Do You Think It Is OK To Walk Away From A Mortgage You Cannot Afford?

What do you think? From CNN/Money:

Homeowners are abandoning their homes and, more importantly, their mortgages, rather than trying to keep up with rising payments on deteriorating assets. So many people are handing their keys back to lenders that a new term has been coined for it: jingle mail. “I stopped paying my mortgage in October, after shelling out about $70,000 in interest [over 15 months],” said one borrower, David, who doesn’t want his last name used. “Now, I’m just waiting for the default notice.”

I gotta say that I think it is kind of crappy – I mean, people should take some responsibility for what their financial decisions, right? Oh, and that David is not me. 🙂 Take the poll – do you think it is an OK practice to walk away from your mortgage when you can no longer afford it?


Like this article? Please consider subscribing to my full feed RSS. Or, if you would prefer, you can subscribe by Email and have new posts sent directly to your inbox by entering your email address in the box below. Your email will only be used to deliver a daily email and you can unsubscribe at any time.

Comments (48)

Trackback URL | Comments RSS Feed

  1. Jeremy says:

    I think this kind of practice is disgusting. As a society, we’ve lost a great sense of obligation and personal responsibility. It doesn’t matter if it is a mortgage, credit card debt, or some other contract you entered to agreed to. What happened to following through with your actions?

    I’m not talking about people who got scammed or suffered some unfortunate illness or catastrophe that put them in these positions, but the ease at which people simply turn their backs on a promise that they made so that they can get off easy.

    While the bankruptcy laws have changed, there are still people who abuse this system to almost no end. Constantly racking up debt they know they can’t repay, only to end up having a ding on their credit report that will eventually go away so they can do it again.

    I think I find this type of activity hard to swallow because I could have easily been one of these types of people when one of my businesses failed and saw myself faced with close to $100,000 in debt. Sure, I could have stopped making payments and told the lenders to kiss my butt, but I knew there was risk involved going in. I made a promise to borrow a certain amount of money and then repay it, and I intended to stand behind my word.

    Financially painful? Sure. But at least I can sleep at night.

  2. Cynthia says:

    Wouldn’t it be nice to take the easy way out with no repercussions? However, I too subscribe to the personal responsibility bandwagon. And it’s not just about money, it’s about ethics in general. It just seems there’s a lot more shady people out there these days…

  3. david says:

    Good points guys – it has become “the American way” to not take any responsibility anymore for anything. What a shame!

  4. Four Pillars says:

    Wow, this is a tough one.

    I’m inclined to say that you should be able to do it since you’ll still pay the price in terms of your credit. On the other hand if you can sell the house and have the ability to finance the resulting leftover loan then it’s hard to argue against paying it back.

    I don’t know 🙂


  5. Jeremy says:

    You’re right, David. This is the now very typical “American Way.” Just like the ability to sue for virtually anything. There is absolutely no personal responsibility, and I know, my wife is an attorney. I can’t believe the stories I hear.

    I know it is impossible to go back to the days where a handshake was as good as a legal contract, but it is ridiculous that there are so many loopholes and legal ways to circumvent responsibility today.

    It is a true shame too, because I have a hard time trusting anyone any more. Even a legal contract is almost worthless when the other party can find some shady lawyer to take their case and find some ridiculous reason to let someone off the hook.

    Everyone is quick to blame someone else for their problems, and unfortunately, we have created a society that allows this to be the accepted norm. As long as the person to blame is a big corporation or has a lot of money, it is our American right to try and milk as much out of them as we can without owning up to our mistakes.

  6. david says:

    Yea, the suing thing is out of control. Ever wonder why insurance costs so much? It’s because of us – all of us. We sue, we file claims when not necessary, we lie on applications, we hit and run in our car – it goes on, all in the name of not taking responsibility. And it is biting us in the ass in the amount of money we spend on things like insurance.

    I hear you on the law stories, Jeremy. A good friend tells me stories all the time, it is scary what our lawyers and justice system has to spend time and money on.

  7. Braunn says:

    Wow, I didn’t realize just how touchy I was about this subject until I started reading the comments. On the poll, I voted “No, they should take some sort of responsibility for taking out the loan.” The key words there being “some sort”…that is, ANY sort. While I agree that there are far too many people who are perfectly willing to try to get something for nothing, I don’t think “the American Way” has sunk quite as far as is being made out here.

    To play devil’s advocate, I’m going to argue that it’s not society’s choice to do so as much as it is Corporate America’s dictum. Case in point, my wife and I were forced into a bankruptcy several years ago over a home loan. Actually, it was a mobile home (“premanufactured home”, thank you) we bought for the several years we spent in a college town returning to finish our degrees. Knowing how things turn over in such an environment, we figured we could build up a little equity over 5-6 years and then sell it to the next guy that moved to town. However, once we took jobs in another state, we spent a full year continuing to pay on the note when we were unable to sell the home, while also paying rent in our new locale. We went to the bank on several occasions to ask for help in selling it, arranging an auction and letting us pay the difference (without having to have to go through foreclosure), etc. Anything at all that would let us get free honorably.

    Unfortunately, the bank(s) have absolutely no incentive to do so, since they have you locked into a contract. (The recent sub-prime meltdown notwithstanding. Poetic justice if you ask me – the lender that took such a hardline stance against us, and the company that bought them out, are both out of business now.) When it finally came to the point that paying for two residences, one of which we had not lived in for over a year, had us maxed out on credit cards and having to choose between the electric bill and groceries, we bit the bullet and declared bankruptcy.

    Perhaps its the embarrassment of having been driven to such a measure that has me taking some of these comments personally. It was certainly not something I would have chosen to do had I had any other choice. It was simply the only choice we had left.

    In contrast, despite multiple hospital stays for myself, my wife, and one daughter over the last 4 years, and a few thousand dollars in car repairs in the last 12 months, while we are again dealing with debt headaches that we had avoided for several years, we are still paying on everything and still on track to be debt free within the next 12-18 months. (not counting mortgage and student loans)

    So, you see, it’s not always as simple as “taking the easy way out with no repercussions” vs “personal responsiblity”. (Not to single you out Cynthia, yours was just a very concise statement of what I saw as the general sentiment.) Sometimes bad things do happen to good people…and it’s usually got an “Inc.” at the end of it’s name.

    As for the litigousness of today’s (particularly American) society? Wow, don’t get me started!! LOL

  8. Willfe says:

    From a purely financial perspective it *always* makes sense to walk away from a situation that’s costing you money, or that you can’t afford to be in.

    We’re mixing up two different issues here: simply “walking away” from a house one can’t afford the payments on *is* financially the correct decision — in many situations, the other options are not attractive — but then there’s no satisfaction of society’s overwhelming desire, nay, thirst for “vindication.”

    Should these people have borrowed the money in the first place? Nope. Should they be able to walk away if it doesn’t work out? Absolutely.

    There is, of course, going to be a potentially painful consequence of just walking away — the bank will foreclose, the borrower’s house will go away, and finally the borrower’s credit will be quite thoroughly destroyed. Bankruptcy isn’t exactly a “win” for many borrowers. These people aren’t just walking away and suffering *no* consequences. It’ll probably be pretty tough to borrow any more money for awhile 🙂

  9. plonkee says:

    If they cannot afford to pay off the debt at all, then of course they should walk away. If it’s a choice between paying the mortgage and food, then food it is. I also don’t think that in real life, people take the decision to hand back the keys lightly. Most people try to hang on to their houses far longer than is sensible.

  10. david says:

    Of course from a financial perspective it might be the wise choice, but come on – people should take some responsibility.

    Braunn – I don’t think what you guys did was necessarily wrong. You bought a house you could afford, tried to sell it when you moved to a job, asked the bank to help out and find a way to get out from under it, etc etc. You did not just get up and walk out one day. The people doing this now got into a house they could not afford, made the payments for a while, and then decided they could not pay it anymore.

    Oh, and Plonkee – This is happening quite a bit here in the States nowadays, it’s not too rare anymore.

  11. There should be some sort of penalty a charge and time that they can not repurchase another home.

  12. From a financial perspective it’s a “fool me once, shame on you, fool me twice, shame on me”. What bothers me is that “these people” are apt to go out and do it again. The “ding” should be permanent in big red letters all over the credit report.

    From a moral standpoint what they do not seem to care about is that when they walk away from $100,000 that represents the savings of some guy who worked for several years. They are effectively saying “Even though you worked for several years, we think our pain here is larger than your sacrifice, so bye bye”. This is extremely disrespectful.

  13. Rich says:

    WILLFE is absolutely correct that if walking away is the right financial decision then that’s the one to take.

    Lenders are not some poor sap that is not getting their money. They agressively lend money out for fee and interest income. They would not think twice about kicking you out of your home if you couldn’t make the payments. Any losses are a tax writeoff for them.

    If lenders didn’t want to take losses or risk having the keys handed back to them they wouldn’t lend to risky borrowers with low credit scores, they would actually do due dilligence and verify incomes, and they would require a downpayment instead of lending out 100% (or more) of the property value.

  14. David says:

    No one is saying they shouldn’t because of the lender, but because of any kind of personal responsibility, which people seem to be lacking nowadays.

  15. Deamiter says:

    I don’t find it particularly palatable, but “ok?” Absolutely.

    This is the whole purpose for contracts in the first place. Two parties agree to uphold their part of the contract and our legal system imposes penalties for the failure to honor the contract. Mortgages are still largely profitable to the lenders, lenders have simply gotten too careless about making loans to those who would be unable to repay the loan. Further, dishonest companies specialized in these subprime loans and sold them for more than they were worth, making a ton of money and passing on the liability.

    No, I don’t think it’s good that people were unwilling, or simply too ignorant to judge what they could afford themselves. Even worse than unwise borrowing, unwise lending, or outright fraud, would be forcing the borrowers to continue to make payments on debts they can’t afford. These days, with bankruptcy “reform” making it much harder to discharge debts, there is an ever increasing population that will simply be harassed by collection agencies until they die.

    If financial companies are making unwise loans to chase profits (subprime loans make banks MUCH more money in fees and interest than prime loans) they’re going to be bitten when the borrowers can’t pay them back. The entire economy will suffer for it, and hopefully, we’ll come out the other side having learned that giving out mortgages and credit cards to those who can’t pay back the loans is highly unethical.

  16. Brip Blap says:

    Of course it’s OK to walk away from a mortgage! Willfe and Rich are 100% correct. When you “bought” the house, what really happened was that you borrowed the bank’s money to buy the house. They own the house, not you. The bank has collateralized their loan with your home, so sure – you default on the loan, the bank takes back possession of the house.

    This is one of the myths pushed on people, that getting a mortgage means you can “own” a home. If you think you really “own” your home, try not making any mortgage (or property tax) payments and you’ll find out who really owns it in a hurry. The bank takes the risk when they give you the mortgage loan – that’s why they charge interest, after all, because it’s a money-making proposition.

    Not only do I think this is OK, I think people who were given predatory ARMs should walk away (assuming they have somewhere else to go and understand that the bank will do everything it can to wreck their future ability to borrow money)!

  17. david says:

    Again, its not the point of “it’s the banks problem” – it’s about personal responsibility. That’s all it is about, plain and simple.

  18. Brip Blap says:

    David, I know what you’re getting at, but it’s not about personal responsibility. If you are unable to pay, you lose the house and the bank takes it back. There are drastic and massive penalties for doing so. But if I was in the situation where someone had given me a predatory mortgage and the choices were (a) stay in the house until my last dime was gone or (b) walk away and at least keep enough money to survive on for a while, I don’t see the problem. If the person stays in the house until they are bankrupt, then a bunch of that person’s unsecured creditors will be hurt. At least the bank takes possession of a house. The bank is willing to assume the reward if things go well, so they take the risk, too.

    I just don’t see it as a question of personal responsibility as much as a lack of sensible laws surrounding the lending of money that prevent banks from taking on excessive risk but also protect borrowers from going into too much debt – you get more warnings buying a pack of cigarettes than you do taking on a huge mortgage. What is a person in this position supposed to do? Keep making payments until they don’t have money to pay for food for their family? Wait until they run out of money then get kicked out their house anyway? The guy in the example you cite should be kicked out of his home, but it sounds like that was going to happen eventually, anyway.

  19. Deamiter says:

    As I said before, I see the current ‘crisis’ as largely the bank’s fault. They alone had the resources and experience to judge a borrower’s ability to repay loans and little tricks like allowing unverified stated income or selling ARMs based on the highest teaser rate a borrower could afford are inexcusable.

    At the same time, I do see David’s point. Even if a person’s house is worth less than the mortgage they’re paying on it, they do have a responsibility to pay it back if they’re able. No, that doesn’t mean choosing mortgage payments over food or going bankrupt to pay the bank back! There are people out there (I’ve seen interviews with a few) who simply walk away from mortgages if their house depreciates in value, and I find that ethically wrong. It’s true, they receive stiff penalties for their actions (and likely will not be able to get a mortgage with reasonable terms for 7 years) but they’re also hurting the banks that made the loan, trusting that the borrower would repay. The banks lose a lot of money on a foreclosure and it hurts the entire economy if banks have to assume that a large portion of homeowners will simply default if/when the market slumps rather than gains.

    I don’t think it should be illegal, and I agree, it makes financial sense (if money is the only financial goal anyway) but IF a person can continue to make payments on their mortgage, I do feel that they’re ethically bound to do so.

  20. Tim says:

    i agree that they should be responsible for the debt and pay a heavy price for walking away. unfortunately, the laws limit the impact of walking away from a mortgage, which is too bad. you can start improving credit 3 years after a bankruptcy with slim chance of getting a mortgage, but it only takes 2-2.5 to get a new mortgage after walking away from a foreclosed home. that is wrong. foreclosures should be treated for what they are, repossessions thus charge offs.

    unfortunately, the law was designed to help lenders, but again like the changes in the bankruptcy laws that favored creditors, both are biting back on the creditor and lender now. This is a good thing in the long run if Congress relooks the laws and also stops protecting lenders.

    many people who are walking away are flippers who are getting caught in the real estate decreases. i think this is also good and hope it will lead to more stringent restrictions on flipping houses which caused artificial increases in the real estate market. they gambled by trying to flip, so they should be penalized for it. again, though, with current laws, they are going to be able to walk away and get new loans once the dust clears again.

  21. david says:

    Tim – ”
    many people who are walking away are flippers who are getting caught in the real estate decreases.” – that is a good point, thanks for pointing that out.

    Brip Blap – I guess the thing that bothers me most is that people don’t even bother trying to hold up their end of the deal anymore. The bank is not going to come take your house if you have been making your payments; so why should you be able to just walk away. Contracts should be upheld by both parties and I have said it before – if someone doesn’t know what they are doing, they should not be in the contract in the first place.

    People should, if they choose to go this route, not be able to get a drop of credit for at least 10 years. If the majority of us hold our our end, where is the “major” punishment for those who don’t? There isn’t any – maybe a few years with some bad credit.

  22. […] Two Dollars – Do You Think It Is OK To Walk Away From A Mortgage You Cannot Afford? David asks a good question, and the comments on this article are great. I don’t have an […]

  23. […] Two Dollars – Do You Think It Is OK To Walk Away From A Mortgage You Cannot Afford? – No, no it’s not. Deal with it like an adult. You got in, you work it […]

  24. […] to a value less than the outstanding mortgage. It is becoming much more common for people to walk away from their mortgage because they owe more than the house is worth. In cases such as these, there are no […]

  25. liz says:

    I am petrified, but my credit has gone to s///// because we were lied to about our first home sold. Ended up with 50.00 and the mortgage co. rewrote our house that we bought with no $ down based on my good credit. They told us we would be able to re-neg. the loan after a year. Now, I know I was niave, but I trusted these “professionals”. Now we have been suffering for 2 years, working 2 jobs each with hardly any money for food or gas. We have been in contact with our mortgage co. and begging for help, drained savings, retirement $ and even tried the short sell. They are not working for us and we have to leave and I have never walked away from my responsibilities. Everyone has told us to do this simply because it’s not worth the pain. I think people should take a course as a pre-requisite before buying a home so they understand.

  26. Josh says:

    I understand all the people that are saying people should “take responsibility,” and under normal circumstances, I agree. Unfortunately, millions and millions of people were scammed and sold overpriced homes with short fused mortgages. Why should we have to atone for the greed of other people? Victims should never “take responsibility” for what happened to them. It’s almost like blaming a robbery victim because he took a wrong turn into an ambush. I’m SERIOUSLY considering walking away from my house. I paid $28,000 cash (all my money) and have a $250,000 mortgage. Now the comps in my area are under $220,000 and dipping fast. I can’t refi because I have negative equity so when my rate resets, I’ll have to shell out another $200 a month into a house that is depreciating every day. The people that need to take responsibilty are the banks, the mortgage companies and the appriasers. If moral responsibility forces me to become and indentured servant to the bank… then I’ll take it up with the Big Man when I die.

  27. Speculator who bought homes they couldn’t afford on neg-am loans probably won’t be able to keep their “investments” regardless of whether its right or wrong.

    is bailing on your obligations or promises the right thing to do?
    of course not!!! but for a lot of people, there doesn’t seem to be any other alternative.

  28. I am walking away says:

    How about this situation….

    I am an alien in this country. Worked on wall street and was making a decent living. Bought a home with a 7/1 ARM. Everything was going good. Then the meltdown happens.

    Loan – 428K house value goes down to 390 K. I have lost my job and have paid for another two months. Because of INS i have to leave. I want to protect my house. Requested the BOA to give me a breather for 5 to 6 months. I promised to pay it despite going back to India… where i could only potentially get 30 to 40 % after conversion to dollars. We are very sensitive to shame and are credit fearing (my take on our clan)!!

    you know what the bank said. We cannot trust you if you are going to come back. I proposed that i will pay every alternate month to show that i am interested and i am not a risky guy. If i fail any way it would go to foreclosure…. they refused to work out a solution. There is no precedence to this situation is what they cited. Well i wanted to own the responsibility of the payments. i have requested for a restructured payment schedule… but they refused. Do you think i will pay. I cannot even if i want to cozI have to feed my family.

    Flip side of it. The economy here is in shambles. I walk away and go away from this great country. Despite willing to pay the bank has not cooperated. I walk away. This will spoil my credit score. But i leave this country. The credit score doesn’t chase me to where ever i am going outside USA. I am better off in my country when it is booming.

    Bottom line it is on a case to case basis. What will you do if ship is sinking? You offload some weight or do you keep the weight on board saying that it is precious… so is the case with obligation. If obligation is hurting you bad that it is going to lead you to doom… then you should not be obligated anymore. But prove it to yourself and your conscience that you have given it your best shot.

    Couple of questions to ponder….
    is that conscience level set by the society?
    Will society come to the rescue of a person if he or she is not able to pay?
    At what point do you say enough is enough?

  29. David says:

    Sorry, but if you were an alien here, you knew you might have to leave eventually – maybe you should have either rented or tried to get resident status before buying.

    This whole thing boils down to one thing – personal responsibility. But since the government doesn’t see it that way (which is weird, because everyone screams when anything socialist happens), I wonder what I am getting from them for being responsible.

    Oh yea…nothing.

  30. Jim says:

    Well, you’re asking if it’s okay to walk away from a mortgage you can no longer AFFORD, that means you can’t pay. In today’s market and in a lot of cases you can’t sell your house for enough to cover your mortgage, so what choice do you have? A lot of people on here are being pretty high handed, without ever having been in that situation or gone through something as traumatic as this. If it was easy to sell or rent a house that you can no longer afford then you could do that easily, but if you can’t afford it and can’t get rid of it any other way, what can you do? Now, if you CAN afford it, that seems to be a different story, but that wasn’t the initial question. I say it’s okay to walk away if you can’t afford it, it’s a business decision, businesses do it all the time, why can’t an individual?

  31. Kerry says:

    The housing market has failed and property prices have fallen through the roof. This is the biggest problem. Should those who bought homes for 450,000 which are now worth 220,000 take on and keep the debt??? That is the real question you should be asking.

    Most of these people can’t refinance even if they wanted to continue to pay for something which is not worth anything near what the loan was negotiated for.

    So the issue in my mind is not personal fiscal financial responsibility; but will we lower interest rates and modify (not the amount of the loan) the loan into a fixed rate, as opposed to a continuing adjustable rate payment on a home not worth what it was bought for and not eligible for a loan????

    Please address the upsidedown issue.
    Please put this to a question.

  32. Olga says:

    Okay I hear everyones opinion and I used to be the person that always said “dont take what you cant pay back” “be responsible with money” “always pay back what you owe even if you go hungry”, well I am singing a different tune for the last 3 months and unfortunately my mom is also. After getting divorced by a controlling husband that did not allow her to get an education here in America (we are from Russia, she has a degree there) and also not allowing her to work or talk to anyone let alone leave the house. The house the car and all the loans were and still are on my moms name. After he left he made her sign an agreement for a divorce, that yes stupidly she signed (she was very distraught especially because she just learned that he was a child molester also) so he left, married a 20 year old and by the agreement paid for the house, a whopping 3,500 a month and also paid alimony and child support. As of late (6 months) he stopped paying. He now framed his work truck as if it was stolen and because he no longer has a business the courts cant even go after him for any money because it shows that he doesnt have any (even though we all know that the two mortgages he took out totaling to 350,000 is in his pocket). So now my mom who has never worked in the US because he wouldnt allow it, works full time at two stores making the min. wage and still raising my 13 year old brother is screwed. She has been putting the house payment on credit cards. She makes about 800 a month and can barely afford to pay for my brothers health insurance and food for her and him. I ofcourse help but there is only so much I can do. The new idea is to stop paying for the house, just walk away. As much as we are against this sort of thing it just doesnt seem any other way out of it. She keeps putting the payments on the credit cards (which are about to be maxed out, all 6 of them) and then she wont be able to pay anymore so she will lose the house and have even more debt or she stops paying and waits to be kicked out of the house and then, who knows. We tried to sell the house but even for a really cheap price, no one is buying, we have over 15 houses being sold on two blocks next to our house. Even though our place is nice, no one is buying, so what does a person do?! So as much as many people are against walking away in some situations especially now there is not much we can do. As ashamed and horrible my mom feels there is nothing we can do about it. We need a miracle.

  33. Caroline says:

    Every time I see “it all boils down to personal responsibility”, my blood boils!! You people out there who keep spouting this aren’t really LISTENING to what’s being said. You are short-sited and apparently have NEVER suffered a financial melt down in which you have to choose between feeding your family and paying an inflated mortgage on a house no longer worth the contract its written on. Buying a home used to be something you do with pride and you kept your responsibilities and paid the mortgage. But its a different world now in which Fannie Mae and Freddie Mac have gotten greedy and out of control, thus, causing chaos in the mortgage industry and the lives of good, hard working people who have not fallen for the fancy ARMS are going down the toilet. The people you snide about are having to make serious life decisions, and when they say they are choosing to walk away, they are trying to tell you that they have done everything they can to be “personally reponsible” and look good in the public eye. At some point, you have to make a business decision and write off bad debt, like banks and big corporations do on a daily basis. Why do you hold an individual at such high standards when (1) you have never had to deal with that they are dealing with, and (2) all bets have been off since 2007!??? Give them a break! You can’t judge what you don’t know anything about. Lose your job, be forced to move and pay on 2 residences for a year, and you’ll be singing a different tune, my friend. Walk a mile in a person’s shoes before dispesning your parroted “wisdom.”

  34. Braunn says:

    Okay, so here we go again.

    We are moving out of state and selling our house. Because of the current conditions, the net proceeds from the sale are going to be slightly less than the balance on the note. By slightly, I mean $3-4k.

    I’ve spent the last week and a half trying to contact someone at Wells Fargo to see what we can set up so that I can go ahead with the sale (after 3 months we finally got an offer at slightly below asking price and, according to my agent, well above what she expected given the comps and foreclosures in the neighborhood) and simply pay off the remaining balance over the next 6-12 months. With the change in jobs and the cost of the move itself, I simply don’t have the cash to take to the closing table.

    Guess what? The bank isn’t interested.

    The mortgage department (loan servicing) “doesn’t deal with these issues”, but put me in touch with Banking Services to apply for a personal loan. Since our credit scores are still battered from a bankruptcy 7 years ago, as well as some medical collections from recent (multiple) surgeries, applications for a personal loan of less than $5,000 and/or for a credit card were both declined.

    An email plea through the website, asking to be put in touch with anyone who would agree me that it would be better for me to sell the house and still owe $4000 (that i WANT to pay off) rather than let them forclose, auction it, and still owe $40,000, was met with a response to contact a “liquidation specialist”. This person tells me that they don’t have any procedures in place to deal with the situation I am describing (someone who actually WANTS to pay off what they owe), but that they could send me the paperwork to start the process for a short sale. [Basically, they would “forgive” the difference between the net proceeds and the note balance and report such on my credit report – which would amount to the same as a foreclosure on the credit report. In addition, I’d get a 1099 at the end of the year for the debt forgiveness – so I’d have to pay taxes on the money I DIDN’T HAVE to pay off the loan – does that make sense?] But I don’t want a short sale – I WANT to pay off the loan!

    So, Wells Fargo would rather force me into a short sale and write off the bad debt than let me pay off the balance – that I WANT to pay!

    Again, I simply have no sympathy for these people/companies that are simply reaping what they sow.

    But, in the interests of personal responsibility, anyone have any suggestions??????


  35. David says:

    Can you borrow from your family and friends for a short-term loan?

  36. Josh says:

    I find it somewhat amusing that people get so offended by the ‘lack of ethics’ shown by someone who walks away from a mortgage yet are silent when corporations walk away from bad deals and drop pension pension plans at the drop of a hat.

    This is not some new development indicating the downhill slide of ethics in America, this is merely the American consumer waking up and practicing business in the same manner as any successful company has for decades.

  37. Deamiter says:

    What makes you think that people are silent when corporations walk away from pension plans?!?

    Braunn – try getting a loan from Prosper.com. Under $5000 should have little difficulty getting funding, tough your rate might not be great, it’ll be lower than credit cards.

  38. David says:

    Josh, who is silent about it? I rail against corporate B.S. all the time!

  39. Caroline says:

    Braun, my heart went out to you when I read your post about Wells Fargo (also, my mortgage holder)! We moved out of state as well, 10 months ago, and left a house behind STILL on the market for sale today, and we’ve dropped the price by over $30,000 since then and still – nothing! We are renting while we pay on the house back home, and we are straining each month just to pay all the rest of the bills! I know people who can’t even make one mortgage payment let alone two. I was thinking of doing a short sale with Wells when we reach the 1 year mark but now I’m not sure that’s such a good idea. I am shocked that they are unwilling to use logic and work this out to everyone’s benefit. I cannot believe that a mortgage company as big and as old as Wells tells you they “don’t have any procedures in place to deal with the situation I am describing”!! WTH??? I’m very concerned that they will also brush us aside with a flippant lie such as this. While the mortgage world explodes in all our faces, the banks seem to be washing their hands of us! We aren’t the ones who bought above our means with fancy schmancy interest-only loans, we actually did it the normal way, but now we’re caught up in the rushing flood waters of the mortgage crisis caused by greed, greed, and more greed! And the lame brains who sit in the side lines casting down judgement on things they know nothing about, make me want to puke. I say, give them time, they have lessons of their own to learn.

  40. D- says:

    I’m going to have to say let them walk… its not like a large percentage of people took these loans with the intent to default. My wife was laid off and I took a large pay cut to keep my job. Do i stay in a house where paying the mortgage means bleeding money every month, not a few dollars, but hundreds out the door each month. sure credit will be crap for a decade but our quality of life will hopefully be much better

  41. Enzo says:

    Actually, you promise to repay or the bank can take the house back. So by giving the house back, you are honoring the agreement. What’s so hard to understand about this?

    When an corporation gets in trouble they fire people or file bankruptcy and their stock goes up and everyone applauds. But if a regular Joe forecloses everyone beats them up over it. People should do what is financially best for them. If the house is 100k upside down within a year or two, then the appraiser & bank should be charged with fraud since they were obviously full of shit.

  42. Tammy says:

    I agree with Enzo. We are in this situation right now. My husband had to relocate for his job. We are upside down in the house. We have a renter, but it does not cover the mortgage. Why is it okay for the banks and real estate agents to lie, but wrong to forclose. We can’t continue to be in the hole every month anymore.

  43. Terry G says:

    David, you need a reality check. It is great that you have strong morals, however, purchasing a house is a financial business transaction. Within that financial transaction are stipulations in the event that one party defaults on the agreement. The purpose of the default is irrelevant. The buyer agreed to pay fees and interest to the bank to borrow the funds to purchase a home. The bank set the fees and interest rate based on their perception of the risk. The bank was paid to accept the risk and now they are assuming those risks and must absorb the losses. This is called capitalism. Welcome to America.

  44. david says:

    Well, we see how well it’s been working I guess. Let’s keep buying houses we can’t afford, yipee!

  45. joe says:

    i sure hope David never gets into a bind!! he’s so responsible. wonder if he’s a banker

  46. Maria says:

    When speaking of personal responsibility, people should look to the banks first. They think nothing of changing terms midstream…

    I took out a mortgage 4 years ago. It was based upon 2 people’s salaries. Now we are in a bind because my husband’s business is belly-up. Now we are trying to pay a mortgage (and childcare) on one salary. I tried to contact the bank to see if there was a way to work this out. I cannot refinance because my mortgage (for a townhouse) is over 100K upside down. The bank’s reply was, “sorry, we can’t help you.”

    A tribute to this same bank… has anyone ever accidentally bounced a check and had the bank charge them overdraft fees 5 times (that’s $35 x 5)in ONE day? Trust me… the banks are not the victims here!

  47. […] in February of 2008, I wrote a post titled Do You Think It Is OK To Walk Away From A Mortgage You Cannot Afford? that got a lot of attention and comments. In it, I said “I gotta say that I think it is kind […]

  48. Steve says:

    I’ve been through very many financial problems lately, been to mortgage co’s, banks, cccs, realtors, congressman,my own mortgage company, hamp program etc…looking for help it is not there if you have to walk away go ahead,the bank could get bent… take care of your family !!!!!