should everyone with negative equity just 'walk away'

[sniglet]

[rose-colored-coolaid]

[jillayne]

Hi sniglet,

A lender is not always in a position to accept what you're describing, which is called a deed-in-lieu of foreclosure. Doing so limits a lender's options in the event of, say fraud. For example, if a consumer commits mortgage fraud, that lender might decide to foreclose on the home judicially, by going to court instead of foreclosing via an auction. The lender might want to pursue a deficiency judgement against the homeowner.

There are many options for a homeowner with negative equity who, for whatever reason, can no longer make their payments. That person is better served by obtaining legal advice and by visiting a HUD approved housing counseling agency that specializes in default counseling.

[sniglet]

[explorer]

Interesting observations by home owners on the subject. However, if you think you can easily rent again with a major ding like that on your credit record in the Seattle Area, you might be in for a bout of homelessness or an extended camping adventure.

Not saying it's imposssible, but my just concluded adventure finding another place in-city after being condo-converted out was not fun. I have great credit and 17 years of solid long-term rental history in Seattle. Been using nearly all my spare time and then some looking since the end of May. What you are put through now makes racial profiling and Homeland Security paranoia look tame. It makes a mockery out of what little Landlord-Tenant laws and reasonable risk management practice used to be. You would very conciievably be jumping from the frying pan into the fire

NO ONE I spoke with would take a "risk" on a tenant with major dings on their credit record. That goes double for any potiential roomates, even if one can carry the burden easliy. Forclosure is the equivilent to bankruptcy in a Landlord's mind. You might have to search long and hard finding a landlord who is actually reasonable.

[sniglet]

[explorer]

[sniglet]

[jillayne]

[redmondjp]

I think that Explorer and Jillayne both have raised a very important point -- your credit rating.

Some employers are now checking credit as part of the pre-employment screening process. It would really suck to get turned down for a great job that you are qualified for if they didn't like the fact that you walked away from your house (payments).

Now if you have zero (or negative) equity in your house and will have to bring $$$ to the table at closing, can move in with other family members or relatives, and work under the table, then it may make the best financial sense (but keep living there until somebody makes you move out). And I have no doubt that for thousands of homedebters out there (nationally), this is exactly what they will do. Can you say 'jingle-mail?'

Oh yeah, Tim, that's another term to add to the glossary.

Jingle-Mail - The term given to walking away from a house and mailing the keys to the primary loan holder (the keys jingle inside the envelope).

[sniglet]

[rose-colored-coolaid]

[perplexd]

[mking]

i think it is very important for the government to do all it can (say by helping bad loans be converted into longer term fixed interest loans) to prevent this type of behaviour from being widespread.

think about who is going to get hurt when the homeowner walks. not a the homeowner (at least not enough to keep him from walking). not the loan originator who wrote a bad deal (even if they are still in business, they sold the loan, after bribing the rating agency to label crap AAA investment grade).

the people getting hurt are people who have saved in their 401k or pension plan. think about it. if we encourage people to walk, all the bad actors (the loan originators, Wall Street, the dumb borrowers) are fine, and the fiscally prudent (at least those who put there money somewhere other than their mattress) get burned.

[sniglet]