52club said:I find it interesting that we hold individuals to high moral standards, but since large business/corporations continually screw people over they don't get held to the same standards. I understand two wrongs don't make a right. However, if those who bring up the moral issue believe a corporation wouldn't stick it to an individual to pad their bottom line they living in a dream world.
No business or corporation screwed him over. He purchased his house with legitimate loans, but the market tanked. He could be in a bad situation when the ARM resets, but that was his decision. Having people walk away from their houses is going to cause more problems and hurt homeowners even more because prices will continue to decline rapidly.

pringle said:Thanks for all the replies everyone, I appreciate all of the input. A quick clarification since it's come up in several posts -- the house next door is almost identical to mine, and in good condition (we live in a townhouse).

Most of the other assumptions have been correct. The 30k I am willing to put down would NOT wipe out our savings. We currently have about $45k liquid among other assets such as stocks ($15k) and our 401k ($60k).

The downside to walking away is that both my wife and I are on the loan, which means both of our credit scores would take a hit. At the time I would not have been able to qualify for the loan by myself, hence the joint app.

Thanks again for all of the replies.

The only thing I would add, is that the 401k should really not be thought of as liquid. IMO, I dont think 401k money should be thought of as liquid. Its money that shouldn't really be touched until retirement.

Now Scrawney, would you please come out and mention that you are a realtor that didnt make a sale in the last 8 months?

ScrawneyWallet said:NorthStar2020 said:Would you agree to tuck your tail between your legs and walk away if OP says the next door house is identical to his?

Yep.

NorthStar2020 said:Now Scrawney, would you please come out and mention that you are a realtor that didnt make a sale in the last 8 months?

ScrawneyWallet said:NorthStar2020 said:Would you agree to tuck your tail between your legs and walk away if OP says the next door house is identical to his?

Yep.

Nope.

There were too many people - especially middle and low income people taking advantage of the BK laws in prior years that led to the reform.

Also, with so many unmarried couples, people were planning their BKs, taking trips running up debt, moving money to the g/f b/f s/o and then filing and then the g/f has $45K down payment for a house.

However, even though I think the OP can get out of this , walking away should be considered WITH ALL OF ITS CONSEQUENCES - financial, emotional, marriage, etc.

If, for example, you bought in a area that is going under AS A COMMUNITY, I would argue that you should stay put, not make a payment, save like the dickens, and wait until the sheriff knocks on the door.

But the OP , if he is a real FWF member, should be able to shake this off. But paying $2.5K per month on a home that you will be underwater in for the next 20 years is foolish.

Walking away should be considered and ,,,, planned if it is the wisest option.

Remember, permabulls and permabears, this market will change. People will still want to live in CA and FL rather than Missouri, and there will be stories of people who bought on the cheap. Those without crdit or cash will not be participants in this move up.

patch96 said:There were too many people - especially middle and low income people taking advantage of the BK laws in prior years that led to the reform.

Also, with so many unmarried couples, people were planning their BKs, taking trips running up debt, moving money to the g/f b/f s/o and then filing and then the g/f has $45K down payment for a house.

However, even though I think the OP can get out of this , walking away should be considered WITH ALL OF ITS CONSEQUENCES - financial, emotional, marriage, etc.

If, for example, you bought in a area that is going under AS A COMMUNITY, I would argue that you should stay put, not make a payment, save like the dickens, and wait until the sheriff knocks on the door.

But the OP , if he is a real FWF member, should be able to shake this off. But paying $2.5K per month on a home that you will be underwater in for the next 20 years is foolish.

Walking away should be considered and ,,,, planned if it is the wisest option.

Remember, permabulls and permabears, this market will change. People will still want to live in CA and FL rather than Missouri, and there will be stories of people who bought on the cheap. Those without crdit or cash will not be participants in this move up.

Ahhh Just like when I ran up my c.c. back in the day, then lost my job and the choice was pay the C.c. company or eat. I should have had them forgive my debt because my market conditions changed. My c.c. score still begs to differ. And If I would have posted that here back then, I'd be beat down as a deadbeat.-

I get it though. Walk away from Big 'losses' = Smart Financial Planning. Walk away from bills you just don’t have money to pay for = Deadbeat.

Just admit the hypocrisy and move on, everything else is just rationalizing.

BobM73 said:If we're truly trying to make a business decision here.....

Why not offer $250k for the other townhouse while the credit is still good, perhaps rent it for six months if you need to show income. Then let the first home go into foreclosure.

You'll end up with the same house for a much lower payment and since you'll already have the loan, dealing with the trashed credit might be easier.

I have heard of this; however, many homeowner's credit is too tight to accomplish this feat.

I have learned through past failures (and i mean FAILURES) that the OP should ACT NOW on his own - rather than let market forces act on him.

He needs INFORMATION. He needs to get info on WHY that neighbor is selling so low.

I would not touch savings and would put an end to that 2nd mortgage at 7.5%

If you like the home, the neighborhood, the schools and the general area then just ride it out. I would hold back on paying the second off in advance unless your making a tom less on it then the note rate.

Real estate will advance before you know it. If you did a walk away, it will bite you for the next round in real estate. Next time, don't buy when everyone else is buying....

michal1980 said:I get it though. Walk away from Big 'losses' = Smart Financial Planning. Walk away from bills you just don’t have money to pay for = Deadbeat.

Just admit the hypocrisy and move on, everything else is just rationalizing.
Everyone has different definitions, but I would hazard that a deadbeat is someone who refuses to pay debts that he *can* reasonably pay, particularly if the refusal to pay is planned beforehand, and particularly if the thing being paid for is sunk.

ie, someone who picks up a candybar and eats it and then refuses to pay is a deadbeat (and a thief).
Someone who sneaks into a movie and watches it, then refuses to pay is a deadbeat (and a thief and a trespasser)
Someone who intentionally runs up debt, goes on luxury holidays and then declares BK is a deadbeat (but well-tanned)

A mortgage on the other hand is collateralized.
Someone who surrenders the collateral on a loan because they choose not to pay the loan is not a deadbeat. It may or not be a good business decision, but that's all it is - a business decision.

kenblakely said:michal1980 said:I get it though. Walk away from Big 'losses' = Smart Financial Planning. Walk away from bills you just don’t have money to pay for = Deadbeat.

Just admit the hypocrisy and move on, everything else is just rationalizing.
Everyone has different definitions, but I would hazard that a deadbeat is someone who refuses to pay debts that he *can* reasonably pay, particularly if the refusal to pay is planned beforehand, and particularly if the thing being paid for is sunk.

ie, someone who picks up a candybar and eats it and then refuses to pay is a deadbeat (and a thief).
Someone who sneaks into a movie and watches it, then refuses to pay is a deadbeat (and a thief and a trespasser)
Someone who intentionally runs up debt, goes on luxury holidays and then declares BK is a deadbeat (but well-tanned)

A mortgage on the other hand is collateralized.
Someone who surrenders the collateral on a loan because they choose not to pay the loan is not a deadbeat. It may or not be a good business decision, but that's all it is - a business decision.

except for the fact that to do it. The bank will ethier have to forgive 120+k, or the seller needs to come up with that money.

Or are you proposing this is the new no risk way to invest. If the mark gets hot, you make out like a bandait. If it gets cold, heck, just give it up and walkway... Can I get that kind of insurance on buying stocks?

I have a hunch metal prices will go up... I'll buy up tons of gold/platinum, if the price goes up, I make money and pay the bank back, It crashes, I'll just give the gold to the bank. We both win right?

But heck, i'll give you back a half eaten candy bar if you catch me eating it before I pay. Just dont expect me to give you the buck. After all I gave it back.