The new smart financial move is walking away

[LuckyInOC]

[quote=davelj]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.
[/quote]

Dave, would you feel the same if a person as you describe above buys $500k a stock before a crash of 25%. He is upside down in his stock purchase. Should he ‘gut it out’ possibly lose more or would it make more financial sense to cut his loses and put his money to work in a better investment.

My guess would be persons like the one you described would be more likely to walk away because it would be a ‘Business Decision’ and everyone would respect his past success. The person you describe would careless of his credit score. He does not carry outstanding balances on his credit cards. He pays for his vehicles in full. He ‘could’ pay for everything in full including a home.

If I could get it past my wife (I have good understanding how Scaredy feels – bro in arms) and we were upside down with no financial recourse or taxes, I would walk. But because of my understanding of the some dynamics involved with the recent past housing market and much ‘LUCK’, I could now repurchase my home in full (20%less)if I walked away. Of course, I won’t because of my 50% LTV. I owe my 2nd hand knowledge to my younger brother purchased his second home in ’89 when the ‘industry’ was saying house prices ‘never’ drop. I was the only one he knew that said ‘not to buy’. He walked away from that home. He went out and rented a bigger/better home for less than his past mortgage and saved his money. Since then, he has purchased a home that has positive LTV. I learned from his mistakes.

I deeply agree with CA Realtor and AN about luck and being prepared when luck comes your way. I experienced it first hand. After my 2700sf home purchase ’05, we closed our previous 1400sf home (purchased 1yr after the ’89 bottom) 1 week before the mortgage crash for a $27k less than our ’05 purchase. The 80/20 purchase loans for the previous home were with 21st Century. Had I not pushed my agent to close on time, I would have been stuck with two mortgages in a death spiral market.

Lucky or Good, I choose both…
call it Good Luck…

And I am very…

Lucky In OC

[danielwis]

[quote=briansd1][quote=mydogsarelazy]I read the article this morning and found it well done. One thing that is pointed out is that some observers are surprised that more underwater homeowners haven’t yet walked away.

In the coming years mortgage fatigue will wear down many more people. What this article describes is a trend that is really the beginning of a slow melt.

JS[/quote]

I agree. I said the same thing before when it was sacrilegious to even mention it.

Bankers thought that people would sacrifice everything just to keep the house. It turn out that it’s the opposite. People will pay for their cars, dinners out, movies, cable TV, clothing, etc.. before they pay the house.

It’s a new cultural phenomenon; and I’m sure that sociologists and economists will be studying the implications of mortgage walkaways for years.[/quote]

Yup, and here’s another thing, which someone else mentioned above: They see banks getting bailed out, and they see those same bankers collecting record bonuses. Many of these people, might normally try to stick it out, but see the bailouts and the good times rolling on for banks, and decide its time for them to get some relief. For many, that relief comes when they walk away.

[danielwis]

[quote=briansd1][quote=mydogsarelazy]I read the article this morning and found it well done. One thing that is pointed out is that some observers are surprised that more underwater homeowners haven’t yet walked away.

In the coming years mortgage fatigue will wear down many more people. What this article describes is a trend that is really the beginning of a slow melt.

JS[/quote]

I agree. I said the same thing before when it was sacrilegious to even mention it.

Bankers thought that people would sacrifice everything just to keep the house. It turn out that it’s the opposite. People will pay for their cars, dinners out, movies, cable TV, clothing, etc.. before they pay the house.

It’s a new cultural phenomenon; and I’m sure that sociologists and economists will be studying the implications of mortgage walkaways for years.[/quote]

Yup, and here’s another thing, which someone else mentioned above: They see banks getting bailed out, and they see those same bankers collecting record bonuses. Many of these people, might normally try to stick it out, but see the bailouts and the good times rolling on for banks, and decide its time for them to get some relief. For many, that relief comes when they walk away.

[danielwis]

[quote=briansd1][quote=mydogsarelazy]I read the article this morning and found it well done. One thing that is pointed out is that some observers are surprised that more underwater homeowners haven’t yet walked away.

In the coming years mortgage fatigue will wear down many more people. What this article describes is a trend that is really the beginning of a slow melt.

JS[/quote]

I agree. I said the same thing before when it was sacrilegious to even mention it.

Bankers thought that people would sacrifice everything just to keep the house. It turn out that it’s the opposite. People will pay for their cars, dinners out, movies, cable TV, clothing, etc.. before they pay the house.

It’s a new cultural phenomenon; and I’m sure that sociologists and economists will be studying the implications of mortgage walkaways for years.[/quote]

Yup, and here’s another thing, which someone else mentioned above: They see banks getting bailed out, and they see those same bankers collecting record bonuses. Many of these people, might normally try to stick it out, but see the bailouts and the good times rolling on for banks, and decide its time for them to get some relief. For many, that relief comes when they walk away.

[danielwis]

[quote=briansd1][quote=mydogsarelazy]I read the article this morning and found it well done. One thing that is pointed out is that some observers are surprised that more underwater homeowners haven’t yet walked away.

In the coming years mortgage fatigue will wear down many more people. What this article describes is a trend that is really the beginning of a slow melt.

JS[/quote]

I agree. I said the same thing before when it was sacrilegious to even mention it.

Bankers thought that people would sacrifice everything just to keep the house. It turn out that it’s the opposite. People will pay for their cars, dinners out, movies, cable TV, clothing, etc.. before they pay the house.

It’s a new cultural phenomenon; and I’m sure that sociologists and economists will be studying the implications of mortgage walkaways for years.[/quote]

Yup, and here’s another thing, which someone else mentioned above: They see banks getting bailed out, and they see those same bankers collecting record bonuses. Many of these people, might normally try to stick it out, but see the bailouts and the good times rolling on for banks, and decide its time for them to get some relief. For many, that relief comes when they walk away.

[danielwis]

[quote=briansd1][quote=mydogsarelazy]I read the article this morning and found it well done. One thing that is pointed out is that some observers are surprised that more underwater homeowners haven’t yet walked away.

In the coming years mortgage fatigue will wear down many more people. What this article describes is a trend that is really the beginning of a slow melt.

JS[/quote]

I agree. I said the same thing before when it was sacrilegious to even mention it.

Bankers thought that people would sacrifice everything just to keep the house. It turn out that it’s the opposite. People will pay for their cars, dinners out, movies, cable TV, clothing, etc.. before they pay the house.

It’s a new cultural phenomenon; and I’m sure that sociologists and economists will be studying the implications of mortgage walkaways for years.[/quote]

Yup, and here’s another thing, which someone else mentioned above: They see banks getting bailed out, and they see those same bankers collecting record bonuses. Many of these people, might normally try to stick it out, but see the bailouts and the good times rolling on for banks, and decide its time for them to get some relief. For many, that relief comes when they walk away.

[danielwis]

[quote=sdrealtor]No its not safe to say everyone is 15 to 20% off because not all are. No we cant expect them all to walk either. If you put money down you may not be underwater and even if you are 10% to 20% underwater (loan to value) you want to try to get your money back. Thats the way most i have run into think.[/quote]

I agree. But, if the market stalls, and maybe back tracks down a bit, many of these people who were hoping for a quick(ish) turn around may get despondent about the time frame, and join the ranks of those that walked. Its a psychological thing for most people. Many will see a five or even ten year time frame for a turn around as reasonable, and try to hold on. But if people begin to feel that the time horizon might be longer than that, many more will begin to walk. Throw in other factors (location changes, job changes, job loss, divorce), and the number that walk likely remains high for some time.

[danielwis]

[quote=sdrealtor]No its not safe to say everyone is 15 to 20% off because not all are. No we cant expect them all to walk either. If you put money down you may not be underwater and even if you are 10% to 20% underwater (loan to value) you want to try to get your money back. Thats the way most i have run into think.[/quote]

I agree. But, if the market stalls, and maybe back tracks down a bit, many of these people who were hoping for a quick(ish) turn around may get despondent about the time frame, and join the ranks of those that walked. Its a psychological thing for most people. Many will see a five or even ten year time frame for a turn around as reasonable, and try to hold on. But if people begin to feel that the time horizon might be longer than that, many more will begin to walk. Throw in other factors (location changes, job changes, job loss, divorce), and the number that walk likely remains high for some time.

[danielwis]

[quote=sdrealtor]No its not safe to say everyone is 15 to 20% off because not all are. No we cant expect them all to walk either. If you put money down you may not be underwater and even if you are 10% to 20% underwater (loan to value) you want to try to get your money back. Thats the way most i have run into think.[/quote]

I agree. But, if the market stalls, and maybe back tracks down a bit, many of these people who were hoping for a quick(ish) turn around may get despondent about the time frame, and join the ranks of those that walked. Its a psychological thing for most people. Many will see a five or even ten year time frame for a turn around as reasonable, and try to hold on. But if people begin to feel that the time horizon might be longer than that, many more will begin to walk. Throw in other factors (location changes, job changes, job loss, divorce), and the number that walk likely remains high for some time.

[danielwis]

[quote=sdrealtor]No its not safe to say everyone is 15 to 20% off because not all are. No we cant expect them all to walk either. If you put money down you may not be underwater and even if you are 10% to 20% underwater (loan to value) you want to try to get your money back. Thats the way most i have run into think.[/quote]

I agree. But, if the market stalls, and maybe back tracks down a bit, many of these people who were hoping for a quick(ish) turn around may get despondent about the time frame, and join the ranks of those that walked. Its a psychological thing for most people. Many will see a five or even ten year time frame for a turn around as reasonable, and try to hold on. But if people begin to feel that the time horizon might be longer than that, many more will begin to walk. Throw in other factors (location changes, job changes, job loss, divorce), and the number that walk likely remains high for some time.

[danielwis]

[quote=sdrealtor]No its not safe to say everyone is 15 to 20% off because not all are. No we cant expect them all to walk either. If you put money down you may not be underwater and even if you are 10% to 20% underwater (loan to value) you want to try to get your money back. Thats the way most i have run into think.[/quote]

I agree. But, if the market stalls, and maybe back tracks down a bit, many of these people who were hoping for a quick(ish) turn around may get despondent about the time frame, and join the ranks of those that walked. Its a psychological thing for most people. Many will see a five or even ten year time frame for a turn around as reasonable, and try to hold on. But if people begin to feel that the time horizon might be longer than that, many more will begin to walk. Throw in other factors (location changes, job changes, job loss, divorce), and the number that walk likely remains high for some time.

[Anonymous]

Scaredy’s wife is a doctor? Which character from Scrubs is she most like? I’m guessing she’s like the Monica-from-Friends character who was chief resident for a while.

Also, I get the impression that most of the people who are arguing with scaredy about compromise within a relationship aren’t married. If they were married, they would understand the need to compromise. You either compromise or eventually you get divorced. That’s how it works.

Someone also mentioned Bill Gates as an example of someone who ‘took a risk’. No. Bill Gates’ dad was the ‘Gates’ in the law firm ‘Preston Gates & Ellis’:

http://en.wikipedia.org/wiki/Preston_Gates_&_Ellis

Bill would have never had to work a day in his life if he didn’t want to. Instead, he used the connections his dad made from his law firm, bought an operating system with his parent’s money, and then used his parents money to market the hell out of it. That’s not exactly pulling oneself up by one’s bootstraps.

I also find it funny when I see realtors trying to chalk their good fortune up to ability over luck. If the government wasn’t propping up the housing market with trillions in taxpayer dollars, realtors would be eating cat food. Realtors are a protected class in America just like banksters and other welfare queens.

[Anonymous]

Scaredy’s wife is a doctor? Which character from Scrubs is she most like? I’m guessing she’s like the Monica-from-Friends character who was chief resident for a while.

Also, I get the impression that most of the people who are arguing with scaredy about compromise within a relationship aren’t married. If they were married, they would understand the need to compromise. You either compromise or eventually you get divorced. That’s how it works.

Someone also mentioned Bill Gates as an example of someone who ‘took a risk’. No. Bill Gates’ dad was the ‘Gates’ in the law firm ‘Preston Gates & Ellis’:

http://en.wikipedia.org/wiki/Preston_Gates_&_Ellis

Bill would have never had to work a day in his life if he didn’t want to. Instead, he used the connections his dad made from his law firm, bought an operating system with his parent’s money, and then used his parents money to market the hell out of it. That’s not exactly pulling oneself up by one’s bootstraps.

I also find it funny when I see realtors trying to chalk their good fortune up to ability over luck. If the government wasn’t propping up the housing market with trillions in taxpayer dollars, realtors would be eating cat food. Realtors are a protected class in America just like banksters and other welfare queens.

[Anonymous]

Scaredy’s wife is a doctor? Which character from Scrubs is she most like? I’m guessing she’s like the Monica-from-Friends character who was chief resident for a while.

Also, I get the impression that most of the people who are arguing with scaredy about compromise within a relationship aren’t married. If they were married, they would understand the need to compromise. You either compromise or eventually you get divorced. That’s how it works.

Someone also mentioned Bill Gates as an example of someone who ‘took a risk’. No. Bill Gates’ dad was the ‘Gates’ in the law firm ‘Preston Gates & Ellis’:

http://en.wikipedia.org/wiki/Preston_Gates_&_Ellis

Bill would have never had to work a day in his life if he didn’t want to. Instead, he used the connections his dad made from his law firm, bought an operating system with his parent’s money, and then used his parents money to market the hell out of it. That’s not exactly pulling oneself up by one’s bootstraps.

I also find it funny when I see realtors trying to chalk their good fortune up to ability over luck. If the government wasn’t propping up the housing market with trillions in taxpayer dollars, realtors would be eating cat food. Realtors are a protected class in America just like banksters and other welfare queens.

[Anonymous]

Scaredy’s wife is a doctor? Which character from Scrubs is she most like? I’m guessing she’s like the Monica-from-Friends character who was chief resident for a while.

Also, I get the impression that most of the people who are arguing with scaredy about compromise within a relationship aren’t married. If they were married, they would understand the need to compromise. You either compromise or eventually you get divorced. That’s how it works.

Someone also mentioned Bill Gates as an example of someone who ‘took a risk’. No. Bill Gates’ dad was the ‘Gates’ in the law firm ‘Preston Gates & Ellis’:

http://en.wikipedia.org/wiki/Preston_Gates_&_Ellis

Bill would have never had to work a day in his life if he didn’t want to. Instead, he used the connections his dad made from his law firm, bought an operating system with his parent’s money, and then used his parents money to market the hell out of it. That’s not exactly pulling oneself up by one’s bootstraps.

I also find it funny when I see realtors trying to chalk their good fortune up to ability over luck. If the government wasn’t propping up the housing market with trillions in taxpayer dollars, realtors would be eating cat food. Realtors are a protected class in America just like banksters and other welfare queens.

[Author]

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