[...] to find themselves with the choice of whether, faced with a huge new wave of interest resets and a historic decline in the value of their homes, they will simply walk away. First, those home prices: For a weird [...]
There is going to be a catastrophic correction. The people who sold their vastly overpriced homes to suckers reap the reward of jumping the boundary between rich and poor. The middle class will see catastrophic interest rates, making buying a home almost impossible. The prices will dive in response. The only winner in this case is the governnment who gleefully collected more taxes on the overpriced homes, and will still collect even in foreclosure. Death and taxes.
I have considered this option that you propose on our house, which is worth about what we owe. I believe that this is a sweeping statement which has bears no merit.
All Morals aside Options:
1. If we sold it for what we owe we would no longer have use of the asset. Credit rating would not be damaged.
2. If we let it go back to the bank we would not have the asset either. Credit rating goes down.
End result either way we would not be able to finance qnything else at this time with no cash down.
3. Keep it, keep making the payments, if we can afford to, keep claiming the interest against any income.
4. Rent the property out and rent a lower priced home. Expense the property.
Question where do you propose that all these people who have a single home which they give back to the bank will live?
They wlll have poor credit because it just got swept away, would you want to lend money to this person?
Immediately this personality type is labeled untrustworthy.
All I can say is that anyone who is prepared to risk their good name for the sake of greed is not worthy to have any and I personally would not rent to such an individual either. I guess the only thing they will be able to do is usurp someone else’s property or leave the country and start again somewhere else.
At the end of the day I believe that the majority of people want to be able to hold their faces up in front of others and live amongst similar types of people with the same morals and raise their children similarly.
Working on your statement taken to the nth degree picture this, no-one will own a home. Everywhere will be ghost towns. Do you really think the American people will allow that to happen?
It is now that I find myself to understand all of this.
I come from Macedonia a former socialist country which means mortgage only 1/3 of the value of the home(not market value but some state average…) and I completely understand and support such a policy.
And hell…are you serious with the prices of homes?!?! Even now they are very high..get real! and stop crying…you are going to lose your house. You lost it the minute you payed too much for it.