NPR says walking away from a home need not be a shameful decision. The station’s reporters found a web site called You Walk Away that “empowers homeowners who purchased their homes at the peak of the real estate market to take control of their financial future.” Which is not-so-subtle code for reneging on your mortgage.
The site has an interactive calculator that helps you figure out whether you should walk or not. Seeing how their business is helping people walk away, I’m guessing the calculator is biased. Still, it may be worth looking into for some readers.
April 3rd, 2009 at 4:32 pm
I’ve just lost a lot of respect for NPR.
We purchased in August 2005. Even though we put 20% down, we still owe more than our house is worth, and yes, it sucks to be in this position. But we signed that paperwork, saying that we would make this payment every month. We knew the terms, we knew there was no guarantee that our property would appreciate. Isn’t keeping your word important to anyone anymore? Only when it’s in your best interest?
Ethics aside, while it may make financial sense to the individual who is walking away from the house, every person who does creates one more toxic asset that is contributing to our current financial crisis. That means another fire sale in your neighborhood that further depresses property values, and more taxpayer money going to your bank.
The more people that choose to honor their obligations, the less taxpayer money spent on toxic assets, and the sooner our economy can recover and we can see our properties start to appreciate again (I realize it’s not quite that simple and there are a lot of other steps – but fewer defaults will only help the economy). Choosing to walk away is very short sighted.
April 5th, 2009 at 4:58 pm
It is a hard world now. It is not the good old
America we wish it was. I gambled and lost when
we got too many refinances on our house.
We sold it and actually got a small profit because
we were selling at almost the peak of the market.
This was not because we were making the choice
knowing the bubble would burst soon. We didn’t
know anything like that. We just knew we could
no longer meet the payments. We sold just in time.
But because of the way we had been living on credit
we eventually had to declare bankruptcy. I felt so
guilty. But a friend of mine said that sometimes
you just have to look at it in terms of survival.
True it just doesn’t sound too right for people
to just walk away. Hopefully some are doing
this in the same spirit that we had to see,
“hey this is survival”
I do not see anything wrong with looking at some of
these principals in terms of survival. Now if some
are trying to avoid the consequences of bad
decisions, but they can still find a way to keep
paying, that would be honorable.
But if they want to walk away though they can actually manage to make payments, I can’t see walking away (as a calculated step just because it is a “smart move”) being a good thing for anybody.
That would be akin to what the very rich business world does all the time just because they weigh how much loss and how much savings and decide to declare bankruptcy when just opting out of the deal makes “better business sense”.This is more
logical if one is looking just at the numbers . And they do this repeatedly without any consequences from the law.
But it creates a lot of burden on the middle class who foot the bill. And the same goes for “walking
away”
I live with the regret of losing my home because
of bad decisions, but once I was in trouble
I had to make the best decisions I could to
just survive in this economy.
Therefore I believe there does need to be, in
our lives now, a rule of not judging because now
we are all just one mortgage payment away
from the Street. And if you are “getting by”just be utterly thankful.
April 6th, 2009 at 10:32 pm
You made some good points there. I did a search on the topic and found most people will agree with your blog.
April 12th, 2009 at 10:25 pm
Nice site! Thanks for the great post