I do not understand why others look at this as a moral issue. It is a simple business decision. Look at the world today, how many employers out there are keeping their employees? A simple business decision is made to terminate an employee regardless of its ramifications to the former employee. Where are the morals in that?

My advice if you choose foreclosure is to approach it like a business transaction with the Bank – look for someone important with decision-making authority – and tell them your intent. Tell them it is not what you want but unless they are willing to work with you “Sorry this decision is the best for my husband and I”. I realize you have tried talking to the bank but you need to get someone outside of the simple minion status. Look for someone close to the top by reviewing the Banks’ SEC Financial reports and get in touch with them.

Just my 2 cents

So my family is faced with no way to refinance to a fixed rate loan and shoveling money into a bottomless hole we can not dig our way out of. Saying it is unethical is sickening when I fully intended to meet my obligation. Should I just continue paying $5000-$6000-$7000 a month until I am absolutely bankrupt? And now that my home is worth so much less does it even make sense to pay decades on a loan that will still have us walk away with nothing at the end? My family has to come first.

We bought a home we could afford. We are not frivilous people who take tons of vacations and drive expensive luxury vehicles. In my 22 years of marriage we have taken 3 awesome family vacations. That’s it! We are the only ones in our neighborhood who didn’t put in a great backyard. Ours is still dirt because we didn’t want to do it until our loan was fixed and then we’d pay cash to have it done. My car is paid for w/ 135K miles and my husbands car has 91K miles on it. Our oldest child is in college and we are not eligible for any financial aid. We pay for what we need and are not asking for a bailout.

Until you are in this kind of situation I would ask you to stop being so judgemental. I had no control over the fact that my home would lose such a substantial amount of equity. I had no idea we were even affected by this mortgage problem at all until I went to refinance!

Debtors prison and not being able to get a mortgage again for 30 years??? Please. We are not criminals. We were swept under by something we could not control. And I don’t feel I’ve compromised my morals or values either.

Why only homeowners are said to be greedy when the whole economic crises has been triggered by lenders, banks etc got greedy and made bad loans for short term gains.

How could you talk about obligations/ethics when bank themselves are selling the same house for half the price in a neighbourhood of a person who bought the house paying double.

I would say its totally unethical to drop your kids out of good college so as to save money to pay your mortgage for house thats worth nothing. The result would be uneducated new generation and what would they do….. guess what??? another meltdown.

So, please stop teaching people about obligation and ethics. Homeowners and banks needs to get together to fix this problem. Homeowners and banks both needs to take their part of pain in order to bring up the economy.

Ofcourse those people would also have to take the pain who were not responsible for this mess, through tax. Ultimately only taxpayers can bring up this economy.

If you already paid 300,000 dollars then you have taken your part of pain and the other part belongs to lenders/banks.

This whole problem was because Congress forced banks to loan to black people and other minorities.

End of argument. He is right 99.8% of the time, good enough for me.

And this was caused by the insane monetary and fiscal policies of the Federal Government and the Federal Reserve.

The consequences must be faced, now or, much worse, later. Better now.

Maybe it is because these people who walk away from houses have hurt and are still hurting all of us who have been responsible? Did you notice that the economy is a mess and that millions of people lost their jobs just last month? Sure they aren’t the only ones to blame, but they are on the list of those to blame. They are hurting our retirement savings, they are one of the causes why so many people are unemployed, they are hurting their responsible neighbors. If they live in a condo as opposed to houses, their neighbors may end up paying their share of common charges.

I’ve been responsible all my life, waited and rented until I could save enough to buy; commuted for 50 miles one way for 2 years in 89-90 waiting for real estate prices in my new location come down while saving money so that I could afford to buy a place in the new area; bought condos instead of houses so I could easily afford the payments. Now these people who are walking away are partially responsible in losses in my investments. They are also one of the reasons some friends of mine lost their jobs just a month ago; and why I am scared as hell for my job.

To those who say how they thought that house values can only go up. Where were you in the 90s? There were areas in the US where the prices dropped over 50%. For example, on the East Coast, some co-ops that were selling for over 90K in late 80s was selling for 30K in the 90s; condos that were selling for 160K in late 80s were selling for 90K in the 90s. When I bought my current home in late 90s, the sellers wrote an additional check to their bank since the amount of money they could get didn’t cover what they owed the bank. 1990s aren’t exactly last century. Were you all born in 2000s? I didn’t know banks were giving mortgages to children…

You believed a salesman. How did you not know that was a mistake?
Why should I have anymore sympathy for you than for someone who bought into the stock market in fall of 2007 because their adviser told them too? You actually have the better situation because you have a house to show for the money you’ve paid.

“We didn’t understand the market or that homes could go down so intensely.”

If you make a huge purchase like a home you should probably do a little research so that you do “understand the market”. RE crashes aren’t unheard of. Look up the Houston RE crash in the 80s.

Walk away from your mortgage and the rest of us will pay for it with our taxes, but learn from your mistake. Maybe you should stop feeling sorry for other people’s brains and take a look at your own.

The whole way the mortgage industry worked from 2003-2006 was basically a huge scam. Should the people who invested with Bernie Madeoff lose every penny because they made the mistake of investing with a criminal? The government will step in and help them. The banks were basically doing the same thing for the past few years. They created an elaborate ponzi scheme and anyone who got caught up in it is now screwed. I’m sure if you had been caught by this scheme cooked up by the mortgage companies you’d be singing a different tune. How does it go? Judge not less you not be judged? Maybe you not to apply that morality to your own life.

Maury if you get out of a phone contract by paying penalties, you’ve fulfilled the contract.

Bucky, you kinda made my point instead of disproving it. If they have their names in the paper for their misdeeds, then they were probably succesfull for a season, then lost their success ala Madoff.

However, I stated that people with integrity are usually financially successful. That doesn’t mean the reverse is true. One of the Forbes Richest this year is a Mexican drug lord. It is sometimes possible to rape, plunder and pillage, then die peacefully in one’s bed, but it’s pretty rare.

And I don’t know if my opinion is “internet bullshit”, but yes it is my subjective observation, not published research. And I came at it not by oberving who is financially successful, but by a lifetime of watching those I know best, and still respect.

Lastly my life has been full of moral dilemmas, and I sometimes disappoint myself and don’t always live up to my own standards. I work for myself and own a very small business. Simply paying my taxes honestly is very hard since I pay WELL over 50% when you add up business taxes, FIT, my SS, my single employees matching SS, my self employment tax, property taxes (both on my house and on a small commercial building I own), sales taxes and so forth.

You could even start a really big business operation, since most of the third-world still works on a cash-only basis – you probably wouldn’t be traced down.

Although, they may hunt you down if you ever come back to the States, you would probably have to lay low for a while.

Yes, it is.

But the contract never says that if you give up the house, the loan is considered paid in full.

The contract says that you promise to pay back the loan principal plus interest according to terms.

The fact is, if you walked away from your mortgage, you breached the contract. That is why they leave a black mark on your credit report. Now, whether walking way is moral or not, that’s up to your individual standard.

A previous poster sad mortgages are contracts. Right he is.

Lets look at the other side. When a corporate business has made too many wrong decisions (contracts), they can declare Chapter 11 (reorganization) bankruptcy.

Meaning, they get to keep most assets, their jobs, salaries, operations, etc. They can accept or reject most obligations such as lease. Loans are reset, canceled or reduced.

They screw stockholders (investors) and creditors.

So why is this tool (getting out of bad obligations) wrong on our side but not on the other?

Something to ponder. Get rid of Chapter 11 in favor of chapter 7 (full liquidation) and now the playing field is level.

Otherwise, not.

“stealing is immoral”

This is the crux of the tsk-tskers who want to make a legal contract into some moral issue.

The banks applaud you all, btw, for doing their dirty work for them by trying to increase the cost of loan default by making it a moral issue.

But I have yet to understand what is being stolen? The home has not been stolen — it has been returned to the lender as stipulated by the contract.

The only thing that the lender doesn’t get is the anticipated future profits. Which is the same thing that the buy is losing as well.

Both buyer and lender took a risk that the property would continue to increase in value.

It didn’t. And now people want the buyer to assume all the downside.

The sad fact is that the banks didn’t care about the future value of anything. They were all and only about generating loan processing fees in the short term. That is why they were offering 0% down loans with all the fees rolled up into the loan. The financial institutions spent a decade lobbying congress to relax the mortgage rules and they got what they wanted. They spend hundreds of million educating the public to the new “reality” that you could buy for the same amount you could spend on rent. It wasn’t true, of course, but that didn’t matter. They conned people into high-risk loans. And when it all went South, they got congress to give them hundreds of billions of dollars.

And people here are upset at the morality of the buyers?

Oy vey.

Yes, a few of the commenters here were greedy mo’fos. No less so than the banks lending them money with nothing down.

Still … the banks wrote all the rules and they wrote the rules people who walk away. So if people decide to walk away, they pay the consequences and go on with their lives.

That’s how it works in business. I can name a dozen major corporations that have declared bankruptcy over and over and over again to get out from under their debt and the “free” market rewards their actions as smart business moves.

Why is it different for individuals?

Stealing is immoral, regardless of the amount or whatever recourse your victim has, or whoever the victim is.

However, many times immoral things are legal. And I can understand why some people would do immoral but legal things at tough times. I can even understand why some people do illegal things at tough times – like stealing to feed his child.

So you bought a $600K house that is now worth only $200K. That was your mistake. Your mistake does not relieve you from your obligations, legal or moral. Simple.

for those of us who think of our house as an expense, then who cares what its worth. if you dont have an ARM then the payment is the same, and your getting the same utility out of the house today as you were yesterday. if you can afford it. then stay.