On Walking Away
Is it okay to walk away from your mortgage for no other reason than it doesn’t make financial sense to keep throwing your hard-earned money away? There’s no universal answer here, but in most cases, the answer is “Yes.”Importantly, the reason is not that “Wall Street deserves it” or “We’ve got to teach the banks…
Dibs, this is not strategic default. What we are talking about is the moral obligation to pay $6,000 a month (which they can afford) when they could rent the same for $3,500, while their entire equity has been wiped out because of the decline in values.
Posted by: Maly at January 15, 2010 10:50 AM
Nowhere did I read that type of scenario into the OP. If that’s what he’s talking about, these people get what they deserve. And Adam is right.
Blogett’s right. Never thought I’d say that.
It’s a transaction. Dollars and cents. if the pro’s (immediate and delayed) outweigh the cons you do it. As if banks behave any different.
An analogy, my employer talks a lot about loyalty. But less so when they’re laying people off and cutting benefits. There is no personal responsibility in either case, just entities making financial decisions. As individuals we need to do the same.
“IT WILL DESTROY YOUR CREDIT!!! You won’t be able to get a Gap Credit Card with that foreclosure on your credit report.
Employers also check your credit. I know for a fact people that have not gotten jobs because of bad credit.”
Fuck credit (for the next 7 to 10 years)! Fuck the GAP! The consumer is tapped out. People need to cut losses and get on with their lives.
You’ll get a job. Don’t be ridiculous. Maybe fewer choices but it is what it is. And you WILL get credit again well before 7 to 10 years anyway. You rebuild.
***Bid half off peak comps***
IT WILL DESTROY YOUR CREDIT!!! You won’t be able to get a Gap Credit Card with that foreclosure on your credit report.
—
One can always rebuild their credit after foreclosure. I’ve seen it before. In this case, it’s a matter of weighing the pros/cons. Can you save 2500 per month by renting rather than owning? Is that money worth it to affect your credit score? For many the answer is obviously yes.
It’s interesting watching the many stages of a housing implosion, no?
If he’s pointing out that contracts and laws were designed to act without recourse to an impossible to define higher moral authority, and that furthermore, one may act according to the terms of a contract without breaking the law, then he’s right– but it’s not that interesting a point.
Do what you need to do, and be prepared for the consequences. By the way- same goes for theft, murder, curb-cutting, and other acts which destroy the fabric of the urban streetscape– these are defined by a criminal and civil law system that has no need to define ‘morality’ but does a reasonably good job of defining situations and consequences.
IT WILL DESTROY YOUR CREDIT!!! You won’t be able to get a Gap Credit Card with that foreclosure on your credit report.
Employers also check your credit. I know for a fact people that have not gotten jobs because of bad credit.
Dibs, this is not strategic default. What we are talking about is the moral obligation to pay $6,000 a month (which they can afford) when they could rent the same for $3,500, while their entire equity has been wiped out because of the decline in values.
“but it HAS to break down, in order for it to be built back up into something better!
*rob*
Posted by: Butterfly at January 15, 2010 10:46 AM”
No property rights will inevitably lead to wholesale bloodshed. I don’t think you want that.
Denton — no doubt. I too feel that you should pay your bills, but take a quick look at the article I linked above. It’s eye-opening… Individuals should pay their bills, but corporations like banks should also. And they need to be accountable for *their role* in the loan that was signed in the first place… They have no problem with “securitizing” mortgages and scattering the loan around the globe. Why should the individual retain the moral obligation if the banks don’t?
The take-away message is… it’s not that individuals should start acting more like banks (that would be horrible), it’s that banks should start acting more like humans.
The courts decided long ago that a “corporation” is a “person” under the law… shouldn’t they be required to act like it?