jump to last post 1-7 of 7 discussions (7 posts)

Do you agree with employed homeowners who chose to walk away from their underwat

  1. ExpandYourMind profile image73
    ExpandYourMindposted 7 years ago

    Do you agree with employed homeowners who chose to walk away from their underwater mortgages.

    When value of home has dropped drastically.

  2. dabeaner profile image56
    dabeanerposted 7 years ago

    One can't blame them.  They are victims of government and financial institutions jerking them around with monetary system manipulations.

    This whole housing situation is a result of "funny money" (fiat money) systems foisted on us by central banks.  (e.g., U.S. Federal Reserve.)

    http://hubpages.com/hub/america-what-we … the-answer

  3. profile image49
    Tom Jamisonposted 7 years ago

    I don't think people should "walk away", they should, stay and fight.  visit shortsalesarebad.com for more information. Or see my hubs.  If you are significantly upside down and can't afford your payments, it is financial suicide to walk away or to continue to pay.

    Imagine if you make 100,000 per year and got a 500,000 house with no money down (lots of people did).  This was way too much house at the time for that income, but everyone said don't worry, the house will go up and your income will go up. 

    Unfortunately, neither of those things happened, and now the house is only worth $250K to 300K depending on where you live.  Even if you could take 25% of your pre-tax income and pay it towards this shortfall, it would take 8 years to recover. 

    If your interest rate is 5% and taxes and insurance add another 2.5%, that $500,000 mortgage is 37,500 per year (not to mention maintenance and utilities).  This person is probably drowning in other debt as well.

    If a business found itself in this situation it would restructure everything in order to survive.  Homeowners are expected to "hang in there, it will get better".

  4. ExpandYourMind profile image73
    ExpandYourMindposted 7 years ago

    Thanks for your input and info.  I'll check out the website and hubs.

  5. Greg Cremia profile image61
    Greg Cremiaposted 7 years ago

    If housing prices had gone up should they have to give the profits to their lender?

    If you want to gamble then be prepared to live with the consequences.

  6. Wayne Brown profile image84
    Wayne Brownposted 7 years ago

    No I do not.  Even in the best of times, there is nothing guaranteed about home values as the market rises and falls. The crash of late 2008 was totally driven by the government interfering in the home mortgage business and creating potential buyers who could not normally qualify to buy a home. The valid buyers were victimized by this incursion in the market and they paid the price by loss of equity value.  If we buy a home, we enter into a contract, which says that we as buyers will pay the loan amount owed on the home regardless of what the market does.  The contract does not read "as long as the house retains its value".  In essence, the people who would walk away from a home that is undervalued yet they still have the means to pay for are making a very short-sighted decision.  In the long term, home values will probably return to more normal levels as employment stabilizes and reduces.  I think most of the people who are walking away from a home they could otherwise pay for are doing it for other reasons and just using the convenient excuse of undervalue to rationalize the action. In the long term, they will be the losers because like people who make stupid stock investmentst, they bought high and then walked away destroying their credit.  A home just like a stock only has value when you sell it and that depends on the market conditions at the time. Even when you have positive equity, there is nothing there that you can spend without increasing your debt ratio to do it thus it makes little sense. Instead, these people had rather walk away and pay out the same amount  of money in rent somewhere else.  WB

  7. fdoleac profile image57
    fdoleacposted 7 years ago

    It is their choice.  In most states, the lender has the right to come after them for the deficiency.  In the states that a buyers exposure is limited and they can walk away, the lender knew the risk.  I have a problem with the taxpayers subsidizing the risk of a lender who gave bad loans.