tlatoani (tlatoani) wrote,
tlatoani
tlatoani

Walk away from your underwater mortgage -- the bank would

I agree with this article: a mortgage is a business transaction, and homeowners are being suckered into thinking that walking away from an underwater mortgage carries ethical implications when it doesn't. Whatever bank the mortgage is with walks away from bad financial deals all the time. And the argument about "walking away from their responsibilities" is crap. They aren't. They're suffering exactly the consequences the bank specified in the contract for walking away: forfeiture of the house.

The bank wrote that contract, after all, and the bank was definitely the party with more power, so they're getting exactly what they insisted on. Go ahead and give it to them:

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?hp

While there are certainly financial and credit consequences to walking away, it pisses me off that people are taking the position that this is in any sense a moral issue. It's simply a business contract, and when you break a contract, you suffer the specified consequences.

ETA: As I mention above, there are consequences to walking away. And you'd better know them before you decide. So yes, talk to a specialist real estate lawyer to make sure you know precisely what they are. Don't assume you know the rules; in some cases, the bank may be able to go after your other assets, not just the house. But while losing everything you own might be one of the consequences, being a bad person isn't.
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