Would you walk away from a mortgage that was stressing you mentally and financially?

We have had 2 previous mortgages, that were paid in full when those 2 houses had sold. Do not preach to anyone about "signing a contract". Contracts are broken all the time. If you can keep (or have) your job and pay for it, then you should honor the contract, BUT when BOTH people loose their jobs, search for over 2 years, and have no prospects for decent work then its too bad for the banks, we're walking. Why should I give the little amount of money I have left to live on to the banks, only for them to foreclose on it? What do I get in return? NO HOUSE!

ITS THE ECONOMY STUPID!

My husband and I recently walked away from our home, and we were in your similar situation. When your down to your last pennies in your savings account and you have been robbing your childrens piggy banks you really dont have a choice in the matter

I signed a contract in good faith that I"d pay the mortgage, but my government and the greedy mortgage companies (Countrywide is mine) and the local realtors manipulated the market and my chances of having a fair shake in keeping up my home's value and worth....I'm suppose to be a good girl and pay on a house that may never build any equity? The good faith was broken by business and government, I've struggled to keep up, but now, I'm done....My mortgage company won't even work with me, after I told them, I need to lower my payments to try to honor my mortgage... I'm $125,000 short...paid $225, 000, put $30,000 in the house w/ repairs and it's worth $100,000 now....Not my fault that the BIG GUYS set the rules so we can never win...Screw 'em and I"m ashamed of my government and Congress for so many years of looting and holding hands with greed-meisters... I"m done...

My bank told me that they wouldn't negotiate a loan modification until I was 60 days late (by a loan officer).  He made it sound pretty simple.  I began getting calls after I was 30 days late but waited until 60 to try to call the bank.  Once I hit 60, I began attempting to reach the bank with the phone number provided but after sitting on hold on a few occasions for 45 minutes waiting for help, I decided to send my contact info via the website to request that time be set aside for our discussion.  3 weeks later, I rec'd an email from the bank stating that there were sorry that I was having a hard time reaching them but to try the same phone number that I was having trouble with in the first place.  I did finally get a hold of them last week (~100 days late) and was told without a doubt that the bank was in foreclosure process and that my only option was a short sell.  How's that for negotiating.  Not the loan modification I needed to maintain my home.  I don't think I'm alone...the banks are thinking of no one but themselves...their true customers are their shareholders...not the people that give them business.  I must admit, I do have the middle class mentality and feel very bad about withholding the money...but with a family to consider and the observations I've made about who gets what bailout...I'm voting for my family with my wallet.  I'll rent until the market turns around and my credit recovers.

Hey Nitwit...

Are you still running around believing that bad marks in the second grade are impacting your adult life? That's the message pedants have for young children and adults every step of the way. e.g. "My getting fired from my third job is going to follow me the rest of my career."

You obviously aren't familiar with the myth of the phoenix...which is too bad really- for you-anyway...

Your understanding of contract law and your consequent statement of opinion is uninformed and laughable...

You're welcome, as captain, to go down with YOUR ship...but don't proffer bad advice to others...

The article mentioned it only briefly, that the banks do have legal recourse, but quickly went on to say that most banks assume they'll never recover the money they lose when someone "walks away" from a home. I suspect that 5 years down the road when those banks and the larger economy are (hopefully) back in control, the banks will finally get around to coming after the people who thought they walked away from their contract Scott free. In my opinion, the media is doing a big disservice to the public by giving people the false sense that they can, to borrow an Obama phrase, "hit the rest button" on their financial future by simply walking away from their underwater home mortgage, leaving the evil banks holding the bag. While I have no love for the banks, I fear many of these people have an unpleasant surprise awaiting them years down the road when an official looking letter will arrive informing them that the bank is now ready to work out a plan for the "recovery of the $100K loss we took when we were forced to liquidate the residence associated with your unpaid mortgage".

One thing I do not understand? Banks will foreclose on your "Contract", take your house and sell it to another, at that "NOW" current market price!

WHY, the HELL won't they modify the current mortgage holder and give them the same deal? Seems to me that would be the WIN/WIN situation? The other choice is they both loose!

But Nooooooooooo, they ruin ones credit 1st, then write off the loss?

I am currently not in any trouble, paying on time. BUT, if this economy doesn't get moving soon, I too, will NOT have any CHOICE or PROBLEM, breaking my "Contract" with the Bank.......

What about our leaders contract to do what is right for America ! Fool !

i don't think the credit score system should be redefined. People don't need and shouldn't get all this credit anyway. I still don't really truly understand the point of "owning" a home in which you have to mortgage. If you're paying a mortgage, it's not your house anyway, its the Banks. What's the point in buying a $250,000 house in which you end up paying close to $400-500,000 in principal and interest, unless interest is going in your pocket, interest is a waste of money IMO...

For the tax write off. It doesn't make sense to actually own the house. Then you can't write off interest. Renting would be better in that case.

If you walk away from your home/mortgage, are you still able to buy another home? I have heard people walking away from their home to getting bigger cheaper homes.

I walked away in 2001, kept my bills paid on time for the next 7 years. Meanwhile, the foreclosure fell off my credit reports. Had sparkling clean credit when I bought last year, and got a low fixed rate because of it. Foreclosure isn't the end of the world, you just have to wait until your credit gets cleaned up to get into home ownership again.

I really don't think you get it and won't unless you are in this position.  I am stuck in a mortgage I took out 9 yrs ago on a 1700 sf house. We were not subprime, we put down 15%. We made renovations (the house needed a lot of work). My husband & I had good incomes. Then after 911 my husband's firm went under. A few months later, out daughter was diagnosed with a terminal illness. We blew through everything we had to keep her alive & TG she is still here). My husband remained unemployed. We have nothing left. We live day to day.  I still have a job but we have lost $100,000 in equity and am now underwater. We live in an area Automotive dependent. Houses here are next to worthless and nothing is selling for anything.  I have not mailed back my keys but I don't know what the future holds for us. Not everyone took money out of their house and treated it like a piggy bank, not everyone lost their job because they deserved it. Bad things happen to good people.

"How do you get $30,000 dollars in home renovation debt in a $170k home?"

Not hard at all. Re-roof - $10,000. Renovate a kitchen - anywhere from 8k to 35k depending on how much you do. The furnace dies, and there's $6,000.

Trust me, roof repairs or new furnaces don't cost less just because the house is worth *only* 170k. When your boiler goes, it doesn't matter whether your house cost $50,000 or $500,000 - you'll still have to pay a bunch of plumbers $150 an hour!

Mary- Pay no attention to people like Richard above! You couldn't explain it to them with a TEAM of Lawyers......

Sorry to hear about your misfortunes, so many now adays fit your senario. My wife and I HAVE used our house as an ATM machine. We were very careful to keep that debt, down below 50% of our home value, just in case... In this economy now, we've almost lost that, here in Phoenix, Az. (-$118,000 since 2003 peak, thank you very much!). We are not in any real emergency situation, as we are still working though,

BUT, people like Richard above, JUST DON'T GET IT!

It doesn't take a lot to get people in this situation. What choice do you have? One bad medical emergency, a lost job(income) and people like Richard, think it's all your fault and think you're a LOOSER???

Oh well, we all get through the day in our own way I guess, I sleep very well at night, myself. These financial institutions have CREATED THIS MESS...

I say send them your KEYS...walk away before they take everything you GOT, Plus the house...!

No Richard. You are correct. Mary is an exception, the ones using the equity like the piggy bank are the rule. My brother is one of these "unfortunate souls" who just can't seem to figure it out.

I've been trying to work with my bank for nearly a year now. I did the right thing and contacted them up front when I found that my position was going to be eliminated. They offered me nothing. I paid my mortgage, even while on unemployment, and drained my savings to meet my obligations. I got a housemate to help meet my bills. I'm now underemployed and am still trying for a mortgage modification. However, because I'm not behind, it may take another year to get an answer out of the bank. They don't respect me because of my attempts to do the right thing and they don't give a damn if I go without food as long as I make my payments. I contacted several credit counseling services who couldn't help me because "I'm upside down". Guess what?? I knew that and that's why I asked for help!!! Help isn't available simply because you think so.

They were allowed to live and borrow beyond their means because there was big profit in it for those with all the money (the 1% who hold 99% of the world's wealth; have you heard about that before or do you live a cave?) who have it to loan out.  These banks that you believe are "getting stuck"...what a silly and naive point of view.  They're getting bailed out...and on your dime...taxpayer...LOL...so you're getting stuck twice...you really must be a boob...

That you are the bastion of responsibility is your cross to bear (language I'm sure you'll understand- Christian) in a wholly corrupt system...and you want to stand up for the banks...the innocent banks...who control the whole show...

Better wake up and check that alarm clock, my sister...

Really??????? The problem isn't the average Joe who has to walk away, it's Wall street, government blindness and corruption that put many of us in a bad state. I bought a house I could afford, but now the market is so bad, I'll never have any equity in...Why should I take a hit when the big guys get bailed out and still live in excess??? Your guilt trip on how the little guy has to keep up appearances to keep the big guys in business is typical of why we got in this mess in the first place....No one's gonna bail me out...I"m gone and will do what is financially good for me...just like the big boys do...

Hey Jean,

Retirement was nothing more than an "idea" not too long ago. Think that 401k was really worth all that money? No, its only worth the amount that you PUT into it! Its silly to think that all that "money" vanished........ and then blame others that are down on their luck as well. You seem like the bastion of ignorance so lemme explain some. The flame that lit the housing crisis was provided by dear ol' Bill clinton. http://realtytimes.com/rtpages/20010102_legislation.htm Pay attention to the "The American Homeownership and Economic Opportunity Act"

Next to come along was Fannie n Freddie being unable to compete, so they took on alot of questionable debt, and loan practices. Plus plenty of banks gorged themselves on the housing market orgy. Senator McCain and Prez Bush tried to rein in these out of control banks: http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/ No, I dont like either McCain or Bush. But I admire the whistle that was blown.... someone at one point was thinking about us.

Add: Bush's outrageous taxes on mid/small business, lax to no attempts to do anything about the warning signs.

Add: Gasoline prices are out of control(Thanks to bush's so called arab buddies)

Add: We have too much of a credit based economy.

End result: The Gov set us up for failure, and the economy is destroyed. The End.

Sad part is: The rules are setup so that theres a "negative feedback loop". So until that loop is broken. We will never really get out of this situation(Hint: encourage someway to have american companies bring back american jobs). This whole mess is likely to happen again! Soon, Even! >_>

I could go on and on about the other stuff but I dont have time. So look at the bigger picture before you go blameing people that were just being human. Oh and one other thing..... Noone cares about your 401k......

The End.

Don'tbelieve the BS about the ones who couldn't afford the homes starting this mess everyone knows it was the greedy banksters that lent the money are to blame !

If you walk away from your house, is it still possible to buy another house? I have heard of people walking away from thier homes to buying into new bigger cheaper homes.

Everyone who is walking away, I'm sure you checked this already but maybe a Chap. 11 would be the best way to go. Gets rid of your credit card debt and I don't think the mortgage company can come after you for the balance if they sell your $300,000 home (mortgage amount) for $20,000 to one of their ex CEO's new realty company. Most likely they will get the balance from Fannie or whatever insured the loan but these mortgage companies are a tricky lot.

Once again, if the Federal Government had simply mandated all mortgages be lowered to 4% millions of foreclosures would not have happened. A federal bank for this purpose should be started immediately instead of more bailout money to the likes of Bank of America/Countrywide, Fannie, Freddie, AIG etc.

DEMOAZ

NO you would have a FORECLOSURE on your CREDIT which most certainly would preclude you from obtaining a new contract, not to mention the 20-30% they are requiring as a down payment. You can however if you have a lender that will cover a scam... get a rental agreement on your exisitng property then acquire the new one...

So, you didn't learn anything from your BK 10 years ago. Why live so irresponsibly?

ten years ago, i was in college. as most college students dont live in the real world until you are out in the real world.

Check with your local government. Cities and Counties have a federal loan program for repairs. Sometimes they grant the money or provide at no/low interested depending on income. If you stay in the home they forgive after so many years.

Why did you buy such a sh*thole? Fixer uppers are for contractors or people with money in the bak to fix them up.

You should not walk away. I understand the stress, but think about the renters in the AZ house. You walk away to do what you want (start a family), and the renters are out on the street. How is that fair? I say, rent the property for enough to handle both mortgages, or don't buy in Kentucky and rent until the AZ property is sold. That's the only fair thing to do.

Yeah, now that we have renters we are definitely not going to walk away, its not an option now, especially with the new house. Having the income from the renters makes it a little less stressful, I thought I was going to lose my mind before we had the renters. We'll make it somehow :)

and we don't believe in walking away from a contract and an obligation so we'll just keep at it and hope for the best.

until you see what the renters do to your house in az.

I rented a new home to a couple that had great credit ref's and 1 1/2 years later I had to have them removed BECAUE THEY STOPPED PAYING and when I was able to get in the house, it was distroyed and cost me $ 43000.00 to get it repaired. good luck.

I WILL NEVER RENT TO ANYONE AGAIN. LAWS PROTECT THE RENTER , NOT YOU.

yeah and be responsible, unless your biological clock is screaming at you (i.e. you are in your late 30's), then maybe having a kid and being a full-time mom is not the best choice right now

No one stays at home anymore...........where have you been, you need 2 incomes to make ends meet. Last I heard the military doesn't pay all that much. And forget about kids, the world has enough people already, besides at the rate we are killing everyone ,we won't be around that much longer so why worry about another mouth to feed?

Staying home with your children is a personal decision. Many people do it . I stay at home with our children and wouldn't have it any other way. My husband works and we have a very comfortable life style. It's a matter of how you spend your money. Sometimes the high cost of daycare doesn't make sense to go out and work.

I work in a law office and laws absolutely do favor renters. Not only that, I had "friends" living in my home and they trashed it! They didn't even have to pay rent - their landlord was foreclosed and they needed a place to go. I let them stay to help them and me - at least my house wouldn't be empty... I would have been better to take my chances of having someone steal the plumbing!

I see...so your comments are provided on the basis of self-interest. You don't want to be put in the position of having to pick up the slack to support your municipality's loss of tax revenue...LOL

That's too bad...and maybe you'll just have to find yourself walking away like others at some point because you won't be able to support your town as "A Tax Base of One".

Your preference is that others just suck it up and stay trapped in their lousy situation created at the hands of an abominably corrupt banking system. Good for you, faithfully paying your mortgage. You're a tool, man.

We are right there with you here in Florida...the loan modification process is a JOKE! We will be sending in the keys and walking away..no other option. The bank told us they were going to a loan modification, and then when we got 90 days past due they decided not to! Although we had send in the monthly payments they had requested. They can have the house chinese dry wall and all!

Across the Pond,

I agree with you 150%! I am an American who rents by choice because I like to move around, and renting gives me the option to pretty much pick up and move to a new place whenever I feel like it. In addition, for me, renting is cheaper as I live in a very modest apartment with very affordable utlities, so that means I have a little money to invest and a little money on which to vacation!

I would proabably make a very good European! I don't understand why some Americans think that the fabled "American Dream" is about "buying" a house and then being in debt on that house for 30 years! For me, the "American Dream" is about living where I want, doing what I want when I want to, and being free of owning a lot of "stuff."

That said, upon retirement, when I have lots of time to tend a yard and garden, and when perhaps I've seen the world and travel becomes difficult, I might just settle down and buy a small house with a little garden and yard and maybe a nice little front porch on which to watch the world go by! I am looking forward to that. Then again, I might just join a commune with lots of other older people. I hear that's becoming quite the fad!

Both Spot-on and Greg are on the mark. I'm 64 and retired. I just walked away from a home near Albuquerque because of lost value and was unable to sell. Owning a home is a complete drain and absolutely like a ball and chain. I'll never own again. You get at most a 25% write off on your taxes and interest from your income tax and there is always something breaking down. Will it impact my ability to ever purchase in the future. Sure. But why would I care. Will never own again. By the way, prior to moving out I arranged for a very nice apartment prior to my credit score taking it in the shorts. Once you're in, they never check you score again anyway. Americans put way too much stock in home ownership. 

I totally agree with you. I am from the islands and I am married to an american and I have stressed to my husband since we have been married that I do not want to buy a house for that very reason. The home is not yours until it is paid up in full, and by the time you do pay it off you will be too old to enjoy it. Who knows you might be dead before you get it paid off.

I think credit card companies and banks should be looked at more closely. I have good credit and recently went for a car loan, not a 'top of the line' car, just a basic car. I was told 21% on the loan - and that's putting about 40% cash down !!!!!!!! No wonder so many people are in trouble, these percentage rates are killing us and robbing all our money. Savings? What's that? Mine is almost gone, like my 401K !!!!!!!!

I understand your frustration with the banks. I felt obligated to fulfill a sales contract 3 yrs ago on a new home even though our previous one in FL wasn't selling (the bubble had just burst). Since our down payment money was stuck in the first home, we had to take out a second mortgage for 20% to close on the new house. That mortgage carries a fixed rate (30 yrs) at 10.5%.

In 3 yrs I have never missed a payment or even paid late. Do you think the bank will lower my rate? NO!

Why should I feel obligated to honor my contract with them. I am underwater already and if the value drops more I may walk away.

Keith:

My spouse and I are very new to investment property ownership, but my understanding is banks look at investment properties differently and therefore charge higher interest rates. I don't think it matters whether you are a newbie or old-pro at it. Our goal after buying and renting several properties is to be able to use all cash to puchase and avoid mortgages.

Absolutely with you on that one...the banks are interested in the value of their stock...not the well being of their customers. The threat to people stuffing money in their mattresses is real...and created by the banks. They are their own worst enemy. I was laughing at a comment about Mike about being unpatriotic, irresponsible, and dragging the country down. Who do you think he's referring to? Most likely not the banks that are taking bailout money and redecorating their offices. I'm sure he's referring to those of us who had best intentions in trying to live the American Dream only to have it shattered due to circumstances beyond our control. Where's the irresponsibility in that? Laws are there for a reason...crooks take advantage of them every day...so why can't good folks who are trying to make this work get a pass this time?

It amazes me that there are people who still assume foreclosures are only happening to people who bought too much house in the first place. My husband and I bought our first home in Florida in 2000. We were well able to afford the mortgage, in fact it was cheaper than the rent we were paying at the time. We put down 20%, and no, it wasn't a mansion, just a $95,000 home. With the taxes and insurance escrowed into our loan our payment was less than $800 a month. Then the housing bubble hit, and my modest home was being assessed for tax purposes at ever higher amounts. It was eventually appraised at over $220,000, a ridiculous amount. The lender insisted that we keep it insured for a similar amount (at a time when insurance in FL was skyrocketing due to hurricanes). Our mortgage never changed and we didn't take out any other loans against our home, but our payments ended up at about $1900 a month to cover the escrow, which was far more than we could afford. We struggled to keep up, but then my husband lost his job. Six long unemployed months later we considered walking away, but we were lucky enough to sell the house for a small profit at the last minute.

There are a lot of people who acted intelligently and responsibly to begin with who have been swept under by the economy!!! Don't judge if you don't know!!!

You must be a rich Republican, whos had your head up your ass, for the last 8 years!

M, M, M...I see you have a tremendous cross to bear such that empathy is in short supply at your house...well not for the banks who call the shots and run the show on lending...but short on empathy for people...

You're of course welcome to express your "christian soldier" uninformed opinions...but don't expect not to get slapped for them either.

You obviously have neither business nor legal experience such that you want to hold to the letter of a bad contract because it is a contract...it doesn't work that way in white man's world...so you're equally entitled to be a dope and go down with YOUR ship...but your opinion is about as useful as a corrupt banking system that will within the span of a generation crash an entire civilization...and that is truly the last laugh that the redman will enjoy...

The real reason we are in this mess is selfishness and greed. Wall street investment banks and most of the banking industry are responsible along with 8 years of a republic an congress ( deregulation). Contracts are broken all the time. Just ask a union worker. No one seems to care about them though. I own investment properties and I know how banks operate. So don't be so self- rightous about responsibility and contracts. A bad contract is bad contract.

The real reason we are in this mess is selfishness and greed. Wall street investment banks and most of the banking industry are responsible along with 8 years of a republican congress and a love affair with deregulation. You call walking away from a contract a crime. What about union contracts that are broken? No one seems to care about them though. The banking industry is concerned about one thing, stock prices.

M12-however many numbers you have on your username

Not entirely the banks fault...ok I do kindof agree with you there. When buying, the broker was trying to get me in a stated income interest only mortgage. Talk about greed. I went for the fixed 30 year with comfortable payments that I can easily afford. It is up to the consumer to be informed and to live within their means, however there is a lot of influence out there that can thwart those efforts.

I don't agree with the whole "you signed a contract, you honor it" in this case. I'm comfortable with my payments but I'm thinking about walking away. Never mind the fact that my house is worth $40k less than what I'm paying--because of foreclosures 12 units are not paying dues and an addtional 14 people cannot or will not pay dues. We as a community if we don't get an assessment (which will be beyond my means) will go into receivership (I never heard of that word until yesterday). We as an association may not be able to cover insurance payments.

I'm better off walking away because in about a few months I will pay thousands more than what I signed a "contract" for, and still my community will go into disrepair and my property values will be so bad its depressing. Why not walk away? In this case I know none of this is my fault and I'm upset that the good people are left holding the bag.

So please, I am NOT enjoying "the results of our patience and labor." I am upset at some irresponsible people for having those dangerous mortgages, but get real. The blame should not be all on them. Around me, I see the bulk of those foreclosures belonging to those who have lost their job. Its up to the banks to change the game but they are still about their money and no one else's. Shame on them.

It takes more than a phone call to modify your loan or get yourself in a better mortgage situation. Wake up, my neighbor's been trying to get things straight for more that 4 months.

I used to be that way, thinking that if I pay my mortgage and taxes then I won't be financially affected by this economic crisis (it is!), that let those people who got into that situation deal with it, but now I can't because its affecting me! And yes, I've written many a letter and email to my lawmakers in Tallahassee and DC.

Hang in there, those of you who are facing adversity in these times head on. I may not be far behind you.