The Montrose Gold Team Blog: Is Walking Away from Your Mortgage Morally Wrong?

Chris~ I had a friend walk away from a property instead of going to a short sale.  This was a few years back and short sales weren't really a possibility.  She had lost her job, her teaser interest rate had adjusted and had so many problems with the home (foundation cracking, furnace needed to be replaced, it had flooded and the roof needed to be replaced to name a few).  She was so stressed that she just walked away from it.    She felt horrible, but it was more than she could handle on her own.

Walking away is a simple business decision. Guys like Donald Trump 'walk away' time and time again. It is no big deal really and you right to break a contract and claim bankruptcy. Credit ratings are a joke anyway and after seven or so years you can easily start all over again. Given what the bankers and Wall Street are doing, home owners were scammed into a contract they did not fully understand and is morally wrong to then hold them to said contract.

DO YOU PLAN TO DEFAULT???
Have credit cards, plan to default and jingle mail your home?
I hear that many people are maxing out their credit cards, they are gutting out the house as much as possible including selling the appliances, copper pipes, etc... and buying gold and/or silver with the money.

Dawn Fabiszak - Thanks for the feedback and it sounds like your friend was against the wall and had no other choice... Just to be clear I understand this and back then short sales were more difficult and if things aren't selling, then there isn't much option and I advocate living for as long as you can in the home, till they kick you out.

WalkingAwaysIsFine - I totally get your point about banks scamming people and I am sure a lot of that did go on.  Potentially Realtors to blame for persuading people to buy more than they could handle too.  I think the Moral of the story is/was - if everyone just decides to walk away from their house cause they are underwater, it just makes matters worse and drives values even lower.   And while I also agree that "Credit Ratings" are a joke, they are currently the measure used.  What Megan is pointing out is that if everyone just starts treating the Loan and Deed of Trust or "Mortgage" as a "maybe I will pay you back if things go well", then it will change the face of lending and ultimately hurt the little guy the most.  As you mention people like Trump have done it many times before, but that really isn't a fair comparison, because the Commercial market tends to focus more on the property and its merits than the person.

Hey Chris.. No one should be able to walk away without consequences what ever their circumstances. As for homeowners being scammed into something they didn't understand, sorry don't buy it every one has to take personal responsibility for what the are signing if you don't you only have yourself to blame.

Alan - Thanks and I think there is consequence (like a negative ding for 7 years), but what Megan is postulating is that if enough people take these consequences too lightly they will change them, and under the current path we seem to be on of increasing government involvement, it will only add to the inefficiency of the market and increase the burden to borrow money at all.   Unfortunately we seem to be in an irresponsible bail out mind set, many want a free ride, some are getting it.

But I agree with you, if you promise to pay, do everything in your human power to pay and if you don't deal with the consequences... and your own Karma.  Unfortunately what I think we have now is a lot of people in true hardship losing there homes, which is sad, and some greedy or unscrupulous folks trying to take advantage of the situation, which is wrong.