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A system that allowed people to buy homes for zero down payments is also making it easy for them to walk away.
They have nothing invested in the home, and therefore nothing to lose.
A company called "You Walk Away" offers a service for around $1,000 that helps people to walk away.
If my housing payments suddenly become much more than I could afford and the value of my house had dropped substantially, I think I would be tempted to walk away.
Excess credit and debt is what got these folks in this situation to start with.
Folks with debt problems losing credit -- the capacity to go (furher) into debt -- is about like an alcoholic losing alcohol or a junkie losing their drugs. May be flustrating but is part of the path out if they will take it.
Excess credit and debt is what got these folks in this situation to start with.
Folks with debt problems losing credit -- the capacity to go (furher) into debt -- is about like an alcoholic losing alcohol or a junkie losing their drugs. May be frustrating but is part of the path out if they will take it.
I agree. It's the bank's job to decide who can handle the credit or not.
Some house owners are in above their heads, and they have no choice but to walk away.
You Walk Away is an interesting service. I believe they do more than just handing the keys back to the back. I think they also check the laws in the sate to see how they'll impact your decision.
For most banks, it's pointless to sue these people since most of them have no assets other than what's tied into the house.
The homeowners I really feel bad for are those who have sunk a lot of equity into their homes. When they walk away, they have to face up to huge losses.
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Quote:
Originally Posted by carrot juice
I agree. It's the bank's job to decide who can handle the credit or not.
Some house owners are in above their heads, and they have no choice but to walk away.
You Walk Away is an interesting service. I believe they do more than just handing the keys back to the back. I think they also check the laws in the sate to see how they'll impact your decision.
For most banks, it's pointless to sue these people since most of them have no assets other than what's tied into the house.
The homeowners I really feel bad for are those who have sunk a lot of equity into their homes. When they walk away, they have to face up to huge losses.
Carrot
Although I don't have any experience with this particular company, I can tell you that many companies have come out of the woodwork in the last 9-12 months trying to capitalize on others misfortunes, some of them resorting to fraud to make a buck on these peoples problems. For all I know this particular company is doing the same thing. Ironically, at every one of these companies capitalizing on these foreclosures, you will find at least one shady ex-loan officer that helped to contribute to this mess.
Moral issues aside (I think we covered those on other threads) - is there any legal action that the mortgage company can take against a company that is helping a homeowner default?
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walk away today
Yeah I see a lot of people walking away from there over priced and over leveraged P.O.S. homes. And there credit will be ruined for a little while. But like Philip T said I don't think those people just won't care. Look if I was an irresponsible buyer and I had a choice of stressing out over the next 20 years trying to make payments on a home that has lost value that may not return or a choice of walking away and ruining my credit for the next decade or so and not being able to buy a lot of stuff. I think out of the two bad choices I would choose the second option.
Of course that decision depend on each situation. But I think a lot of people will be choosing the second option in mass for the next couple of years.
Now one good thing that will come from this is that a lot of people that were good girls and boys that either couldn't afford to buy maybe able to get a sane price for a home. Also on the bright side investors that did get caught up in the boom can really make some money in the housing bust. This is because in the long term I believe real estate will recover. Perhaps the home prices will never reach there former highs but I think we haven't even begun to see the bottom in certain areas of the country. So if you time the market right and when you buy at a rock bottom prices I believe it going be hard to not make money when the housing market recovers.
Moral issues aside (I think we covered those on other threads) - is there any legal action that the mortgage company can take against a company that is helping a homeowner default?
No.
Those companies are not doing anything illegal. They provide information and a service.
I agree. It's the bank's job to decide who can handle the credit or not.
Some house owners are in above their heads, and they have no choice but to walk away.
You Walk Away is an interesting service. I believe they do more than just handing the keys back to the back. I think they also check the laws in the sate to see how they'll impact your decision.
For most banks, it's pointless to sue these people since most of them have no assets other than what's tied into the house.
The homeowners I really feel bad for are those who have sunk a lot of equity into their homes. When they walk away, they have to face up to huge losses.
Carrot
Just got back from California on a project. This topic interests me so I chatted the various locals about some of this. Here is what I heard often that NEVER gets reported in the stories we hear -- many of these folks went in seeking earnest honest loans they could repay in good faith.
The buyer did everything by the book and by the numbers. However, what would happen to them, is at closing there would be a "crisis" totally created by the bank/broker. Someway, somehow, the bank/broker could not come through with the deal they offered, but instead would "have to" place the buyer in some sort of ARM and/or what we now call "liar loan." (no document loan, just sign here, we have to close today.)
The standard routine was that the low cost entry loan was promised to be replaced by the originally offered loan in a year or so. Some of these buyers even got these replacement terms in writing. A year later, the original loan terms would be refused by the bank, and they would try to stick the buyer (now owner) in the crooked "bait and switch" loan that had came out at the closing. That bait-and-switch loan had already been re-sold to some holding company on its fake future value of increased rates and returns.
Once may be an accident, a few dozen times some local incompetence or accidental misrepresentation. But in the thousands this is blantent fraud on the part of brokers and banks. The banks that have done these scams on these people have created serious damages to the buyers/owners and even total innocents who just own property in areas were this was done.
So far most folks just seem resolved to being f'ed. Or at most just f'ing the bank back via defaulting and walking away. Being more of a jerk, myself, I would probably run the bank/broker through court as a pro se (no attorney expense) for misrepresentation with the intent of them just giving me the house as compensation for damages to get me to go away. If they defended it, I would bump the cause of action to intentional fraud and go for triple damages against the bank/broker.
When some sharp lawyers figure this out as the Class Action it reeks of becoming, the banks are going to be destroyed.
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walk away today
