You nailed it. For over two years I have been telling my friends that are stuck to stop paying. Every one eventually had no choice. The ones that did the best are the ones that stopped earliest. It is not immoral. It is simple contract law. And the result is a temporarily damaged (notice I did not say “permanently destroyed”) credit score.
Heck, I just found out my brother in law that had nine rental homes in Arizona just walked away from ALL of them. He still owns the home he lives in though, and makes the payments. He still has a good job (very good, actually). He just lost all of his renters as things went sour and the payments would have quickly bankrupted him.
If one is late one month on a 2,000 a month payment (this is a 240k house at 5.x percent) then it may take him 4 months to pick that up, with the usual left-over of $500 monthly “just in case”.
I use my own example.
I planned on a “just in case” that was similar to a car payment. I own a paid-off car, so I had no car payment. But after 4 months of unemployment, I found 16 months of catch up . like an imaginary Mercedes payment.
Coming to the end of that, I’m glad I planned this way. But still... 4 months isn’t even that bad. I was returning cans and working at an arcade, third shift stocking shelves and digging ditches at construction sites within my first 2 weeks of unemployment. it’s very difficult.
My story isn’t even one of a predatory loan - but a predatory ex wife who promised to be there with her income... which quickly went the direction of another dude 7 years younger than me within my first 2 weeks of unemployment.
Anything can happen. People lost their homes before 2004 too.
Hi RobRoy,
Thinking of walking away here too. Upside down 100K AND going through divorce. I have kept the house as part of the divorce but is going to be tough to make the payments and it is worh far less than the loans (100k). What do you think?
You're kidding us, right? I would never think of doing that, agreements are agreements........