Doug French has written an excellent book on this – “Walk Away: The Rise and Fall of the Home-Ownership Myth” which I read fairly recently. For those who insist that private borrowers have a moral obligation to pay no matter what, there is much to consider in the book.

One example is given of a lender that itself feels no obligation to repay its debts: Morgan Stanley, which bought several office buildings in San Francisco in 2007 and announced its plan to return them in 2009 “to get out of the loan obligation” (Alyson Barnes, spokesperson for Morgan Stanley).

Companies are praised for walking away, but try to guilt the rest of us into hanging on. The government helps with the guilting as well.

I lost 30% of my income since the recession and my wife lost her job. If I continued paying the mortgage it would be 50% of my income. NOT GOING TO DO THAT! I didn’t cause the economy to tank, but I’m saving my butt and walking. I could rent a bigger house for less than what I pay now.

Consult with an attorney to protect yourself and WALK if you are seriously underwater. You’ll be better off financially. I don’t worry about my credit score much. I still have over $20,000 in cash so I can cover unexpected expenses. Plus I save $2,000 in cash each month by not paying the bank(I mean crooks). I have at least 6-8 months left here payment free. That’s another $16,000 saved!

[...] pack up your belongings and leave. It isn’t a pretty option, but a lot of people are choosing it. If you do decide to walk away [...]

http://finance.yahoo.com/real-.....ng-markets

[...] Would You Walk Away from Your Home? [...]

I should add that the $600,000 was an arbitrary amount I picked. I was trying to make it an amount that I thought would be easier to isolate emotion and finances.

What is often not mentioned is that the current housing environment is a product of the financial market as a whole. With employment rates going up – what people could afford 5 years ago, may not be what they can afford now even if they were reasonable in their purchase. Many who are laid off now are not having an easy time finding another job and may not find one at the same salary. In those cases walking away makes sense and I do not think is immoral.

I would have to say that I have little to no sympathy for people who bought more than they knew they could afford just because a bank was willing to lend them the money. Or those that used interest only loans. I qualified for much more than I used in my mortgage, but I bought at a rate I knew I could afford. I paid the higher rate to get the 30 year fixed mortgage. I just hope they remember that if it seems too good to be true it probably is…

By the way, how many people are really $600k upside down on their mortgage? At that point, they can probably afford it. I agree at maybe 50% of the value it would be a hard decision, but I don’t think I could walk away. Would be partly my fault for choosing a neighborhood that could decrease that much in value.

http://www.msnbc.msn.com/id/35.....gton_post/

Just my 2 cents.

Personally, for me, I cannot say what it feels like to be that much upside down on my mortgage. I’d have to be able to live with the consequences – having a devalued home or paying for it later with a bad credit score and even higher mortgage payments on the next home (if I even get approved for another mortgage).

I believe I would stay in the home. I committed to pay the mortgage, and I value my credit score even more.

There are many aspects to this storyl. Was the buyer just flipping houses (speculating) or is this the buyers first home in which he intended on living in.

If you ask me what is immoral is the incorrect appraisement the buyer received before purchasing the house. This appraisement was directly related to the banks being able to bundle up these mortgages and pay off other appraisers to label them with AAA ratings, even though a large number of these mortgages were worthless. Then they sold these AAA rated bonds to investors who thought they were buying the safest bonds out there.

So if you ask me would I walk away?
The answer is in a heartbeat. I also dislike people who are not truthful enough or can’t put themselves in other peoples shoes and sidestep the answer to whether they would walk away FROM 600,000$ DEBT!!!! Be real.

And I don’t own, I rent. I can put myself in some of these people’s shoes though.

If you’re not underwater, than why don’t you sell instead of walking away? You may not care about the credit hit, but it seems to me that if there is no/little money at stake, then there is an obvious moral imperative to live up to your mortgage agreement.