Walking away from a bad mortgage

NPR on walking away from a mortgage. Over the last decade we turned homes into houses (that are merely investment vehicles). In the financial world, if an investment plummets south, you cut your loses and walk away rather than risk more exposure. There isn't any moral contract. It's pure math. Anyone that still thinks otherwise, like these chumps on Digg, needs to grow up. This is classic:

"We need a culture of responsible consumers and homeowners," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, echoing a deep-seated American belief that one should always honor financial obligations.

Comments

[Viceroy]

If you haven’t already, you might check out the following link: http://youwalkaway.com/

I’ve looked seriously into starting a similar ‘F**k the Banks’ foreclosure consultation service in my area (under more PC pretenses). Perhaps unsurprisingly I’ve had trouble finding a reputable lawyer willing work on this project. These businesses ARE coming though. They’ll have their very own bandwagon.

[Viceroy]

If you haven’t already, you might check out the following link: http://youwalkaway.com/

I’ve looked seriously into starting a similar ‘F**k the Banks’ foreclosure consultation service in my area (under more PC pretenses). Perhaps unsurprisingly I’ve had trouble finding a reputable lawyer willing work on this project. These businesses ARE coming though. They’ll have their very own bandwagon.

[chadmalik]

Gail Cunningham really should look into a second career in standup comedy.

[Tangurena]

I'm going to recommend you visit Calculated Risk. They blog a lot about the real estate business and how the liquidity/credit meltdown is affecting things.

My suspicion is that the large attention being paid towards "ruthless default" and "jinglemail" is a PR campaign to convince folks that There Is A Problem™ and There Ought To Be A Law™. The lending industry has gone out of their way to get deregulated and the credit meltdown is the end result. I further suspect that the end result of this PR campaign will be to further make bankruptcy harder to obtain, and make far more financial debt non-dischargable in BK. There will be no consequences for irresponsible lending to people who shouldn't be borrowing, except to screw those people even more. When will the Casey Perins (see "caseypedia" for more info) and Harry Macklowes (see WSJ) end up in court? Never.
http://calculatedrisk.blogspot.com/2008/02/lets-talk-about-walking-away.html

Businesses have been engaging in the walk-away routine and somehow it is a "terrible crisis" when individuals start acting in their own rational interest just like corporations do. More and more corporations are defaulting on loans and contracts. Why get excited when customers do?
http://calculatedrisk.blogspot.com/2008/02/sauce-for-goose.html

Financial institutions have spent more and more time hiding from their own customers behind a Berlin Wall of voice mail hell and impossible to navigate phone systems.
http://calculatedrisk.blogspot.com/2008/02/walking-away-or-hiding-away.html

[Michael Tanji]

How much of this is in one's head?

You buy a primary residence and you hope it goes up in value but you don't view it as an investment . . . should you feel bad if you decide to walk away because circumstances (job loss, etc.) leave you upside-down or otherwise unable to make payments? You weren't speculating . . . House flippers and the like should harbor no qualms about cutting loose and moving on, but . . .