[dfwgator]

And she’ll be 95 years old by then. And here is the motivation to walk away from the houses and the losses. 7 years of bad credit, but save, after interest charges, over $250k in the same loan period.

Be careful here, my understanding is that when a bank forgives loan and take it off the book, that is treated as a gain to the borrower for tax purposes, and now they are stuck with a tax liability, and that you don't just get to walk away from.

[LomanBill]

[that is treated as a gain to the borrower for tax purposes, and now they are stuck with a tax liability, and that you don't just get to walk away from. ]

 

Ding ding ding - winner!

 

And thus a house becomes a debtor's prison; substantiating the notion that the major difference between a castle and a prison is merely the direction the guns are pointing.

[woollyone]

agreed...though even the tax burden for the write-off is still a potential lowering to the net loss for those with resources to pay the tax.

In my neighbors case...

~$45k to the IRS
-vs-
~$300K loss(after loss of value in the principle on the note, plus the interest paid over 27 remaining years, plus the equity,) by remaining in an 50% undervalued investment.

[EVO X]

Be careful here, my understanding is that when a bank forgives loan and take it off the book, that is treated as a gain to the borrower for tax purposes,

Congress provided relief for a year or 2 on this. It isn't permanent...