Would You Walk Away From Your Home?
Have you heard of the term “jingle mail?” It’s hipster lingo for someone mailing their house keys back to the bank and walking away from their home. A less amusing term is “ruthless default.”
Calculated Risk has an interesting blog today that consolidates a few articles that cover a rising trend of people abandoning their mortgages and, subsequently, their homes. I saw an article last week that claimed that 10 to 15 million households may walk away from their homes.
But will it really be that bad?
One of the regular contributors at Calculated Risk questions the lack of data used to support these claims.
At what point would you consider walking away from your home?
If you could still afford your mortgage payments and had no real reason to move, but your home was now worth significantly less (say 30%) than what you owed the bank, would you consider walking away?
Do you believe that there is a moral or ethical obligation to repay the bank when you take out a loan? Or is the bank’s ability to be “repaid” by taking back the house enough?
have you considered just how many homeowners
1) put $0 down
2) paid either only interest or minimal principal + interest each month
If I was in that sitution, would not walk but would run away from the house.
No loss of equity and would not be buying another house for a while so would have time to work on the black mark on credit.
Yeah, in 2006, approximately 45% of first time buyers used no money down.
What percentage of them are now under-water and need to move? I have no idea.
I also wonder what percentage of people have decided to stop making their mortgage payments and focus on credit card debt in order to salvage their availability to cash…
IMO- they should have never put themselves into that position. I think there are several people to blame. The lenders, the real estate “pros” and the buyers.
Morally they should not walk away they should make the best effort to fulfill the obligation. The bank (especially in this market) should bend over backwards to make sure they keep the home. There is a trickle effect from the entire mortgage mess, and it touches us all.