In this post about "strategic default," I linked to an article about an Arizona professor's contention that homeowners should not feel guilty about walking away from severely under water mortgages.
A new article from the New York Times predicts a rise in jingle mail, considering there are about to be more than 5 million homeowners at least 25% under water with their mortgages. The government hasn't figured out a way to attack this problem. The professor in Arizona seemed to think that if enough people walk away, banks may become much more willing to write down mortgages to true value. We might find out.
Great article. As a professional Realtor we are legally advised never to tell a client to walk away. But on the other side of the coin, I would be all for the banks being more aggressive in writing down the mortgages. The sooner action is taken the sooner the public will feel safer and more confident in buying or selling real estate.
Thanks for the comment. While my upbringing would tell me that I shouldn’t walk away from a debt obligation, it also tells me that I shouldn’t look to the other taxpayers to pay my home off for me. If only the banks are getting massive bailout money, some homeowners may find a moral balance in just walking away. I guess we’ll see.
Jim
Strategic default, in other words a plan carefully crafted out to not continue to pay on something you bought , even if you can. As a people. we are walking out on our responsibilities when things get tough. Is that the answer?
Kathleen,
Thanks for the comment. It’s certainly puts forth the way that I was raised, to honor my obligations and not walk away from them when I can afford to make the payments.
Unfortunately, as my newest post points out, there is information out there that could encourage the practice of strategic default.
I have a friend who has tried to honor her obligation. She did full loan documentation but was swindled by bank fraud. She fought really hard to stay in her house even getting an attorney. I am happy to say that she has kept her house. Many or these homeowners want to honor their obligations but if they have a fraudulent Countrywide loan, should they?
What does one’s signature worth on a note if they can just walk away from their obligations? When someone “promises to pay” it does not mean that “only if the value is there”. Now if someone has a true financial hardship and CAN NOT make the payments… that is a different story…
Whose fault is it that values have dropped and jobs have left the coutry? You know darn well who’s fault it is –the gummints. There is no one but Rep. Ron Paul, Repub. from TX., that has voted against subsidizing corporate owners from moving jobs off shore. Read Pat Buchanan’s article found on DrudgeReport.com about .”..PIGS…”. And make sure to read the “all omments” section. Some real smart guys explain it clearly. Pat B. explained it in previous articles, also.