Be aware of all that comes with walking away
by Tim Manni
Frustration over the lack of a suitable response from Washington to help the nation’s underwater borrowers has once again ramped up discussions of walking away. In late September we wrote a post titled “Little interest in FHA Short Refinance program.” Here are a few of the comments we’ve received from that post which showcases the frustration underwater borrowers are experiencing and how it may influence their decision to walk away (emphasis added):
Michael says: It seems that all these programs are designed more for the benefit of the banks than the homeowners. They don’t solve any problems, they simply create false hope and drag out the foreclosures at a slower pace. This way the banks can slowly rid their balance sheets of their toxic assets. If everyone walked away from their underwater mortgages at once, the entire banking system would implode. Extend and pretend, delay and pray.
Mark says: I am 100% with Sara on this one. I love my home and want to stay here but I cannot enjoy it because I am now 20% underwater and cannot refi out of my 6.625% rate. Unfortunately, my home situation depresses me and stresses me out to the point where I will walk away rather than live in my home and not be able to enjoy life.
Don says: I’ll take a look at your program. I’m getting orders in the Spring, gotta leave next summer, no choice. I like the house, but I can’t sell it and I can’t rent it. Why [would I] walk away? Houses like mine rent for $1000 a month less than my mortgage, it’s that bad in Tampa. I’m leaving on military orders, and if they don’t work with me, I’ll just have to take the foreclosure. I’m not going to lose $1000 a month plus upkeep for the next 27 years.
If the White House doesn’t act quickly to introduce something besides their FHA Short Refi program, this country could be faced with another wave of voluntary foreclosures.
-HSH.com has their own plan on how to help underwater borrowers — it’s called the “Value Gap Refinance” plan-
Walking away from your mortgage can be a life-changing decision. While the immediate fiscal benefits may be apparent, you should also realize that the consequences can be far reaching. Anyone who is considering walking away from their mortgage should read our original article, “The Pros and Cons of Walking Away from your Mortgage.”
