The Riverside Press Enterprise has an interesting article about inland empire families who have walked away from their upside-down mortgages. In the article, these families defaulted in 2008 on mortgages that were upside down. Now that enough time has passed since they lost their home, they now qualify to purchase a home under FHA guidelines.
Included in the article is an online poll asking readers “Would you walk away from your home?” At the time of this post, readers voted overwhelming in favor of walking away from the home with nearly 42% of the vote. In second place, voters chose “I’d only leave if the mortgage payments were tearing my family apart” with 28.91%. In third place, voters chose “Absolutely not. A mortgage is an obligation that shouldn’t be broken” with 21%. In last place, readers chose “It’s a nice possibility — if only it didn’t hurt my neighbors and bank personnel” with 6% of the vote.
While every person is different, there are times when it makes the most sense to walk away from a property rather than consider bankruptcy or loan modification to hold on to a home. If the loan is particularly bad, foreclosure litigation may be another alternative to consider. In a foreclosure litigation, our office can sue your lender and loan brokers for deceptive or misleading loan terms. If your loan has severe negative amortization, huge pre-payment penalties, or if the loan was in a language you do not speak, you may have a good claim against a bank in a litigation case.
What would you do if you were underwater on your home? Feel free to leave comments below with how you feel about strategic default on a home.