Homestead or not, the mortgage is written on that home. So that's the collateral. Even people who simply move who may list the other property for sale stop paying on it too...house doesn't sell, home gets foreclosed on because they didn't consider any other plan. Credit may be shot, but can be rebuilt by paying on the "new" mortgage...albeit that takes time, plus you likely lose in the end your credit card(s). Options are out there, most people are still dumb as bricks to realize what they are...
Most people are stupid alright. These buy and bail folks are doing EXACTLY what a rational person should do. They made a poor decision, realize it, and now SMARTLY are getting out of that poor decision and onto a better one. Only a financial idiot would stay in a grossly underwater house and keep throwing money down the drain every month. It has nothing to do with ethics or morals, it's simply financial sense. Also, not that it matters, the "feds" don't dictate recourse vs non recourse; States do. The faster we get back to an economy based upon people making the smartest choices for themselves, the faster we'll be on our way to someplace we might actually want be. We're a long way from there. however, so you young kids are just going to have to accept the fact that you were born at the wrong time to live free of economic termoil.
Real estate professionals call it âbuy and bail,â acquiring a new house before the buyerâs credit rating is ruined by walking away from the old one because itâs âunderwater,â or worth less than the mortgage. Itâs an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan.
Anybody still think Fannie and Freddie don't need to be regulated? The Congressional Democrats obviously don't as they didn't include these major players in the collapse in their financial reform bill. I'd like to hear their justification for this.
I Disagree...it has everything to do with ethics and morals despite the fact that it makes financial sense for them to walk away. If you sell me your car on credit and after a few months I see that the same car is selling for less than I owe you, it makes financial sense for me to stop paying you, but it is unethical and immoral for me to back out of our contract isnt it? What would you say to someone who told you it has nothing to do with ethics why they are not paying you that it was just "financial sense"? It really just goes to show you that most humans lose all ethics if $100k dollars or more is involved.
So by telling people that strategic forclosure, and buy and bail is unethical, are they admitting that when businesses do the exact same thing, that they are unethical too? Oh, wait...that's just a good business decision. It also looks like the people who can still pull this off are probably at the higher end of the income scale... The guilt tripping makes me sick...
Now settled in their new residence, they may try to sell the first home for less than what they owe, said Wilczek, owner of Metro Phoenix Homes. If the lender won't agree to a short sale, they may just stop making payments, he said. "You can make the argument that you must honor your commitments no matter what," Wilczek said. "On the other hand, you have people who are realising that if they want any hope of a retirement or a better life for their families, they can't keep paying for something that will never, at least in their lifetimes, regain its value." Even if owners have underwater loans, walking away is unethical, said Scott LeForce, president of Realty World Northern California.
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