We can probably all agree on the list of market conditions that helped form the “perfect storm” in inflating the real estate bubble and ultimately leading many to ask themselves the question “to walk or not to walk?” In my mind, however, the decision regarding walking is much more forward-looking than its opposite counterpart.
Certainly I think there are those that may attempt to justify/rationalize a walk-away by more than just chalking it up to a business decision but by also indicting “the system” for creating the environment that precipitated them putting on their walking shoes. So there is some backward-looking analysis by some. Nevertheless, I have little doubt that the primary issue is forward-looking – ie, “what will happen to me if I walk?” Using this rationale, you can make the argument that it is the non-recourse nature of CA purchase money loans and the historical lack of pursuit of judicial foreclosures/deficiency judgments by lenders as to recourse loans that cinches the decision to walk. Bottom line being that if a borrower was facing not only ruined credit but also a strong likelihood of a judgment against them for six figures, they would have to be more inclined to take that second job, rent out that room, etc, to try and salvage the situation. Recourse (or lack thereof) is THE issue with respect to walking away.
