The new smart financial move is walking away

[SD Realtor]

Read what I wrote. I never said walking away was not good or bad. Just don’t blame your poor decisions on other people, or external conditions, or Alan Greenspan, or (pick your scapegoat and insert it here). Taking responsibility in the form of walking away is fine with me. We all pay when someone does that because our govt is controlled by those entities that go walked away from.

There is no doubt all of these greater entities ENCOURAGED people to do the wrong thing, PROVIDED an easy path for them to MAKE STUPID CHOICES. Yet they didn’t sign the loan docs.

[desmond]

[quote=SD Realtor]No Desmond I think you could not be more incorrect. [/quote]

I think your incorrect. Those buyers and borrowers are living in a mess. They might be skipping some payments, etc., but ask any of them if wish they had not bought or borrowed and see what they say. Those that did not buy might complain but I bet few if any would want to be in that situation. Anyway, I usually have a smile on my face.

[desmond]

[quote=SD Realtor]No Desmond I think you could not be more incorrect. [/quote]

I think your incorrect. Those buyers and borrowers are living in a mess. They might be skipping some payments, etc., but ask any of them if wish they had not bought or borrowed and see what they say. Those that did not buy might complain but I bet few if any would want to be in that situation. Anyway, I usually have a smile on my face.

[desmond]

[quote=SD Realtor]No Desmond I think you could not be more incorrect. [/quote]

I think your incorrect. Those buyers and borrowers are living in a mess. They might be skipping some payments, etc., but ask any of them if wish they had not bought or borrowed and see what they say. Those that did not buy might complain but I bet few if any would want to be in that situation. Anyway, I usually have a smile on my face.

[desmond]

[quote=SD Realtor]No Desmond I think you could not be more incorrect. [/quote]

I think your incorrect. Those buyers and borrowers are living in a mess. They might be skipping some payments, etc., but ask any of them if wish they had not bought or borrowed and see what they say. Those that did not buy might complain but I bet few if any would want to be in that situation. Anyway, I usually have a smile on my face.

[desmond]

[quote=SD Realtor]No Desmond I think you could not be more incorrect. [/quote]

I think your incorrect. Those buyers and borrowers are living in a mess. They might be skipping some payments, etc., but ask any of them if wish they had not bought or borrowed and see what they say. Those that did not buy might complain but I bet few if any would want to be in that situation. Anyway, I usually have a smile on my face.

[scaredyclassic]

never smile. As Dwight Schrute says, “smiling is a sign of submission among primates. I NEVER SMILE.”

[scaredyclassic]

never smile. As Dwight Schrute says, “smiling is a sign of submission among primates. I NEVER SMILE.”

[scaredyclassic]

never smile. As Dwight Schrute says, “smiling is a sign of submission among primates. I NEVER SMILE.”

[scaredyclassic]

never smile. As Dwight Schrute says, “smiling is a sign of submission among primates. I NEVER SMILE.”

[scaredyclassic]

never smile. As Dwight Schrute says, “smiling is a sign of submission among primates. I NEVER SMILE.”

[davelj]

[quote=briansd1][quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.
[/quote]

Yes, I think there are a LOT of factors at work in this decision. Among them:

(1) How far underwater is the mortgage in both dollar and percentage terms?
(2) What does this “hole” represent as a percentage of total net worth?
(3) What is the cost of comparable alternatives (that is, comparable rental options)?
(4) How much financial stress is related to continuing to pay the mortgage?
(5) What are the total non-monetary negative externalities with respect to family, image, credit score, job, etc. etc.?

I believe that the current research suggests that the 12%-15% underwater range is where default rates start to hockey stick upwards. Which kind of makes sense.

If you bought a $500K house at the peak and put 10% down and the value’s fallen by 25%, then you’re about $75K underwater. That’s a lot of money if you (a) don’t save much, (b) don’t have good job stability, (c) don’t have strong community ties (kids in school, etc.) and (d) the rental alternatives are much cheaper. A lot of those folks will walk. And with good reason.

However, it’s a totally different situation if you (a) have a decent net worth and savings, (b) have good job stability and the mortgage isn’t overly taxing, (c) have strong community ties, and (d) moving under duress would be an issue for family and reputation issues. Most of these folks will gut it out. And there’s a lot of them.

So, it just depends.

[davelj]

[quote=briansd1][quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.
[/quote]

Yes, I think there are a LOT of factors at work in this decision. Among them:

(1) How far underwater is the mortgage in both dollar and percentage terms?
(2) What does this “hole” represent as a percentage of total net worth?
(3) What is the cost of comparable alternatives (that is, comparable rental options)?
(4) How much financial stress is related to continuing to pay the mortgage?
(5) What are the total non-monetary negative externalities with respect to family, image, credit score, job, etc. etc.?

I believe that the current research suggests that the 12%-15% underwater range is where default rates start to hockey stick upwards. Which kind of makes sense.

If you bought a $500K house at the peak and put 10% down and the value’s fallen by 25%, then you’re about $75K underwater. That’s a lot of money if you (a) don’t save much, (b) don’t have good job stability, (c) don’t have strong community ties (kids in school, etc.) and (d) the rental alternatives are much cheaper. A lot of those folks will walk. And with good reason.

However, it’s a totally different situation if you (a) have a decent net worth and savings, (b) have good job stability and the mortgage isn’t overly taxing, (c) have strong community ties, and (d) moving under duress would be an issue for family and reputation issues. Most of these folks will gut it out. And there’s a lot of them.

So, it just depends.

[davelj]

[quote=briansd1][quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.
[/quote]

Yes, I think there are a LOT of factors at work in this decision. Among them:

(1) How far underwater is the mortgage in both dollar and percentage terms?
(2) What does this “hole” represent as a percentage of total net worth?
(3) What is the cost of comparable alternatives (that is, comparable rental options)?
(4) How much financial stress is related to continuing to pay the mortgage?
(5) What are the total non-monetary negative externalities with respect to family, image, credit score, job, etc. etc.?

I believe that the current research suggests that the 12%-15% underwater range is where default rates start to hockey stick upwards. Which kind of makes sense.

If you bought a $500K house at the peak and put 10% down and the value’s fallen by 25%, then you’re about $75K underwater. That’s a lot of money if you (a) don’t save much, (b) don’t have good job stability, (c) don’t have strong community ties (kids in school, etc.) and (d) the rental alternatives are much cheaper. A lot of those folks will walk. And with good reason.

However, it’s a totally different situation if you (a) have a decent net worth and savings, (b) have good job stability and the mortgage isn’t overly taxing, (c) have strong community ties, and (d) moving under duress would be an issue for family and reputation issues. Most of these folks will gut it out. And there’s a lot of them.

So, it just depends.

[davelj]

[quote=briansd1][quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.
[/quote]

Yes, I think there are a LOT of factors at work in this decision. Among them:

(1) How far underwater is the mortgage in both dollar and percentage terms?
(2) What does this “hole” represent as a percentage of total net worth?
(3) What is the cost of comparable alternatives (that is, comparable rental options)?
(4) How much financial stress is related to continuing to pay the mortgage?
(5) What are the total non-monetary negative externalities with respect to family, image, credit score, job, etc. etc.?

I believe that the current research suggests that the 12%-15% underwater range is where default rates start to hockey stick upwards. Which kind of makes sense.

If you bought a $500K house at the peak and put 10% down and the value’s fallen by 25%, then you’re about $75K underwater. That’s a lot of money if you (a) don’t save much, (b) don’t have good job stability, (c) don’t have strong community ties (kids in school, etc.) and (d) the rental alternatives are much cheaper. A lot of those folks will walk. And with good reason.

However, it’s a totally different situation if you (a) have a decent net worth and savings, (b) have good job stability and the mortgage isn’t overly taxing, (c) have strong community ties, and (d) moving under duress would be an issue for family and reputation issues. Most of these folks will gut it out. And there’s a lot of them.

So, it just depends.

[Author]

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