulting then more power to you.

The numbers in favor of walking away are fairly staggering, even with a high interest rate once you factor in a much lower mortgage and the potential upside from a recovery in prices.

Kind of a bum deal that people who were responsible get the shaft, but I'd rather be underwater and still have some savings then be bankrupt (which anyone who walks away should be taken to court to collect every last dime).

I'm 200k upside down and walking. The bank does not have the option of taking any of the money I will have in the bank including any of the $30,000 I'm saving that would have been mortgage payments while it takes a year to foreclose. Even in the cases where they can sue someone I'm hearing that they mostly don't. Gotta love CA and our non-recourse laws. Around here, because of how bad the market has crashed, walking away from your home has almost 0 social stigma and I seriously doubt it will be harder to rent. Especially in the case where the only mark on your credit is the foreclosure. By the way how did those of us underwater 200k not get the shaft? The new housing plan only helps people who have little or no negative equity. Why should those of us underwater subsidize those mortgages while paying our own horrendously underwater mortgage?

[dgrilley]

Originally Posted by airics

Right and for 7 years, your credit will be shot! So do you think in 7yrs, its not coming back... If you have your own business, and need credit.. you'll never get it... Your credit cards will be closed, they will sell the account to some scumbug debt collector and in 15yrs you'll still be trying to get it off your reports!
Just curious, what is your credit score now and prior to this mess....

They aren't going to close credit cards if you default on a mortgage. Why push inaccurate scare tactics to try to make people stay in underwater loans? I've already had a notice of default filed on my property and my credit cards haven't even upped my rates much less closed accounts. Also how are they going to sell your debt when they aren't allowed to collect on it? A lot of home loans are non-recourse meaning the banks isn't even allowed to try to collect the difference from you. My FICO credit score was 810 prior to this mess and I expect it to be 610-630 after its over. And by the way if you think housing in CA 7 years from now will see the prices of 2 years ago you are sadly mistaken. No one expect more than 4% a year once its done going down and it isn't even done going down yet. I calculated my loan and it takes 20-25 years to come back to what I paid 2 years ago at 4-4.5% a year.

[skisickie]

I don't give a monkeys nickle about my credit score. I do care about my family and if you walk you will have problems. Don't think you won't
If you are upside down 200k you really didn't think before you jumped. IMHO

[airics]

Originally Posted by dgrilley

They aren't going to close credit cards if you default on a mortgage. Why push inaccurate scare tactics to try to make people stay in underwater loans? I've already had a notice of default filed on my property and my credit cards haven't even upped my rates much less closed accounts. Also how are they going to sell your debt when they aren't allowed to collect on it? A lot of home loans are non-recourse meaning the banks isn't even allowed to try to collect the difference from you. My FICO credit score was 810 prior to this mess and I expect it to be 610-630 after its over. And by the way if you think housing in CA 7 years from now will see the prices of 2 years ago you are sadly mistaken. No one expect more than 4% a year once its done going down and it isn't even done going down yet. I calculated my loan and it takes 20-25 years to come back to what I paid 2 years ago at 4-4.5% a year.

Wanna bet... Bank of America and American Express are reevaluating your accounts... If you do not have a 750 score, you aren't approved for American Express... if you already have the card, your limit is reduced to $1000 within your balance... With BoA, the score is lower to be approved... If you have a interest only loan, your available credit will be lowered...If you have a foreclosure, you lose the cards period.. I was on the phone screaming at them yesterday since i have an arm loan... I have great credit, my limit went from 55k down to 28k

[gulfer]

Clark, I completely agree with your post. I'll say I'm in different about walking about, I just honestly don't think I could do it, but won't judge as I am not in other peoples shoes. But I do think that your savings, 401K, etc... should be fair game for the mortgage holder to go after.
If you buy a new car for 40K, after the first 1000 miles it is now worth 33K, you're 7K under, do you walk? No you pay.
But a Rep Point for you Clark and thanks for the great point.

[rpachigo]

Originally Posted by dgrilley

They aren't going to close credit cards if you default on a mortgage. Why push inaccurate scare tactics to try to make people stay in underwater loans? I've already had a notice of default filed on my property and my credit cards haven't even upped my rates much less closed accounts. Also how are they going to sell your debt when they aren't allowed to collect on it? A lot of home loans are non-recourse meaning the banks isn't even allowed to try to collect the difference from you. My FICO credit score was 810 prior to this mess and I expect it to be 610-630 after its over. And by the way if you think housing in CA 7 years from now will see the prices of 2 years ago you are sadly mistaken. No one expect more than 4% a year once its done going down and it isn't even done going down yet. I calculated my loan and it takes 20-25 years to come back to what I paid 2 years ago at 4-4.5% a year.

I think you're onto something.

[jfkIII]

Originally Posted by airics

Wanna bet... Bank of America and American Express are reevaluating your accounts... If you do not have a 750 score, you aren't approved for American Express... if you already have the card, your limit is reduced to $1000 within your balance...

Not true. I have a 721 score, an Amex and an Optima card...no such thing has been done to my credit limit. Maybe there are other factors? Outstanding debt? Past history with company? Or, maybe, the area you live?