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what will happen if I walk away from my home

More homeowners looking to walk away from home loans

by Moe Bedard

More Phoenix-area homeowners are walking away from their mortgage payments, and many more are likely considering it.

These are not people losing homes due to severe financial problems. “Walking away” now also describes people who can make their payments but

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Mortgage principal reductions will not save housing

by Moe Bedard

In a letter to the CEOs of Bank of America, Wells Fargo, JP Morgan Chase and Citigroup, House Financial Services Committee Chairman Barney Frank wrote, “To save homes on a large scale, we must move past temporary modifications in interest rates or terms and focus on permanent principal reductions that result in truly sustainable mortgages.”

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You may want to think twice before walking away

by Moe Bedard

Walking away sounds so attractive — I know. But throwing the keys in the ditch or the mail will have some troubling implications on your credit score, as well as possible legal ramifications. Also, how will you feel after giving up? How easy emotionally will it be to just walk away?

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Homeowners who walk away are killing real estate values

by Moe Bedard

Mark Zandi, chief economist for Moody’s Economy.com, said he expects the problem to get worse this year and next. “As people struggle to make ends meet, they will say this just doesn’t make sense” about continuing to make payments, he said.
The trend is being fueled by the large number of underwater mortgages –

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When should you bail on your underwater home?

by Moe Bedard

Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.
No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders

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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 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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Is walking away from your mortgage now become main stream?

by Moe Bedard

Financial author Roger Lowenstein writes in the New York Times magazine over the weekend:
Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So [...]

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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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Stripping Homes and Hocking Fixtures on CraigsList

by Moe Bedard

The author of the Craigslist posting in Las Vegas made no effort to disguise his or her intentions.
“Stripping House — Before Foreclosure,” the ad declared, offering potential buyers the cabinets and countertops, the sinks and toilets, the doors, the appliances, the sprinklers. Even the palm and citrus trees in the yard were for sale, with [...]

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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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Stripped Homes, Samurai Sword Wielding Homeowners and Foreclosures

by Moe Bedard

Just another day in the life of a Modesto County Sherrif Deputy
Aviles has seen stripped houses before on the eviction beat, but never one so thoroughly denuded: Every cabinet, sink, toilet, light fixture and even light-switch faceplate was gone. Later, the daughter of the homeowner explained, “We’ve sold cars, furniture, everything we could to put food [...]

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Let’s All Just Walk Away

by Moe Bedard

“We are propping up the market on the backs of the middle class,” he said. “If we are going to prop up the market on the backs of the middle class there needs to be some kind of bailout for homeowners.”
To that end, White, who is slightly upside down on his own home, said he [...]

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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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Underwater Homeowners Should Bail in Rental Life Rafts

by Moe Bedard

Homeowners who are significantly underwater with their mortgages should consider walking away from those, according to Brent T. White, an associate professor at the University of Arizona’s James E. Rogers College of Law.
In a paper titled titled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis,” White writes most [...]

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Homeowners Continue to Walk Away in Droves

by Moe Bedard

He stopped paying the mortgage, basically forcing the lender to take the condo off his hands through foreclosure.
“I was able to pay off all my credit cards,” said Duque, who is biding his time in the condo, waiting until they come and evict him. “In a way, it was the best thing that happened to [...]

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