WSJ-It’s OK to Walk Away From Your Home

[Arraya]

http://online.wsj.com/article_email/SB10001424052748703795004575087843144657512-lMyQjAxMTAwMDIwNjEyNDYyWj.html#articleTabs%3Darticle
Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.

How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

Are you in this situation? Are you still battling to pay the bills each month, even when it may make little financial sense to do so?

It’s time for some tough talk.

Stop trying to chase your lost equity. That money is gone. Don’t think like the gambler who blows more and more cash trying to win back his losses. That’s how a lot of people turn a small loss into a big one.

And do the math. Even if you hope the real estate market is near the bottom—it’s possible, but by no means certain—it may still take years to see any meaningful recovery. If you are 25% underwater, your home will have to rise by 33% just to get you back to even.

[blahblahblah]

When this is appearing in the WSJ, we are about to move into phase 3 of this operation. In phase 3, the institutions holding MBSes are threatened with extinction when mortgage holders stop making payments. The well-connected of these institutions will soon receive bailouts, they’ll retain ownership of the properties, and either rent them back to the previous “owners” (who were really tenants all along) or sell them and pocket the cash. In effect, the US government will have paid to construct lots of housing, and then given it free of charge to financial institutions. Those same institutions will then collect rent in perpetuity or just sell the houses. It’s a win-win, just as long as you’re in the loop (which none of us are).

[blahblahblah]

When this is appearing in the WSJ, we are about to move into phase 3 of this operation. In phase 3, the institutions holding MBSes are threatened with extinction when mortgage holders stop making payments. The well-connected of these institutions will soon receive bailouts, they’ll retain ownership of the properties, and either rent them back to the previous “owners” (who were really tenants all along) or sell them and pocket the cash. In effect, the US government will have paid to construct lots of housing, and then given it free of charge to financial institutions. Those same institutions will then collect rent in perpetuity or just sell the houses. It’s a win-win, just as long as you’re in the loop (which none of us are).

[blahblahblah]

When this is appearing in the WSJ, we are about to move into phase 3 of this operation. In phase 3, the institutions holding MBSes are threatened with extinction when mortgage holders stop making payments. The well-connected of these institutions will soon receive bailouts, they’ll retain ownership of the properties, and either rent them back to the previous “owners” (who were really tenants all along) or sell them and pocket the cash. In effect, the US government will have paid to construct lots of housing, and then given it free of charge to financial institutions. Those same institutions will then collect rent in perpetuity or just sell the houses. It’s a win-win, just as long as you’re in the loop (which none of us are).

[blahblahblah]

When this is appearing in the WSJ, we are about to move into phase 3 of this operation. In phase 3, the institutions holding MBSes are threatened with extinction when mortgage holders stop making payments. The well-connected of these institutions will soon receive bailouts, they’ll retain ownership of the properties, and either rent them back to the previous “owners” (who were really tenants all along) or sell them and pocket the cash. In effect, the US government will have paid to construct lots of housing, and then given it free of charge to financial institutions. Those same institutions will then collect rent in perpetuity or just sell the houses. It’s a win-win, just as long as you’re in the loop (which none of us are).

[blahblahblah]

When this is appearing in the WSJ, we are about to move into phase 3 of this operation. In phase 3, the institutions holding MBSes are threatened with extinction when mortgage holders stop making payments. The well-connected of these institutions will soon receive bailouts, they’ll retain ownership of the properties, and either rent them back to the previous “owners” (who were really tenants all along) or sell them and pocket the cash. In effect, the US government will have paid to construct lots of housing, and then given it free of charge to financial institutions. Those same institutions will then collect rent in perpetuity or just sell the houses. It’s a win-win, just as long as you’re in the loop (which none of us are).

[Rich Toscano]

I liked Ramsey’s version (from 1/09) better:

“Why Be a Nation of Mortgage Slaves”
http://online.wsj.com/article/SB123336541474235541.html

Rich

[Rich Toscano]

I liked Ramsey’s version (from 1/09) better:

“Why Be a Nation of Mortgage Slaves”
http://online.wsj.com/article/SB123336541474235541.html

Rich

[Rich Toscano]

I liked Ramsey’s version (from 1/09) better:

“Why Be a Nation of Mortgage Slaves”
http://online.wsj.com/article/SB123336541474235541.html

Rich

[Rich Toscano]

I liked Ramsey’s version (from 1/09) better:

“Why Be a Nation of Mortgage Slaves”
http://online.wsj.com/article/SB123336541474235541.html

Rich

[Rich Toscano]

I liked Ramsey’s version (from 1/09) better:

“Why Be a Nation of Mortgage Slaves”
http://online.wsj.com/article/SB123336541474235541.html

Rich

[Nor-LA-SD-guy]

Not every situation is the same,

I would say that depending on the location and amount under water and the financial position of the owner, this could possibly be the worst advice I have ever heard (but to each their own).

For other locations (say Palmdale or maybe Phoenix AZ, possibly Denver Co) anywhere there is almost unlimited flat build-able land it may even make a little sense.

For instance I know of a Guy in L.A. who is a 100K under water on his home (he still can easily afford it currently), he ask if it would be a good Idea to walk away.

I said are you planning to live the north L.A. area for the next 10 years ???

He said yes.

I said why ruin your credit (possibly your employability) when in ten years it will all be water under the bridge most likely.

But what ever you want to believe.

[Nor-LA-SD-guy]

Not every situation is the same,

I would say that depending on the location and amount under water and the financial position of the owner, this could possibly be the worst advice I have ever heard (but to each their own).

For other locations (say Palmdale or maybe Phoenix AZ, possibly Denver Co) anywhere there is almost unlimited flat build-able land it may even make a little sense.

For instance I know of a Guy in L.A. who is a 100K under water on his home (he still can easily afford it currently), he ask if it would be a good Idea to walk away.

I said are you planning to live the north L.A. area for the next 10 years ???

He said yes.

I said why ruin your credit (possibly your employability) when in ten years it will all be water under the bridge most likely.

But what ever you want to believe.

[Nor-LA-SD-guy]

Not every situation is the same,

I would say that depending on the location and amount under water and the financial position of the owner, this could possibly be the worst advice I have ever heard (but to each their own).

For other locations (say Palmdale or maybe Phoenix AZ, possibly Denver Co) anywhere there is almost unlimited flat build-able land it may even make a little sense.

For instance I know of a Guy in L.A. who is a 100K under water on his home (he still can easily afford it currently), he ask if it would be a good Idea to walk away.

I said are you planning to live the north L.A. area for the next 10 years ???

He said yes.

I said why ruin your credit (possibly your employability) when in ten years it will all be water under the bridge most likely.

But what ever you want to believe.

[Nor-LA-SD-guy]

Not every situation is the same,

I would say that depending on the location and amount under water and the financial position of the owner, this could possibly be the worst advice I have ever heard (but to each their own).

For other locations (say Palmdale or maybe Phoenix AZ, possibly Denver Co) anywhere there is almost unlimited flat build-able land it may even make a little sense.

For instance I know of a Guy in L.A. who is a 100K under water on his home (he still can easily afford it currently), he ask if it would be a good Idea to walk away.

I said are you planning to live the north L.A. area for the next 10 years ???

He said yes.

I said why ruin your credit (possibly your employability) when in ten years it will all be water under the bridge most likely.

But what ever you want to believe.

[Author]

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