Scaredy the reply was meant for Arraya and not you. Also no house, car, boat, it doesnt matter. Lifespan doesn’t matter. Look, extension of credit is extension of credit. I am loaning you money and you promise to pay me back or return the asset I loaned you the money for. Regardless of the asset, there is never an inherent gaurantee of appreciation or depreciation.
What Arraya said about encouraging people to walk if there is a certain threshold that they reach makes sense for them financially. However the threshold is arbitrary and the premise cannot be carried out in entirety because the bounds do not hold.
The logical answer is as follows, do not buy on credit. Similarly only a fool would extend credit to someone who will walk on the basis of depreciation of the asset. Accordingly a free market economic system cannot operate under that guise, (at least that I know of)
I agree with everything that Arraya said about the ponzi scheme, about the fed, about our banks, about the govt. People who I have represented in short sales I also counsel not to pay if it will be a hardhsip for them.
The premise that living in a home for free is a victimless crime is not true. In fact, for those who think they are punishing a bank, they are mistaken. The bank would rather have you live for free in the home, rather then vacate. Once you vacate and send them the keys, they are responsible for the home. If you go further and work a deed in lieu of foreclosure they then become responsible for taxes, and other costs as well. Furthermore that will trigger a change on the books for them.
It is a complex problem. Most people I know who have had to walk on the loan feel very badly about it. They have paid their debts all their life and psychologically it is tough. Other people brag about it and as we have seen, become quite vitriolic when challenged. Still others have had true hardship and simply cannot pay.
The problem I have with issue of walk when depreciation strikes is that the system of credit does not work then.
