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walk away from my underwater home

Sometimes walking away from your mortgage makes economic and ethical sense

by Moe Bedard

Q. Many public figures are urging people to pay their mortgages even if they are “underwater.” What does Judaism say about this?

A. Housing prices always have cyclical ups and downs. But once upon a time, mortgages were only given with a hefty down payment, usually at least 20%. The only way the mortgage could be [...]

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Strategic Mortgage Defaults Test Moralists

by Moe Bedard

While many of these 4 million homeowners really can’t afford to stay in their homes, there’s an emerging group who are making a strategic decision to walk away from their homes. It’s hard to pinpoint the numbers but lawyers for mortgage companies are reporting increased incidence of strategic foreclosures.

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Is it moral to walk away from your underwater mortgage and unforgiving lender

by Moe Bedard

Real estate prices have dropped about 30 percent since their peak in 2006. As a result, something like ten million American homeowners owe the bank more than their houses are now worth. More than half of them are stuck with mortgages that are more than 20 percent higher than the value of their homes. They [...]

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More homeowners walking away from underwater mortgages

by Moe Bedard

“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”
After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama

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Plan for mortgage principal reductions pitched to Congress

by Moe Bedard

NEW YORK, Feb 3 (Reuters) – A group of influential mortgage investors is intensifying efforts to encourage a new phase to U.S. housing stability plans that would give homeowners ability and incentive to pay their loans.
Proposals from a coalition led by Fortress Investment Group address the problem of “underwater” loans, whose high balances relative to [...]

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Strategic defaults now the norm for many homeowners

by Moe Bedard

The number of so called “strategic defaults” more than doubled, to 588,000, from 2007 to 2008, according to a study by Experian and Oliver Wyman. A separate 2009 survey found that more than a quarter of all existing defaults were strategic. Meanwhile, a growing number of academics are touting the financial benefits of walking away. [...]

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Should we be looking at it more like a stock trader? Buy low and sell high

by Moe Bedard

Most of us are guilty of it.   A mortgage is meant to be paid off eventually, right?  So why did the lenders invent interest only loans and negative amortization loans?  Clearly to take advantage of buy low and sell high.  Short term homeownership similar to the arbitrage that stock traders get rich off of.  Who [...]

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Tit-for-tat with banks that aren’t behaving like good people

by Moe Bedard

A lot of the resistance I’ve gotten for saying that people ought to pay their debts comes from people angrily declaring that after all, the banks are vicious predators.  In some cases this is true . . . certainly, in the case of Tom Vellucci, which I debated with Felix Salmon last week, the servicer [...]

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Life of the Underwater Homeowner

by Moe Bedard

There’s been some debate in academic circles lately about why more financially distraught homeowners don’t just pack up their belongings and walk away. The short list of reasons: moral shame, fear of credit repercussions, and social and governmental pressure, according to Brent T. White, an associate law professor at the University of Arizona and the [...]

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Attorney Tells Under Water Homeowners to Walk Away

by Moe Bedard

Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don’t feel guilty about it. Don’t think you’re doing something morally wrong.
What kind of law school professorial advice is this? Aren’t mortgages legal contracts? In an interview, White said that in so-called anti-deficiency [...]

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1 in 4 Homes Under Water

by Moe Bedard

NEW YORK (CNNMoney.com) — In a sign that more foreclosures could be on the horizon, 23% of people with mortgages owe more than their home is worth, according to a report released Tuesday.
Almost 10.7 million U.S. mortgages were “underwater” as of September, said research firm First American CoreLogic.
Another 2.3 million homeowners are within 5% of [...]

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Underwater Homeowners Left in the Foreclosure Cold

by Moe Bedard

But Brent White, an economist at the University of Arizona, argues that staying in an overvalued house is fundamentally irrational. He writes in a paper titled “Underwater and Not Walking Away” that lenders exploit fears of a bad credit score and cultural mores against foreclosure to keep people in houses.
“This imbalance is exaggerated by the [...]

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Homeowners in Their 20’s More Likely to Bail on Underwater Mortgages

by Moe Bedard

“Why would I keep paying on a $250,000 loan?” he asked. “I would not ever buy a house again.” (We tried to follow up with this guy, but his number had been disconnected.)
Statistics don’t exist because no one declares their reasons for walking away, but a handful of papers have suggested that there’s something to [...]

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