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crankywithakeyboard's avatar

What do you think about people who walk away from their mortgages/houses?

Asked by crankywithakeyboard (649points) June 22nd, 2010

I hear about this happening more and more in the news. I’m talking about people who make a conscious decision to stop paying the mortgage because they are “upside down” and just hang out for the couple of months it takes to get kicked out of the house.

There seem to be a couple of schools of thought. One, it’s okay because they banks have been screwing us all over for years. Or two, it’s immoral to break your promise to pay.

What do you think?

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12 Answers

john65pennington's avatar

Obviously, these people are not fulfilling their obligation to make payments as promised. needless to say, they can forget attempting to buy anything on credit ever again in their lifetime. the mortgage companies may be “screwing people over”, but this is not the way to fight back. this is why we have civil courts. to just walk away is the cowards way out, just like getting a divorce after being married just six months, without seeking counsel.

dpworkin's avatar

It’s the kind of decision that businesses, including banks, make every day. It’s spurious to try to make it a moral issue for everyone else. People who don’t walk when the bank won’t negotiate are just being chumps, not noble.

chyna's avatar

Signing a contract is your word. I would try to sell my house before I would just walk away.

SmashTheState's avatar

Fuck the capitalists. I recently defaulted on two credit cards. I ran them up supporting my parents. My mother was diagnosed with terminal cancer. My father stopped working to care for her, so the bank took their house. Social services wouldn’t help them until they had absolutely not a penny left to their name, their savings gone, their retirement money completely depleted. Then during the interim I had to use my credit card to pay for my parents’ food and medication.

For two years after that I stayed afloat by doing what the credit card companies told me to do: taking from Peter to pay Paul. They didn’t care that it was unsustainable, they just wanted their payments from me for as long as possible, so I would use all my money to pay the interest, live on the credit card (thereby increasing the debt) and switching each month between credit cards so that I built up the largest possible debt for the longest possible time—all on the advice of the credit card companies. The first time I missed a payment, they jacked my interest rates to the maximum allowable by law, about 30%. And when their interest and penalty charges put me over the top of my allowed credit (since they wouldn’t approve a charge above my limit, the only way to go over is if they do it themselves), they began adding monthly penalties to the interest, and interest on the penalties.

At that point, I simply walked away from the credit cards and told the collection agencies to go fuck themselves. I’m on a disability pension and they can’t legally touch my pension. So the harassment started, as many as four calls a day, every single day, during which they would tell me I was a “professional debtor” and a “fraudster,” that they were going to have me arrested, that they were going to make sure and call me every day at 8am sharp for the rest of my life, that (and this is awesome) that I had a moral and ethical responsibility to “pay my debts.”

So fuck the banks, fuck the credit card companies, and fuck any mealy-mouthed neo-con shitbags who cry bitter tears for these worthless sacks of lying capitalist smegma.

CMaz's avatar

When there is no other choice, but to walk away from the house.

When you are out of work, or ended up over loaded in debt. The banks and credit companies don’t care if you only have $2 in your pocket, they want it.
They know that in the end they will get the house anyway and the money you did send them went to nothing. So it is better to cut your losses as soon as possible.

The system works both ways. The banks will use it to bleed you dry. And the people use it to try to get back on their feet. RARELY do they both meet in the middle.
You can rant about how that person got themselves into that mess. But the bottom line is they are drowning. So they either grab a life preserver or drown.

arpinum's avatar

Normally I’d put myself down as saying this isn’t morally right.
I don’t apply the same moral rules to my friends as to companies. Taking the moral high ground against a company is a losing position, as they typically will not do the same for you. The banks know the rules going into a mortgage, and if they could weasel their way out of a loss, they would do it too.

Now, dealing with a company such as, I should deal morally with them, because they have come out and demonstrated that they will take the moral high ground in business dealings.

Edit: I should add that I firmly believe in credit scores as a punishment method. Its a really cool reputation tool. Not anywhere close to perfect, but still useful.

Neizvestnaya's avatar

Unfortunate. A forclosure is awful on a person’s credit record and they run the risk of not being able to rent where they want after they must vacate the home. I know a lot of people who have had to forclose or short sale their homes and none of them did it willingly or with premeditatiion to live free for a few months while incurring years of fallout to their credit and lost investment.

PandoraBoxx's avatar

It’s entirely one thing to walk away from your debt because you’ve lost your job or can’t find employment that pays enough to pay off your debt.

People have been screwed for the last few decades by a marketed “ideal” that they deserve things that they really couldn’t afford. Banks became predatory and greedy in order to satisfy shareholders. There was a time when bank had state usury laws that limited the amount of interest banks could charge on credit cards, and the amount of outstanding debt a bank would allow you to have out at any given time.

As a nation, we needed debt to falsely simulate a sound economy. We needed the cycle of enslavement to purchasing what we didn’t need in order to keep the cycle of consumption up. For many, houses moved from shelter to “investment” and people were allowed to overspend their housing dollar. I could never figure out how I was supposed to be able to afford a $300,000 house on $100,000 income ($56,000 take home after deductions) so I stayed in my $75,000 one bathroom house.

CMaz's avatar

Damage to your credit history is the final frontier.
A tactic that the banking institution uses to hold you down with. It is extortion and fear. That is all.

File bankruptcy (a constitutional right) and give it a year or so and you are back in business. Sometimes sooner.
Foreclose on your home. Give it a year or so and you are back in business.

No matter how you go about wiping your debt clear, you are now debt free. THAT is all the new lending companies look at, in the long run.

Now if you go from the frying pan to the fire. Meaning you a a repeat debt offender. Well then, you are unable to re-establish good credit for apparent reasons.

PandoraBoxx's avatar

The only thing you can’t get out from is student loans. Even bankruptcy can’t eradicate those. You can defer subsidized student loans if you don’t make a lot of money, but unsubsidized are exempt from bankruptcy.

CMaz's avatar

And tax debt.

mattbrowne's avatar

They got screwed by the shadow banks. The houses they couldn’t afford is the collateral. They are giving them back to the banks.

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