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You honestly think that walking away would be good for their financial future? Really?
I said best, not good. Big difference.
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Credit ratings are checked by job hires to assess responsibility.
Credit ratings can be repaired. I've helped people remove negative marks on their credit ranging from simple credit card charge offs to repossessions and foreclosures. The tools are there to anyone who seeks them out.
Also there is pending legislation in various jurisdictions that would severely restrict the ability of employers to run credit checks.
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Bankruptcy results in a life time of having to report such to any financial institution that asks.
Bankruptcies can be removed also, though admittedly harder. Even without removing them, recovery is not hard. Someone who properly manages their post bankruptcy credit file can be approved for decent rate loans for cars and such within 2 years or less and often for homes in 3-5 years.
You honestly think that walking away would be good for their financial future? Really?
I am waiting for all those who make this option later on then crying and complaining about how their choice to dump their responsibilities has now closed many doors for them and placed them in a status of severe financial risk for anyone who would do business with them.
Credit ratings are checked by job hires to assess responsibility.
Bankruptcy results in a life time of having to report such to any financial institution that asks.
The list goes on and there are numerous repercussions for such irresponsible behavior.
There is nothing good that.
I see buying a home as nothing more than a gamble if you are trying to make money off of it. Those that bought homes happlily accepted their home rising in value (some took out equity lines of credit etc) but cannot fathom the thought that their gamble didn't pay off (home losing value). There is never a guarantee that you will make money on your home OR that it will hold its current value. It just so happened that for a long time people did make money off of them. Tides have shifted and the homes aren't worth what they paid for them. Too bad. If you are willing to take the equity you ought to be willing to take the loss. That is why I have a problem with walking away from ones obligations.
Bad circumstances happen to people and I understand that some just cannot afford their home any longer. If foreclosure (short selling whathaveyou) is what you HAVE to do it is what it is. If you are walking away because you owe more than it is worth, too bad, suck it up, accept the consequences of buying when the value of your home was inflated.
It's not a matter of debt, but of appraisal. Those who bought
2003-2007 to now - how does a home appraise for let's say
250,000 then down to 90,000 in less than 5 years.
No one in their right mind, would pay twice what a home is
worth on the market, including interest. The federal government might have bailed out the banks.....doesn't
mean individual homeowners need to - especially when banks were responsible for corrupt appraisals.
Buyer beware.
If you overpay for something, you're still responsible for paying for that item.
Be as dishonest as you like, it doesn't affect me; I wouldn't do it.
It's not a matter of debt, but of appraisal. Those who bought
2003-2007 to now - how does a home appraise for let's say
250,000 then down to 90,000 in less than 5 years.
No one in their right mind, would pay twice what a home is
worth on the market, including interest. The federal government might have bailed out the banks.....doesn't
mean individual homeowners need to - especially when banks were responsible for corrupt appraisals.
Buyer beware.
If you overpay for something, you're still responsible for paying for that item.
Be as dishonest as you like, it doesn't affect me; I wouldn't do it.
Um, how many houses were devalued from 250k to 90k?
It's not a matter of debt, but of appraisal. Those who bought
2003-2007 to now - how does a home appraise for let's say
250,000 then down to 90,000 in less than 5 years.
No one in their right mind, would pay twice what a home is
worth on the market, including interest. The federal government might have bailed out the banks.....doesn't
mean individual homeowners need to - especially when banks were responsible for corrupt appraisals.
Buyer beware.
If you overpay for something, you're still responsible for paying for that item.
Be as dishonest as you like, it doesn't affect me; I wouldn't do it.
Um, how many houses were devalued from 250k to 90k, or are you saying that most houses were devalued by 64%?
If a homeowner owes more on their mortage than the home is currently worth, say
Mortgage: $200,000
Value: $100,000
Under water: $100,000
Would it be wrong for him/her to stop making payments and walk away?
it's a tough question.
typically when bad lending occurs, it is the lender's capital, and thus the lender's fault... not the borrowers fault. it's not your fault that the lender happens to also be the taxpayer. i wouldn't lose sleep over it.
We are in this situation. We bought in summer 2007 and we bought for under what the house was appraised for so we thought we were getting a good deal. Well, even just a year later, we were already underwater. Now we owe about twice what the house is worth. We have had a good fixed interest rate (6.5%) from the get-go. When prices and interest rates started falling, we tried to refi and were approved for 4.5% (that's what a credit score in the high 700s used to get you, they didn't even need to verify income) but the house did not appraise out so the refi was denied (even though it's going through the same company, which kind of doesn't make sense to me since they will hold the loan either way). It was okay b/c we could make the payments still with no problem.
Then a year later, we found out my husband was being relocated for his job. We can't sell the house since there's no way anybody could get a loan to cover what we owe. We don't want to just walk away, either. So we are renting it out to a friend. The cost of that to us? We are paying 1/3 of the mortgage out of our own pocket each month. I mean, at least we know our friend isn't going to trash it and he pays on time each month. The upside is that he wants to buy it eventually so he has a vested interest in taking care of it and making some of the repairs (the house is 35 years old). I don't even think we could get it rented out for the full mortgage amount at this point in this economy, so this is really our only option.
The cost of living here in Milwaukee is higher than it is in central Florida so apartments cost more here. We also have a state income tax to pay now. It is a struggle to make ends meet these days and we are looking at ways to cut back (like using cloth diapers instead of disposables, and breastfeeding instead of using formula when the baby comes in two months, my car gets 38mpg even in the city, I use coupons, I don't buy anything not on sale, etc.).
We don't qualify for a modification b/c the house is not considered our primary residence now. It won't appraise out for a refi. We are not in immediate danger of missing a payment (for now) so they will not do anything to help us. The thought of walking away or just plain filing bankruptcy (despite zero credit card debt) is very real for us now. We did not go out and borrow against the house (we have never had equity in it), we are not going out to eat constantly, we don't have a lot of nice things (in fact, when we moved, we sold everything and brought just what we could fit in DH's truck and my car...so we basically started over with just the clothes on our backs, if you want to think of it that way). We were not irresponsible and taking out an interest-only loan or ARM.
I would never tell someone to walk away but if someone honestly could not pay their bills due to circumstances like ours, I wouldn't begrudge them their decision if they wanted to walk away. Honestly, yes, it does drag down the value of the other homes in the neighborhood so it can affect more than just the homeowner, but at the same time, if you're going broke and not able to eat or something b/c your house payment is not affordable anymore, you have to do what you have to do. I don't feel sorry for us, we take full responsibility for our situation. We should not have bought when we did and we should have had a bigger down payment. We thought it was a good idea b/c prices were on their way down but nobody could have predicted that the market would nosedive like it did.
You honestly think that walking away would be good for their financial future? Really?
I am waiting for all those who make this option later on then crying and complaining about how their choice to dump their responsibilities has now closed many doors for them and placed them in a status of severe financial risk for anyone who would do business with them.
Credit ratings are checked by job hires to assess responsibility.
Bankruptcy results in a life time of having to report such to any financial institution that asks.
The list goes on and there are numerous repercussions for such irresponsible behavior.
There is nothing good that.
actually, a BK can even be repaired and a person can still get a loan after 2-3 years. most BKs are cleared within 10 years and won't reflect on a credit report, I believe.
I've always disagreed with credit checks for jobs--I hope the previous poster is right about the removal of that process.
Exactly why should those who borrowed money they could never repay be allowed to walk off scot free?
Trust me, nobody is walking away scot free unless they just plain don't care about money. Credit scores are ruined, they cannot buy another home for years, they may owe taxes on any amount forgiven, they could have a judgment against them for the difference owed, etc. It's not just a matter of walking away, there are decisions that have to be made that will affect the homeowner's future finances. It's not an easy decision, even when you are faced with foreclosure.
Look, I am going to lose thousands of dollars when I sell my house because of these people who decide to walk.
I guess you are one of those who only thinks of himself and you've probably walked away yourself.
What a cop out. You are going to lose thousands when you sell due to the bubble bursting, not b/c of the people who were foreclosed or chose/had to walk away. The economy is in shambles and all of the above contributed, yes, but you have to look at the whole picture, not just blame the people who walked for whatever reason.
I know it's easy to point the finger but it's just really inaccurate of you to say that.
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We have had a good fixed interest rate (6.5%) from the get-go. When prices and interest rates started falling, we tried to refi and were approved for 4.5% (that's what a credit score in the high 700s used to get you, they didn't even need to verify income) but the house did not appraise out so the refi was denied (even though it's going through the same company, which kind of doesn't make sense to me since they will hold the loan either way). It was okay b/c we could make the payments still with no problem.
