My understanding is that: 1. yes, they can walk, 2. the bank takes the property, but can’t take anything else, and 3. a foreclosure will be on their credit report. When people are in this situation, they have the choice of either taking a hit to their credit score or taking a hit to their wallet (if they continue feeding the gator). If faced with these two bad options, I would choose to walk, but I have a feeling that most people would choose to stay, as long as they can make the payments.

I have a friend in a similar situation. I wonder what happens when you have those piggyback loans: one for 80%, then another for 20%… I wonder if the bank can still go after you for the second loan.

My friend is a young woman who bought in San Bernardino county in Feb or Mar 2006, and she was motivated almost exclusively by expected future appreciation. (I didn’t know her then). She’s an immigrant, and I wonder what would happen if she tells the bank, “hey, I can’t afford the mortgage payments any more and I’m going back to my country for a while; here are the keys, and good bye.”

My dad and both neighbors walked after buying a “2nd homes” and then saying “bye bye” to their first in 1994. What happened to us in 1990’s is why I’m so much involved on the idea that homes DO lose value and not go up forever. It was a great decision imo. The credit is clean and saved a ton. Also the appreciation gains from this bubble is better because everyone’s new home was bigger, cheaper, and in a better location (now with clean credit). win win win.

My website tracking Temecula and South Riverside County

Nothing at that time. No tax and he didn’t need credit. He even used money orders for the time after on all bills and payments.

My website tracking Temecula and South Riverside County

7-11, there’s something about those spoon straws….

I had a friend who had a condo in Mission Valley in the early 80s. She quickly became upside down and walked. She claimed no consequences but I doubt it… she still lives on very shaky economical ground.

These days, potential employers check your credit history as well as your driving record and criminal history. There is much more transparency as far as credit-worthiness goes. Then, there’s the “looking over your shoulder” factor. Who wants to go through life being afraid to open the mail?

And remember, bankruptcy laws have changed, no getting out from under consumer/credit card or medical debt so easy anymore.

How many think the Feds saw this coming and preemptively changed the bankruptcy law?

Nor_LA-Temcu-SD-Guy

Odd the timing of that change. Seems old Greenspan was looking after the banks same as when you could get a 4% mortgage and Greenspan was saying you should get a ARM, never forget that one .