AZ Underwater Homeowners Walking Away - Morality, AZ Republic Article (Scottsdale: sale, real estate)

[Beena]

When your home goes up in value 100k, the bank does not make a "business decision" and take the home back from you.

This is called the bank honoring their end of the contract.

When your home goes down in value 100k, the homeowner should not be allowed to walk away without recourse.

This is called the homeowner honoring their end of the contract.

Morality has nothing to do with it. When the day comes that we allow people to default on contracts en masse, our economy will collapse.

I made a stupid real estate purchase in 2005 and wrote a 25k check at close in 2007 when I sold my underwater real estate gamble. Did I make a dumb purchase? Yes. Did I pay for it and learn something along the way? Yes. Did the taxpayer shoulder my burden? No.

If you took a stupid real estate gamble, do the right thing and own up to it.

[Ponderosa]

Originally Posted by Beena

When your home goes up in value 100k, the bank does not make a "business decision" and take the home back from you.

This is called the bank honoring their end of the contract.

When your home goes down in value 100k, the homeowner should not be allowed to walk away without recourse.

This is called the homeowner honoring their end of the contract.

Morality has nothing to do with it. When the day comes that we allow people to default on contracts en masse, our economy will collapse.

I made a stupid real estate purchase in 2005 and wrote a 25k check at close in 2007 when I sold my underwater real estate gamble. Did I make a dumb purchase? Yes. Did I pay for it and learn something along the way? Yes. Did the taxpayer shoulder my burden? No.

If you took a stupid real estate gamble, do the right thing and own up to it.

I beg to differ. It's a business decision not a morality issue. Screw them. If you paid off a non-recourse loan at sale then you were dumb when you bought it and dumber when you sold it. Stop your pontificating.

[ArizonaBear]

Originally Posted by Beena

When your home goes up in value 100k, the bank does not make a "business decision" and take the home back from you.

This is called the bank honoring their end of the contract.

When your home goes down in value 100k, the homeowner should not be allowed to walk away without recourse.

This is called the homeowner honoring their end of the contract.

Morality has nothing to do with it. When the day comes that we allow people to default on contracts en masse, our economy will collapse.

I made a stupid real estate purchase in 2005 and wrote a 25k check at close in 2007 when I sold my underwater real estate gamble. Did I make a dumb purchase? Yes. Did I pay for it and learn something along the way? Yes. Did the taxpayer shoulder my burden? No.

If you took a stupid real estate gamble, do the right thing and own up to it.

Tough call there:

Assuming the buyer is still capable of making the mortgage payments (especially if is a low one to begin with); that individual would be immoral IMHO to walk away.

[YAZ]

Originally Posted by Ponderosa

I beg to differ. It's a business decision not a morality issue. Screw them. If you paid off a non-recourse loan at sale then you were dumb when you bought it and dumber when you sold it. Stop your pontificating.

When your "asset" becomes a liability, time to let it go.

Businesses do it all of the time for tax purposes.

I agree.

A pure business decision.

[rammie]

I agree with you Beena. The same thing happened to me, I brought high and sold low but it was my guilty concious to still pay although I lost a lot more then you....Hopefully things will turn around in the future and we will get our money back in other ways..

[adolpho]

The loan is secured by the prooperty; they get the property back, nothing more. It's a non-recourse State.

I do, however, have no sympathy for the guy in the story. He bought at auction for 51K in '91, and is a player in every sense of the word. I'm sure he spent 15 years telling people about his smart buy, just like I brag about paying 22,000 two months ago.

[backtochitown]

I also believe at some stage it becomes a business decision...but there are significant ramifications to 'dumping' your house...credit killed for at least 7 years...potential loss of future jobs based on poor credit...and it may not be easy to rent either due to poor credit unless you pre-pay many months up front, etc.

Bottom line is if your place is heavily underwater and you have a stash of cash and don't care about your credit it may make good financial/net worth sense to dump it and put your $ towards something that isn't a lost cause.

Of course others...lost job, illness, etc...may not even have a choice but people who can afford the payment DO have a choice and yeah, ethics and morals wise, it pains me a bit because I personally have never had to be bailed out but this is the way it is these days.

I do take solace in the fact I was able to sell our Scottsdale home in 2005 for about 4 times what we paid for it...and I was able to take advantage of that windfall without having to buy back into an overheated market because of a 2nd home we had at the time which we moved into full time...on the other hand when we sold this home last year we took a 5% loss on it but unfortunately we owned it outright and didn't have the option of bailing out on a mortgage (hopefully a low down payment one!).

Heck, it used to be a good thing to not have a mortgage but nowadays it may be stupid to NOT have a mortgage that you can potentially bail out on if you have to and only lose your low down instead of owning the whole thing and risking a huge loss.

[Bummer]

Originally Posted by Beena

When your home goes up in value 100k, the bank does not make a "business decision" and take the home back from you.

This is called the bank honoring their end of the contract.

When your home goes down in value 100k, the homeowner should not be allowed to walk away without recourse.

This is called the homeowner honoring their end of the contract.

Morality has nothing to do with it. When the day comes that we allow people to default on contracts en masse, our economy will collapse.

I made a stupid real estate purchase in 2005 and wrote a 25k check at close in 2007 when I sold my underwater real estate gamble. Did I make a dumb purchase? Yes. Did I pay for it and learn something along the way? Yes. Did the taxpayer shoulder my burden? No.

If you took a stupid real estate gamble, do the right thing and own up to it.

I could not agree more, Beena . . . BEAUTIFULLY STATED.

For those comparing your example to a "business decision" . . . I absolutely disagree. It is an UNETHICAL business decision and, YES, it is done all the time but that definitely does not make it acceptable. These are the same people constantly complaining about rising taxes . . . who else is going to pay for all of these poor "business decisions"?

Probably one of the primary reasons the rules for declaring bankruptcy have been changing over the last few years.

Wouldn't life be great if we only has positives and were never forced to accept a negative?

[checking out]

Businesses have been walking away from debt for decades under the guise of corporate protection.

It's up to the creditor to bear certain risk and to go after the debtor. Good luck to them with that.

[backtochitown]

Originally Posted by Bummer

I could not agree more, Beena . . . BEAUTIFULLY STATED.

For those comparing your example to a "business decision" . . . I absolutely disagree. It is an UNETHICAL business decision and, YES, it is done all the time but that definitely does not make it acceptable. These are the same people constantly complaining about rising taxes . . . who else is going to pay for all of these poor "business decisions"?

Probably one of the primary reasons the rules for declaring bankruptcy have been changing over the last few years.

Wouldn't life be great if we only has positives and were never forced to accept a negative?

It may tough to swallow and 'unethical' but it IS completely legal and the proper recourse for MANY people.