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Would you walk away?

Anything related to matters of the mind

MJ DeMarco

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With 1 in 5 homeowners underwater, many pundits predict a flood of people walking away from their homes. Five readers talked to us about why they are - and are not - sticking around.
22CO-9MCKeM


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MJ DeMarco

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Some interesting stories, mostly from high credit score people.
 

andviv

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people weigh the importance of immediate outcomes more heavily than long-term effects. Walking away involves upfront expenditures of time, money and effort, while the benefits of walking away are back-loaded.

"People are impatient and weight present costs and benefits more, so they will walk away less often than we might think," Johnson says.


So, people are lazy, and they will not walk away even when it makes sense to do so?
 
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CarrieW

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We walked away.

it made the most sense. we downsized and cut costs and moved across country. tried to do the right things with the house and sell it (submitted multiple offers)or sign it over to the bank and ended up in foreclosure over a year after we moved out anyway.

We got in up to our eyeballs and then all of a sudden when one thing went wrong it fell like dominoes and it was over our heads and there was only one way out.

only thing I wish we had done differently is we should have stayed in the house untill the last minute and stashed tons of cash away but we wanted to take care of it and move on paying our way each month and starting over. so we left.
 

hatterasguy

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I would only let go of a property in such a manner if I was forced to.

People are under the mistaken impression from the last 5 years or so that homes will always go up in value, and quickly at that.

Thats not always the case, sometimes you have to sit for a decade and pay. However you get to live in a house you love and if you hold onto it for 15-20 years will probably come out ahead.
 

Edge

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Looks like it could get easier for people to walk.

Am I reading this right? People will be able to walk without hurting their credit?

Obama administration to expand housing plan - Yahoo! Finance

One way would be to encourage a "short sale," in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure -- in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.
 
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MJ DeMarco

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MJ DeMarco

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Thread moved since it is being discussed...
 
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Colbehh

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I could see walking away if you couldn't make the payments, but doing it when you still can seems a little like stealing.

My thoughts exactly, it doesnt seem that people have the integrity to stand by their contracts. :nono:
 

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Walking away is a last resort for me.

If you are under water and can ride it out be patient.

You only lose money if you sell.

If you are pressured consider a "short sale".

The bank prefers this and would work with you.

This is a great time to buy. Everything is on sale.
 
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kwerner

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Am I reading this right? People will be able to walk without hurting their credit?


Not quite; the majority of credit damage is done when the borrower has missed 3 or more payments. Anything after that is really just adding insult to injury.

Giving a deed-in-lieu is still damaging to their credit, but not nearly as much as having it go through the foreclosure process.


Un-FN-believable. At some point, people who make poor choices have to stop being rewarded for it.


I agree 100%. When will the bailouts stop?

What's the next bailout going to be - helping the $30k millionaires that have racked up too much debt on their credit cards and can't afford to repay?

Give me a flippin' break!
 

andviv

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have you asked yourself instead "where is MY bail out" Have you looked for ways to get a loan modification to yours? Have you looked for ways to not be the victim but to take action and have the system working in your favor?
 

Edge

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have you asked yourself instead "where is MY bail out" Have you looked for ways to get a loan modification to yours? Have you looked for ways to not be the victim but to take action and have the system working in your favor?

Actually, no, I haven't. I assumed loan mod would hit the credit score so I haven't looked into it. Am I making a bad assumption?
 
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andviv

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I got a call from a mortgage broker I've used in the past. She told me there will be new regulation for loan mods for homeowners that are not late, full doc, needs 620+ in score, and the refi will include adjustment to the amount owed. My understanding is that it will NOT have a negative impact on your score, but still researching how it works (she may be right, but she may be wrong as well). More DD to be done. I will be working on that next week, to see what the rules are/will be.

Also, what if your score drops 100 points but you are forgiven $100K of what you owe? Would that be a good deal for you?
 

Edge

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Also, what if your score drops 100 points but you are forgiven $100K of what you owe? Would that be a good deal for you?

That's a good question, I had to think about it for a little bit.

The answer for me is no. I can make a lot of money using my credit score as leverage, more than $100k. I guess I'm kind of a control freak, I have no idea (no control) how long it would take to get those 100 points back, but I can control how much money I can make by using a high score as leverage.

Some think that the bar will be lowered in a few years as to what is considered "good" score since so many will have beat up scores. That could be true, but again, I have no control over if that will happen or not. To me it is just the more reason to be the one of few people with a high score.

The other side of your question is how would you feel if you missed out on a million dollar deal(s) because you sold out your credit score for $100k?
 

CarrieW

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have you asked yourself instead "where is MY bail out" Have you looked for ways to get a loan modification to yours? Have you looked for ways to not be the victim but to take action and have the system working in your favor?


In our case we tried loan modification they wouldnt do anything they said we didnt qualify for a loan modification and either needed to sell or look into other options. we no longer qualified for their help.

we tried to get foreclosure assistance.(from a local hud gov program) no go we didnt qualify for their repayment plan.

we tried to give the bank the deed in lieu of... they refused.

we submitted several short sale offers. every one of them refused by the bank. (they ended up selling the property for less then our offers were for too)

I spoke with several people at the foreclosure dept of the mtg co. both before and after we moved out. now with all the bail out stuff maybe they are more willing to work with people but in my experience they didnt want to work with us one bit. after over a year of trying to make the best out of a bad situation we washed our hands of it and rode through the foreclosure. there was nothing else to be done.

to this day I have not gotten a single piece of paperwork from the mortgage company since they sheriff saled the property over a year and a half ago. last i heard was from the county notifying us that we were being removed from the deed. back in jan 07.
 
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Russ H

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Carrie-

You may have answered this in an earlier thread (if so, sorry). But what happened that made the house unsalable?

2005/06 was prime time for the RE boom-- were there any areas of the country that had declines in sales or prices?

Did you pay too much initially?

Or was there some kind of toxic leak or mold or other issue that made the house unsalable?

Just curious. :)

-Russ H.
 

hatterasguy

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Part of being is business is your reputation and word.

If you bought a home you supposidly love as a personal residence who cares if it goes down in value as long as you can still afford the mortgage? You love it, enjoy it for the next decade as the market corrects. People got spoiled and greedy with these crazy profits over a short period. The reality is you have to own a property for a long time to enjoy appreciation. Everyone has gotten spoiled over the last decade.

If you bought it for an investment man up, its your debt. Several members of my family have gone bankrupt or come close due to market changes like this. But they have always paid their obligations and come out of it better. So man up, you made the call and purchased the property. If it drops in value a bit but nothing else changes keep it. If you have to dump it come to the closing table with a check, or work it out with the bank. To make the big bucks and be the boss you have to figure out these problems. This sleezy let it go on purpose and try to buy it back crap won't get you far. Sure maybe you will make a $100k now on it, but thats nothing and won't get you far.

Thats my 2 cents.
 

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