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It's called "strategic default," and experts say it stems from frustration with home values that have plummeted since buyers bought or refinanced at the peak of the real-estate boom, and banks dragging their heels on loan-modification requests.

This is what we in my house are facing. Ever since we bought here in Southern California in 2006, we have been making our payments in time, never missing one. In August of 2009, trying to make sure we could continue even as we faced a loss of income, we proactively asked our bank for a loan modification.

We followed the bank's instructions to the letter, complied with every document request, idiotic as it may have been...and all we got was a very nice (sarc) form letter from them saying "sorry, your 'mortgage vs income' ratio doesn't qualify you for the Federal program, and because you haven't been paying your full monthly payments for 6 months, now you're not eligible for our own in-house program and we're notifying all the credit bureaus that you've fallen behind on your payments."

Nevermind the fact that we never asked to be in the Federal program, or that we missed the cutoff for that program by 0.5%

And yet, there are people who'll say that this is all my fault "for buying more house than I could afford."

We moved back to CA in 2002 and bought a home in 2003. We had purchased one home before and had a great experience with the process. When we bought the second time - we were young and really naive about the process. We by no means bought an expensive house - $215,000 which bought us a decent home just outside of the crappy side of town.

When we went to sign papers, it was totally different than the good faith estimate we had originally seen but wanting a home for our family - we figured we could refi the 80/20 ARM loan and everything would be okay.

We NEVER refinanced the loan and took out money for bills/fun stuff - we did refi trying to get into a better loan while keeping our payments low and by the time everything was said and we owed $270,000 on a house that eventually was worth $140,000.

My husband and I worried ourselves sick as the ARM came closer to adjusting. Sick. There were nights I laid awake terrified wondering what was going to happen to our family. We tried a loan mod and Countrywide offered us a monthly payment that was $500 more than what we were paying each month.

Feeling like there was nothing left for us to do - we walked. That was two years ago. Our house just went up for auction last week. It has been the most frightening and embarrassing situation of my life - I totally understand what you're going through.

Nothing is ever black and white and not everyone who chooses this is the s**t at the bottom of your shoes. We made a mistake and believe me we have learned a huge lesson from it but ultimately, it was the best decision for our family.

Now I am looking for jobs outside of Southern California, and if one comes up, I'll just walk away from the house, and let Wells Fargo worry about it...hell, my credit rating's already messed up thanks to them, anyway.

Do you not see the ridiculous nature of your statement? You blame your credit problems on your bank? I feel sorry that you are having problems, but let's be real here for just a minute, do you think there is anything that you could've done to avoid the situation that you are now in? I say that as someone who sold their property in CA back 06, knowing I was going to have a difficult time when my mortgage's arm reset, so I sold ahead of time. I moved to an area of the country where taxes and property was much lower. I really liked many things about So. Cal, but I simply couldn't afford to live there, so I pro-actively avoided the situation you now find yourself in, as you should have been able to do, as well. I find your blaming your bank for your damaged credit to run counter to almost everything we conservatives stand for, and may I suggest you look into the website called Democratic Underground, you'd probably feel more at home there. You can google it.

“Nevermind the fact that we never asked to be in the Federal program,”

You asked by applying for a loan modification.

All loan modifications are a federal program, no bank would consider talking to you on their own!

In the long run you will be better off. You will be forced to pay as you go in life and will have learned a lesson nobody wants to learn.

I tend to blame the reality and the appraisers for a lot of this. Funny, when you want to have your house appraised for whatever the dam thing isnt worth it. Yet when the new owners wanted to borrow for that place, it was worth every penny.

Case in point. My place in AZ, which I built, was appraised that considerable less than the county had it at. The appraiser claimed he couldnt find any comps. I built it per N Mi specks and the guy had no idea. So, when we wanted to get a conventional loan to get away from the construction loan, the appraiser wouldnt give the proper value to the place. The land alone was worth about 80 grand. He appraised the whole thing, Brand new house and the land at 90 grand. So he was saying the house was worth just 10 grand. The county assessment was at 110 grand..or half of what the sale price would be.

Oh we got our loan-no problem. And we pay the loan each and every month. Yet, we lost value in the end because of one guy...a real typical shyster appraiser.

Now if we go to sell that place and the new owners go to borrow for the place, the bank will say..”But it was appraised at 90 grand! GD them assholes! It was their friggan appraiser! THEY SET THE SALE PRICE!

“We followed the bank’s instructions to the letter, complied with every document request, idiotic as it may have been...and all we got was a very nice (sarc) form letter from them saying “sorry, your ‘mortgage vs income’ ratio doesn’t qualify you for the Federal program, and because you haven’t been paying your full monthly payments for 6 months, now you’re not eligible for our own in-house program and we’re notifying all the credit bureaus that you’ve fallen behind on your payments.”

They are forcing you into default..if you havent already.

Think of it this way.
Harvard, Princeton and Yale-Banks, Bullets and Bombs.

Lawyers plus Bankers lead us to war.

I really feel bad for people like you. They have a good Job, grab a piece of the dream and then lose their jobs and its your fault because you now cant afford a place you could afford before.