7 Responses to “Walk away from this idea” »»

1. confused
   Comment by confused | 11/30/09 at 3:36 am

   I agree, walk.

   I can remember back in 2005 when people were telling me about piggie-back loans and that you have to stretch to buy your first house. I remember the NAR ad-blitzes, the di-tech home loan commercials, the media mania over housing, and the ever prevalent buy now-or be priced out forever. Unfortunately, these tactics worked. People bid up prices in Mass to a median price of $375,000 and banks loaned to them.

   Fast-forward 4 years, as of last week the median price of a house was $287,000. This leaves some people somewhere in the range of $100K underwater. This is in an era of high unemployment, stagnant wage growth and historically low interest rates which strongly suggests that prices aint coming back soon.

   If I faced a scenario like that I’d walk. Hell, it would be like somebody was paying me $100,000 to do so.

2. anon2
   Comment by anon2 | 11/30/09 at 4:41 am

   No, the people not walking away on moral grounds are the people who corporate America haven’t gotten too (yet). It *is* a moral decision, not just a financial one, whereas corporate America is strictly financial. I guess it’s much easier to screw people over by not paying what you agreed when you don’t personally know them. These mortgages have been sliced, diced, and resold, and people rely on them for retirement income and towns rely on them for local operations. You aren’t just hurting a bunch of greedy fat-cats when you walk.

   @confused, I agree that it may make financial sense for some people to walk. However, they are still screwing people over when they do so. My point is, you shouldn’t just treat the decision as a financial one and should also consider who you are hurting when you go back on what you agreed to.

3. Funny
   Comment by Funny | 11/30/09 at 8:24 am

   Are we talking about morality, or finance.

   because with it might make you sick to your stomach, the market and you pocket book doesn’t care about your feelings.

   It’s sound personal financial advice.

   It’s also a textbook reason form rational and limited regulations on market excessiveness.

4. JG
   Comment by JG | 11/30/09 at 11:12 am

   And do you give them the keys to the car (or vacation home or tv or….) that you used the refinance money to buy? I doubt that is part of the advise.

5. BS, Boston, MA
   Comment by BS, Boston, MA | 11/30/09 at 11:42 am

   Thank you JG.

   Confused – someone is paying you $100K to give give up your opportunity to ever live in a home you own again and to pay more for credit for a long time to come. Considering how much people have come to depend on credit, that could be a high price.

   - Want a car? Pay cash.
   - Want to drive a car? Your insurance is gonna cost you more you deadbeat.
   - Want a loan for your kids to go to college, sorry, world needs ditchdiggers too.
   - Want to get a new job. SOL.
   - Want to go buy a plane ticket? Sorry, you’ll have to put it on your 25% card. Can’t pay it off every month. Too bad.

   If you’re underwater and can pay, it is SHORT TERM thinking to walk away. Besides that, it pretty much makes you an irresponsible person per anon2’s post.

6. Glenn Scott Ryan
   Comment by Glenn Scott Ryan | 11/30/09 at 1:53 pm

   I am so glad I did not buy a few years ago like I was saving up to do. Personally I could not just walk away from a mortgage and let my credit score get ripped apart. That is just me, I know there are many others that are okay living in the house and not paying the mortgage anymore until they get kicked out.

7. Ima Knutt
   Comment by Ima Knutt | 11/30/09 at 2:53 pm

   @BS, Boston, MA

   You didn’t read the article. The guy plots out how long it would take to get your credit score back. According to the newly released FICO scoring rules a foreclosure cost 150 points. Unless you start out with poor credit you are back on your feet within 2-4 years. A foreclosure is much easier to get rid of than a bankruptcy.

   @Anon2

   I agree with your moral argument to a point. If one can pay the mortgage, feed your family, save for the kids education, and your own retirement then I think you’re a schmuck if you walk. On the other hand, I don’t think one should let their family starve or sacrifice a financially secure future over a bad decision to purchase an overpriced asset. As confused said, the entire world was tauting real estate as a no fail way to riches. Suzanne researched it.

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