My aunt walks away

[grumpy old guy]

[leaveseattle]

Maybe we are the norm and maybe not, but foreclosing was probably the most awful thing we have ever done...

We broke a promise and in our minds a great American tradition and went against the culture we were raised in...

We consulted an attorney, the mortgage company, we did thousands of dollars of improvements(ourselves thankfully we are capable), but ultimately, health, finances etc we just could not keep making the payments. We left it clean and tidy, we left emergency contact numbers, we paid for 3 months of lawn mowing to hopefully prevent our neighbors from having a glaring eye sore, but you know what, the bank doesn't want it-by taking it back they could save themselves thousands but would rather drag it out..it sits empty. We were not the people who quit paying and squatted on the property-we left before the last payment.

When I cannot sleep at night, when I realize we gave up the dream of home ownership for many years I try to remind myself that we did pay over 80 thousand toward the home in 2 years, we did improve the home, and there was no way we could have anticipated the trail of bad events-

Should the government bail me out? NO. Should tax dollars? NO. This is between me and the bank-lots of contracts break in all sorts of situations and hopefully it will be resolved per the contract. Mortgage companies are equally at risk as the home owner- I suspect that the price I am paying for breaking the contract will be a reminder to think much more clearly about decisions-

I will say, that this was our third home. We were quite shocked at the amount of money the banks were willing to throw at us and encourage us to use-

Perhaps they will learn something from all of this-unless their foreclosure insurance pays out better for our house then we did-

Although I know I am not alone, it sure feels that way.

leaveseattle

[Robroy]

[Robroy]

In a non-recourse state, I think of a home loan like this: A bank gives you a loan to buy a house, which means they own it until you pay it off, at which time they give you the deed. However, at any time before you pay it off you can give them the keys back and say "never mind". This paradigm works because for the most part, real estate either stays flat or goes up in value. It doesn't work for car loans and CERTAINLY not credit cards since they are not secured loans.

And don't kid yourself. during those first few years, only a small fraction of your payment is principle anyway.

But the bank is betting on you like a stock investor bets on a stock. If the stock goes down and the investor loses money, unless laws were broken there is nothing immoral going on.

It "feels" that way when you turn in the keys, but really all you did was use the "escape clause". Feelings can deceive, although one can also sear their conscience.

[rose-colored-coolaid]

[rose-colored-coolaid]

[leaveseattle]

I agree that the bank is taking their own risk by investing in "me" but I agree with others that things are different today, and through me walking away I am contributing to a new era- not knowing the over all effect is the worse part...

I think there is a lot more contributing then just a change in integrity,business is different, folks move frequently for work, we are not as family oriented as we once were,and homes are more investment then family centered.

It should be interesting to see where this all ends up, I think my guilt is not so much from me personally breaking my obligations(I agree that odds are bank was far more aware of the risk then I should have been), but more in the impact that it has on my neighbors and community. I cannot help but think of my friends and neighbors who bought a home to live in for the rest of their lives, and because of my actions are now watching their values dive down..again, not that I am the whole cause, but I am partly to blame.

Hopefully, the banks will recover and like myself be a bit more savvy instead of greedy when they are back on their feet.

[sniglet]

leaveseattle,

If you don't mind my prying, I am very curious about your mortgage default. Was this truly a situation of "vuluntarily" walking away (or a "ruthless default", as Tanta at CalculatedRisk puts it)? It's one thing to make a conscious decision to default when you are deeply under-water to cut your losses. It is quite another thing to default when one can easily make the payments and has the financial wherewithall to stay in the house.

Not that I am saying that even "ruthless defaults" (i.e. when the borrower defaults even when they have the means to continue making payments) is immoral, but that is a very different situation from a case where the borrowers really can't make ends meet and must go delinquent.

[leaveseattle]

Sniglet,

Not prying at all- I figure by posting here I am volunteering.

Husband lost 6 figure job due to a company going bankrupt.(not foreseeable)

Wife(self)diagnosis of cancer(not foreseeable)

We sold everything- we even sold our good car and bought a beater for emergencies and bus passes for the rest of the needs.

We used college savings, retirement savings, sold our furnishings and even inherited family items.

We finally gave in when we just could not even come close to paying mortgage and since we bought in 2006 though we tried to sell, we could not possibly lower the price to the point to get it sold. The bank was unwilling to do a short sale, and our attorney advised that it was time to pack up and go. He said even if they would do a short sale that would still pretty ruin our credit, and it would only sooth our moral values- he actually recommended squatting, but that is not something we could do.

So, now we rent. The medical bills are tremendous but they have been fairly willing to work with us- but heck our credit is so destroyed already just from the non payment they are pretty much grateful that we are willing to pay anything as they have very little to hold over our heads.

The bank will not take the house in deed of lieu nor after 6 months have they even begun proceedings- they simply send us certified mail every other month asking when we are going to make a payment. They would not speak with our attorney(who we can no longer afford but he did make a few attempts) they will not do more then tell us no and ask when we plan to make a payment when we do call.. We called a few non profits but they are more in the business of trying to help folks refinance - even if we refinanced we would end up in trouble down the road- in my mind that would be fraudulent.

On a positive note, my sons both received scholarships and grants to get through college-and we figure we will be out of medical and other debt in about 10 years at which point we can see what is going on in the real estate world.. I strongly suspect though, that we won't be buying anything bigger then a very basic salary could pay for...we ended up moving out of state for my medical care and for the boys college- The colleges in WA did not have much to offer as far as aid vs high tuition and we found a few colleges with much better tuition and more scholarship money even as out of state folks..

We are renting a surprisingly nice home in a nice neighborhood for not even a tenth of what our note was.. friends and family have been kind and my health is on the mend. I have found a new creative side to making something out of nothing- you would be very surprised at the great stuff people throw away- some paint and nails(which can also be found in the trash) and I am now almost furnished. We no longer use credit and have rediscovered the merits of true living vs living for the buck. The husband has a great job(employers have had no problem with the foreclosing issues, may I note honesty is the best policy)and now I also know who my true friends and family are- it is shocking how folks treat us like we have the plague- but that too is the cross you bear when you make the decision to walk away.

So, we try to hold our heads high, and stand tall. It really is not the end of the world. But, it still stings. We now are concerned because I would think since we still own it we will have to pay the insurance? Then also what about the taxes? But, we just cannot afford an attorney and the mortgage company is not in the mood to explain much to us despite our repeated calling and writing-

I wake each day a new person with a new respect for the dollar- but, I am watching the spiral of the real estate world and am curious how far all this will go.. Our attorney thought it would get much worse as the banks are very slow to foreclose and it will be months before the majority of those actually start to show as stats- His thoughts were also concerned about the impact on state taxes and budget.. Even folks best efforts are not always good enough,, and I think about the folks that have to move and cannot sell- how long can they handle a double payment? The reduced amount they are spending retail, the reduce loan amounts, the higher down payments, the lower values, lower tax revenue- it is mind boggling and hopefully one day I will be sitting with grandchildren telling how we were apart of the crash-perhaps one that will end up making the books..

[jon]

[sniglet]

[leaveseattle]

I am sure there are the folks that walk away for personal gain- and I am sure there are those that destroy the house because for some reason they believe that the government and mortgage company shoudl take all responsibility and for some reason have a very difficult time understanding that they are the ones that took the debt-

Those folks should be hung by their toes- Admittedly despite my situation we deserve what we get as written in the contract- that is life. Everyone gets hit unexpectedly sometimes, it is how one handles the situation that counts..

We did get involved with a number of online groups and we were shocked to read about what some folks were doing to the property or that they would take another loan before the first defaulted- they should be in jail for fraud and deliberate destruction of property... I shudder to think we are grouped with the likes of that...

We live in age of no accountability- from our schools, businesses, politicians, shoot even our families- 50 percent divorce rate- surely of that 50 percent of divorces many could have worked out their differences if they had been taught that nothing comes easy and that a commitment is a commitment... not all but better then 50 percent... numbers are rising for children in foster care, the US leads the numbers for child abuse compared to other first world countries...

Rarely do you see folks hang on to things they bought until they are beyond repair, nope, once the color or style is no longer the latest and greatest we toss it- we seem to be heading into an era where we treat morals and people the same way-

I was on that path- but I am feeling pretty lucky that I got a wake up call If I get better and can work again, if our incomes take us back to where we were, I think I am going to appreciate it a whole lot more

[Charles Dean]

I agree. Why would someone buy a house without the intention of ever making a payment?

I know that some people do this, but I think it has much more to do with a spending problem or addiction than it does.

Speculation drove much of it, but I've also come across many people who just chose to buy a house that was WAY out of their price range. I remember talking to one individual who wanted to refinance. He really wanted to keep the house he was in, but the day he moved in, he and his wife never made a payment because they didn't make enough money.

They loved the house, they wanted to keep it and against all good judgment someone gave him the money to buy it.

He called me 3 months after purchasing. He bought it zero down. It was when there was still appreciation, but of course it hadn't appreciated anywhere in that time and no bank is going to give you a loan with recent mortgage lates anyway.

Another good example of this was http://iamfacingforeclosure.com/history.html

Someone who read the "books" and thought he knew how to make millions. In a normal period of time, no bank would have EVER given him the money to buy eight properties if he didn't have the liquid capital to back it up.

Anyway, most people don't buy a house with the intention of never making a payment. The lax lending just allowed irresponsible people to borrow however much they wanted so they could "live the dream". It was nothing more than a high priced shopping addiction for some people.

[sniglet]

[Markor]