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Old 07-06-2011, 10:17 PM
 
Location: North Cackelacky....in the hills.
19,567 posts, read 21,796,411 times
Reputation: 2519

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Again(seems this is a difficult concept) it is a business decision and neither party is losing out.
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Old 07-07-2011, 03:08 AM
 
Location: OCEAN BREEZES AND VIEWS SAN CLEMENTE
19,893 posts, read 18,372,667 times
Reputation: 6465
This is strange for me to answer but i will answer it truthfully. I do live in an upscale area, in my area, homes are selling in the million dollar range and up. No one i personally know has had to walk from their mortgage because they are upside down. Homes are selling, and getting close to the rate the sellers are asking. One across the ST. from me right now is up for $1.5 mil don't know if they will get that price or not. It is not a short sale or a home in foreclosure, a regular listing.

Now to be honest with you, i do have a lot of friends who live in middle class areas, very nice, large homes, big lots, and 3 people i know of right now, are underwater and walking from their homes. What i do not understand is, when i ask them where they are going, they say renting. What does not make sense to me, is when their new rent is almost as much as their mortgage, this confuses me. If you really do not have to move, why not stay put, values cannot stay down forever, in my area they are up. Even up from 8 months ago. Wait it out if you do not have to move, some rents are just as high as a owner's mortage. It is crazy because two of the families, can make the payments no problem, but refuse to and they are going to walk, but where are they going, paying rent, does not make sense, the rent is only $300.00 cheaper then their current home, and the homes they are renting, are smaller. Maybe i am not seeing this right, but home values do fall, but at some point they do rise again.
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Old 07-07-2011, 03:47 AM
 
5,365 posts, read 6,301,858 times
Reputation: 3360
Quote:
Originally Posted by BruSan View Post
I disagree; you can blame them if they OVER extended themselves by buying something they should not have been able to afford if they were performing even marginal due diligence on their budgeting.

You purchase a home knowing the sub prime note you've signed is going to come due in 5 years and then your payments are going to balloon but you buy it anyway "assuming" the value will continue to rise but, ooopsy, the sun fell out of the sky so now we're upside down on our financing.

Walking away is just another manifestation of what's wrong with society today; NO responsibility and consequences for having made a bad decision. It doesn't take fortitude to walk away from a debt; just the opposite is true. It takes fortitude to fulfill an obligation. If you can make the payments you should not be walking away period!

Your lifestyle goes into the crapper and you have to relinquish the lease on your "beemer" and buy a hyundai pony, tough! You can't afford to eat twice a week in four star restaurants and are now obliged to clip coupons to shop with, tough! Vacation expenses have to be curtailed and you're now spending your week off in the back yard, instead of Mauii, tough! Walking to the store instead of hopping into the car for the 3 block trip, tough! Fast food out of the question and you're actually having to plan your weeks eating around the specials at the Winn Dixie, tough!

These little sacrifices are called consequences and they are the logical results of making foolish choices. Man up!
Nope. Sorry. I would walk away. I currently live in a home that was purchased for $700,000. It is currently worth about $300,000. We live in one of the worst hit areas of one the worst hit cities of this recession. If my ex wouldn't have paid for the house in cash we would have walked away with nothing heavy on our hearts. I also have financial morals, but they have a limit. $400,000 dollars in the hole is WAY(!!!!!) past that limit. lol.
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Old 07-07-2011, 07:56 AM
 
Location: North Cackelacky....in the hills.
19,567 posts, read 21,796,411 times
Reputation: 2519
Quote:
Originally Posted by california-jewel View Post
What does not make sense to me, is when their new rent is almost as much as their mortgage, this confuses me. If you really do not have to move, why not stay put, values cannot stay down forever, in my area they are up. Even up from 8 months ago. Wait it out if you do not have to move, some rents are just as high as a owner's mortage. It is crazy because two of the families, can make the payments no problem, but refuse to and they are going to walk, but where are they going, paying rent, does not make sense, the rent is only $300.00 cheaper then their current home, and the homes they are renting, are smaller. Maybe i am not seeing this right, but home values do fall, but at some point they do rise again.
Home prices in some areas will stay much lower for a long long time in my opinion,some places were simply WAY overbuilt AND overpriced.

Now if you owe $100,000 more than the house is worth,how many years will it take to break even?

It could very well take 10 years to just get back to where you aren't losing money,all the while making payments.

What if you were underwater and were told home prices wouldn't rise to where you aren't losing money for another 15 years,would you tough it out?

Last edited by oz in SC; 07-07-2011 at 08:28 AM..
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Old 07-07-2011, 11:51 AM
 
10,854 posts, read 9,267,492 times
Reputation: 3122
Quote:
Originally Posted by california-jewel View Post
This is strange for me to answer but i will answer it truthfully. I do live in an upscale area, in my area, homes are selling in the million dollar range and up. No one i personally know has had to walk from their mortgage because they are upside down. Homes are selling, and getting close to the rate the sellers are asking. One across the ST. from me right now is up for $1.5 mil don't know if they will get that price or not. It is not a short sale or a home in foreclosure, a regular listing.

Now to be honest with you, i do have a lot of friends who live in middle class areas, very nice, large homes, big lots, and 3 people i know of right now, are underwater and walking from their homes. What i do not understand is, when i ask them where they are going, they say renting. What does not make sense to me, is when their new rent is almost as much as their mortgage, this confuses me. If you really do not have to move, why not stay put, values cannot stay down forever, in my area they are up. Even up from 8 months ago. Wait it out if you do not have to move, some rents are just as high as a owner's mortage. It is crazy because two of the families, can make the payments no problem, but refuse to and they are going to walk, but where are they going, paying rent, does not make sense, the rent is only $300.00 cheaper then their current home, and the homes they are renting, are smaller. Maybe i am not seeing this right, but home values do fall, but at some point they do rise again.
They probably see renting as a short term alterative. At some point they will probably going to try to buy a house again. They are probably hoping they can get the same type of home as before at a lower price. Of course they will have to deal with the assoiciated credit issues from walking away from their home and probably pay higher than market interest rates based on that.

I personally don't agree with walking away from a mortgage as long as you can afford to pay it.
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Old 07-07-2011, 12:14 PM
 
13,053 posts, read 12,904,283 times
Reputation: 2618
Quote:
Originally Posted by Recovering Democrat View Post
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?
No.

But then I am also not a person who went out and paid exorbitant amount for a home when I knew it was not worth it and simply bloated in its value.
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Old 07-07-2011, 12:22 PM
 
13,053 posts, read 12,904,283 times
Reputation: 2618
Quote:
Originally Posted by Bosco55David View Post
No, it would not be wrong. People need to do what is best for their financial future.

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.
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Old 07-07-2011, 12:25 PM
 
20,393 posts, read 12,287,178 times
Reputation: 10168
Can you make the mortgage payment? if so the right thing (as well as the smart thing) is to stay in the house and continue to pay the mortgage.

prices fluctuate. selling at the bottom of the market is never smart.

So long as you can pay your mortgage, you stay in the home because
1. It is morally right to live up to your contractual obligations
2. It is financially right to keep your credit sound
3. It is financially right to weather the storm because the value of the home will rebound over time.
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Old 07-07-2011, 12:29 PM
 
6,484 posts, read 6,592,822 times
Reputation: 1275
Quote:
Originally Posted by Bosco55David View Post
No, it would not be wrong. People need to do what is best for their financial future.
I am honestly not surprised that I see you say this.
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Old 07-07-2011, 12:30 PM
 
Location: Londonderry, NH
41,478 posts, read 59,544,333 times
Reputation: 24857
The only reason we would walk away from a mortgage would be inability to pay due to unforeseen additional medical bills or loss of income. Then it would just be a business decision like any other. Having the value drop below the mortgaged amount does not reduce the obligation to pay the loan.

Question – How do stock speculators pay off their loans if they are stuck in a declining market where the value of the asset drops below the purchase price?
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