gosocks said:HumDoHamaraDo said:golfer79 said:HumDoHamaraDo said:If you ever refinanced then it became a recourse loan and they can come after any of your assets.

I thought that was only if there was equity taken out or a second taken after the purchase.
Most refinances become recourse loans

Did you read the article? One person says that refi's become recourse loans and another says "However, Roger Bernhardt, a professor at Golden Gate University School of Law, says there is no California case law that definitively establishes this as fact."

So basically, there is no agreement on the matter which means that a bank most likely will not come after you for a deficiency judgement.

Did you do more research?
Bankrate link

michal1980 said:....Adding gray to it, is just to help yourself sleep better at night.

And I sleep rather well too.

You know the old saying about arguing on the internet tho, so I'm done here - kthanxbye.

NorthStar2020 said:You need to stop responding emotionally about this.
I dont complain when the govt takes my hard earned tax dollars and subsidizes farm workers in Iowa.
The bank knew all along that it is an option for the borrower to return the collateral and walk away from the house and they included this in their interest rate calculations.
If the borrower has put in a downpayment of 80% instead of 20% , the interest rate would be much lower. I mentioned previously to read the Basel II agreement that acts as the foundation for risk management at financial institutions. Not every FI follows it but they follow the Basel theory in general. Then come back and I'll answer the rest of your questions.

If I have nothing to do, i'll read the basel II agreement, but the whole document, (or at least what I found ). Is hundreds of pages long...

And personally. I do complain that the goverment is giving money to farmers in iowa. With the recent run up in prices for grains. I see no need to give them more money. Same with money still going to the oil compaines, why?

So I concede, on paper, walking away might be legal. But just because something is legal, does not make it right. You might call that an emtional argmunet. i wouldn't.

If as a society we establish that all purchases need to be paid for.
Then since a mortage is a purchase, it should be paid for.

If as a society we establish, that taking items for purchase without paying, is theft/wrong.
Then since a mortage is a purhcase, not paying for it is theft.

I want to publicly thank Chairman Bernanke for coming forward and supporting my argument, right here

"Far too much of the lending in recent years was neither responsible nor prudent," he said.

Thanks, Ben, you always chime in at the right moment.

tdf2001 said:
The adverse situation has occurred. The property is upside down and its in the best financial interest of the OP to walk away from the house.
So? Its also in the best financial interest to walk away from a car loan the moment you sign it, and to walk away from your credit card debt. Its also in the best financial interest to go steal food from the store instead of paying for it.

The OP can afford the loan. I do not think it should be acceptable to walk away from a home because the home dropped in value just to purchase a cheaper house. If everyone does that, it will just cause a giant domino effect that will crush this economy even more than it already is. A home is a place to live, not an investment vehicle.

The OP is also kidding themselves if they think a bank is going to give them another loan on a new house before they sell their old house in this market. They're not stupid. The best they could do would be to walk away, rent somewhere for 5-7 years until their credit is rebuilt, and then buy again (and then probably at a higher price when prices rebound)

I am amused when people complain about high gas prices and high food prices but they somehow assume that high home prices is one of their birth rights. Falling home prices bring in pain to the owners but they allow renters previously priced out of the market to buy homes. I dont think its illegal or unethical for the OP to walk away from the obligations if he wants to do it. The bank has already priced this event into their interest rate calculations. The only time I would chide OP is if some one lent him an interest free loan and he decided to walk away. Everything else is fair game.

Incarnate said:tdf2001 said:
The adverse situation has occurred. The property is upside down and its in the best financial interest of the OP to walk away from the house.
So? Its also in the best financial interest to walk away from a car loan the moment you sign it, and to walk away from your credit card debt. Its also in the best financial interest to go steal food from the store instead of paying for it.

The OP can afford the loan. I do not think it should be acceptable to walk away from a home because the home dropped in value just to purchase a cheaper house. If everyone does that, it will just cause a giant domino effect that will crush this economy even more than it already is. A home is a place to live, not an investment vehicle.

The OP is also kidding themselves if they think a bank is going to give them another loan on a new house before they sell their old house in this market. They're not stupid. The best they could do would be to walk away, rent somewhere for 5-7 years until their credit is rebuilt, and then buy again (and then probably at a higher price when prices rebound)

swandown said:vrb747 said:Walking away (Jingle mail) is an option if you have carefully considered the negative consequences of the credit hit you would take. (jobs, financing cars, future homes, leasing apartments etc.)

In addition to the credit hit, he's also walking away from the $45K he's sunk into the house so far. Granted, there is the appearance that the $45K is already gone, but when the house starts to appreciate in value again (and it will, eventually) he'll get that $45K back plus more. If he walks away now there's no way to get that $45K back.

Buying a house while taking out a loan is GAMBLING. It's as simple as that. It's amazing to me how many people fall into the trap of "investment". Every single time you buy chips at a casino that is considered a LOSS until you cash those chips in. And with a mortgage, we're talking about buying in for $20,000 chips and assuming another $380,000 on margin. Op has already lose $120,000 in chips. How is he going to cash in his $20,000 investment?

In this housing market you either hit it big or you lost big. It's called investing on margin, and normally only people with a lot of balls or who are in serious trouble will take those kinds of risks. Your typical new homeowners may not have considered themselves "margin investors", but if they needed to take a loan out to afford their purchase price, that is exactly what they are. That is what makes housing so dangerous. You can lose 5 to 10 times what you initially invested over the course of a year. This is the situation that OP finds himself in.

The question then becomes, how important is your credit score to you? Is it worth shelling out an additional $100k+ to cover your losses and the interest on those losses? You would be paying over the course of many years just to hold onto your higher credit score with no real financial gain. Some people many cite your "obligation" to repay your debts, but really your obligation is to yourself and to your family to give yourself the best financial situation possible. These people are not the ones that are going to be working into their old age because their retirement account fell short because of one bad investment. It is the most important financial decision you will make in your lifetime.©

The banks are already hurting because they speculated on bad loans for people who bought in over their heads. Why should you help them out of their mistakes if it's not in your best interest? Do some research, figure out what you're comfortable with, and make that decision. If I was looking at a decade of poor credit versus a decade of throwing money into a furnace, I would take the poor credit.

SlimTim said:gosocks said:Giving up the house is perfectly acceptable in the context of the note (legal contract) OP signed when she bought the house. Raising the rate would not be allowed under that same contract. Walking away is within the contact. Get it?You're totally wrong. Perhaps some mortgage lenders agree to this, but I've never heard of one. Here's what one of my recent ones says. It's from the Note, page 1:

A standard mortgage contract said:1. BORROWER'S PROMISE TO PAY
In return for a loan that I have received, I promise to pay U.S. $ [amount] (this amount is called "Principal"), plus interest, to the order of the Lender. The Lender is [lender]. I will make all payments under this Note in the form of cash, check or money order.
I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder".The only options are cash, check or money order. The collateral property is not equivalent. The whole note is only 3 pages of big type, go check any you have. Is there a section in the agreement that says forfeiting the property is satisfactory?

There are a lot of other forms in all of my mortgages, but it's not in any of them.

Point taken. What I should have said is that walking away satisfies your legal requirements to pay the note.

gosocks said:Point taken. What I should have said is that walking away satisfies your legal requirements to pay the note.

Are you distinguishing between a contractual violation and a legal one? Sure, there's no law that says anyone has to satisfy any contract - though there are exceptions for things like fraud.

Walking away does not satisfy anything at all related to the agreement. The agreement is to repay the money borrowed, plus interest and other costs. Seizing the home is one of the ways the lender is allowed to try to ensure that happens. Even when they do so, if the loan and all its costs are not repaid, there is still a contractual debt owed.

Guess what happens if the lender seizes the property and sells it for more than the amount they're owed? It's not at all a crazy situation, many longtime owners have mortgage balances that are far smaller than current market value. And property liens are not just for mortgage lenders - remodeling companies, HOAs, and even my local water utility company all do the same for money owed. Do you think there's some implied understanding there that the property is always an even trade for the debt owed?

Some people abandoning homes deserve sympathy, but most deserve scorn. "It's costing me more than I expected" is not anyone else's fault.

gosocks said:If you walk away from a house in a non recourse state, is the lender legally able to sue you for the deficiency? The answer is no. That's what I meant by "What I should have said is that walking away satisfies your legal requirements to pay the note."

If this were a big business, they would walk away from a business venture that was insolvent. As a matter of fact, companies structure business and debt all the time so as to limit their legal liability and so that they don't keep throwing good money after bad. But since it is a homeowner, they're expected to play by different rules?

I would say no. But that business should be held to more of the standard we hold homeowners too.

But as seen by this thread we are in a downward spiral towards a 100% renting society because owning anything doesn't matter. Personal responsiblity doesnt matter. Contracts dont matter.

Can people that keep saying its ok to walk away, find anything that really matters anymore? Are there any rules that shouldn't be broken? Should everyone be able to walk away? Why not? In fact every american that has a loan should just stop paying. Why bother. whats the point?