Posts Tagged ‘walk away’

Walking Away To Better Times

Much ado has been made about “walking away” from your mortgage by the financial services industry and the government. They say that it is wrong, that you signed a contract when you bought your home and you should honor it. They promise dire consequences ahead for you if you just walk away and hand your lender the keys to your home.

Homeowners walking away from their homes certainly is a problem for the banks: it causes them to have to face some serious losses and is a gigantic reality check. Banks don’t like reality checks much…they love playing with their funny money.

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Strategic Default = A Free Rent. Really??

I am sick and tired of posts like this one. It is yet another moralistic, snide view point from a person without an ounce of common sense.

The Times story features Alex Pemberton and his mom, Wendy Pemberton, who both live in St. Petersberg, Fla., and who both pay an attorney $1,500 who says he does “as much as needs to be done to force the bank to prove its case.”

That $1,500 these homeowners are paying in lawyers fees is considerably less than what they’d pay to keep up with the mortgages. So they pay the lawyer and justify their defaults by saying that this is simply business. And nowadays, homeowners finally seem more apt to approach homeownership in a cold, even ruthless business manner

I have two major problems with the above statements: For one, how does the author know that paying on the mortgage would cost less than the $1,500 that these homeowners are paying the attorney? Moreover,  where in the story does it say they pay the attorney $1,500 per month?

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Thoughts On YouWalkAway.Com

There are many good posts on the YouWalkAway Blog and  its owner and CEO, Jon Maddux,  has good intentions in actually helping people through this foreclosure crisis.  I also can’t fault his arguments regarding the failure of the government’s foreclosure mitigation programs to address the magnitude of the crisis. The Congressional Oversight Panel, in report after report, has stated that the Administration’s efforts lag far behind the scope of the crisis.

Having said that, relentlessly pushing the idea that the government can’t help (when in fact, it has helped at least some families, and that’s better than nothing, at this point) and that the only solution is for everyone  to walk away ignores one fundamental thing:

It ignores the emotional consequences of losing a home, especially if one has lived in that home for a long time. A home is more than just a building that you live in and, really, is not an investment that can be viewed in that sense. It is a place where you (hopefully) build your lives and your family. This value cannot be measured in dollars and cents.

Furthermore, it is traumatic to lose your home, whether you walk away and let the bank foreclose on you or you must do a short sale or a deed in lieu. You can’t analyze the situation with the same cold blooded calculus that applies to business decisions.

In closing, I’d like to make one last point about YouWalkAway.Com. It is itself a for profit business. It sells services to assist homeowners in staying in their homes as long as possible before walking away.  It has no doubt helped many distressed homeowners find the least painful way to let go of their homes, but make no mistake, there is some basic marketing at work there, too.

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