Who’s going to rent to them? Their credit will be destroyed.
Gee, everybody wins when people walk from their mortgage, and it stimulates the economy too...yeahhhhhhhhh/s
That tells you all you need to know.
How will walking away from your morgage affect your credit score and ability to buy a home in the future?
Lindsay, the Ph.D. candidate, should know that the federal government taxes “forgiven” debts as income.
All those refi's to the lower rates didn't hurt either. The other bozos used the rates to bump up their living standard, but....some of us used it to ensure that we could stay where we were.
Choices, choices....they all have consequences.
On Friday, the Feds reported that 95% of all new mortgages have been issued by Fannie and Freddie Mac, the govt system with NO regulatory control. Private banks issued just 5% of all new mortgages.
What this author (a Ph.D. candidate at Stanford) suggests would more than damage the private banks and further strengthen the govt financial entities.
Further, I cannot ever remember an author recommending purposeful default.
Ok, you walk away from a $1,500 mortgage payment so you can rent a $1,500 a month apartment?
If she is advising a deed in lieu she is being irresponsible not to also mention this will have as negative effect on your credit as a forclosure
A good friend told me she’s ‘giving’ her house back to the bank next year. I wonder what that could mean????
Zero Hedge is predicting QE2 on a vast scale which will cause a large wave of refis.
Dumbing responsibility & accountability downward. We are led by a lawless/corrupt man & he begets a lawless congress. We will become a lawless nation - joining the lawless/corrup world.
This article is insane.
And think about this - if a homeowner walked away from his/her mortgage, should this person be allowed to have other mortgages in the future and if so, should he/she be allowed to make a profit on selling a future home?
If you won’t is a lot different than if you can’t pay.
If you just don’t want to pay for the bad deal you made walking away can be a solution if your sense of ethics is low enough and you don’t mind sticking others with your financial loss.
Nothing is free.
If the purchaser reneges on their obligation the loss is sustained by other consumers and/or taxpayers (aren’t they the same people?).
But isn’t it discriminatory to allow only home owners to renege on their loans? After all, what about the people who would have bought a house but didn’t (like the blacks who got reparations for farm loans on farms they never owned.
What about people who are upside down on other types of loans? What about people who bought something that no longer satisfies?
For true equality the financial institutions and the federal government will also need to make arrangements to allow others with poor judgment, poor luck or poor taste to walk away from other losing financial obligations.
- Lost a pile at a gambling casino?
- Got a car that you no longer want?
- Need to throw a big wedding reception beyond your wherewithal?
- Want to take the girlfriend on a world cruise you can’t afford?
- Want to buy a fast food franchise but you’re living on welfare?
No problem - Be a Progressive Thinker!
Take a loan out to pay for whatever you want and walk away from the loan payments.
Sure it makes sense, now that honor and personal responsibility have been declared null and void by the leftist, ruling class. Any time you buy a new car, you’ve paid dramatically more than the thing is actually worth. So should all of those obligations also be “walked out on???”
It is not the best thing to do - but getting out from under the mortgage payment and living cheaper can equate directly to personal and family financial survival... If foreclosure is a highly likely - then walking out early means retention of cash reserves... assuming the family finds a cheaper way to live... The consequences are about the same... Hitting the bottom means hitting the bottom... A loss of a job brings consequences - loss of a home... It is not immoral to lose your home if you lose your job and cannot get another one.
I get the impression that a number of posters on this thread are quite naive and have never gone through tough times... Tough times happens even with the best of intentions and actions to do otherwise.
Consequences of a Foreclosure or Walking on a mortgage - the IRS Regs. considers relief of debt as income... Under a foreclosure or walking away a 1099 is likely to be issued by the mortgage for the unpaid balance of the mortgage - this could be a huge amount - say $100,000 or whatever... You are then obligated to pay Federal Income Tax on that amount as added to your income for that tax year.
Knowing that the bank would prefer having the home occupied than vacant, they'll plan to either live in the home for free or for those who own another home, they'll rent out the foreclosed home and pocket the proceeds. The backlog in courts is such that they can easily rent out the home for 12 months this way. Depending on the area and court backlog, the less risk averse may go for a second year renting and pocketing the proceeds..
There are people who have defaulted on their mortgages, who are quite able to foot the bill but choose not to do so, in the full knowledge that banks are being very slow to foreclose and evict ... hey, more free money! Live rent free in a great house for a year or more! That the house has negative equity is a further perverse incentive.