The headlines in the papers and now on "60 Minutes" reflect the growing number of people who are walking away from their homes and mortgages under the "strategic default" scenario. In today's difficult market, many of these homeowner's have made the decision to default on their mortgages....either because they owe much more than the home would sell for in this market, they have lost their jobs or for numerous other life changing reasons.
I have seen personally, where a young man is relocated due to work, has put his home on the market and after 3-4 months hasn't had a showing. He continues to make his house payment, the lender won't talk to him because he is current on his payments, yet he is having to pay for a second home across country in order to maintain his job. This is a true "strategic default" ---- he can either lose his job or his home....somehow that doesn't seem like a tough decision to make! In addition, he is having to travel from work back to home to see his wife and toddler.....keeping the family together is by far the most important factor!
Here is another scenario....a commercial building is rented for 2 yrs with a contract to buy at the end of the lease. Sixty days before the closing date on the purchase, the buyer walks....the seller has been unable to market the property for two years because of the tenant's refusal to cooperate...now has a vacant building. After 15 months of holding a vacant building and paying all of the expenses out of pocket, two of the owners, (because of personal investment) refuse to walk away....both because of the belief in the building and also because of the amount of money they could possibly recoup......the other owners have long relinquished their ownership due to outstanding debt....we now have a renter and possible buyer.....I would not wish this situation on anyone, what my husband and I have had to endure....financially, and most importantly, emotionally. We will lose much of our investment (and retirement) but we will survive.
We will see this through, but it isn't going to happen overnight.
The financial institutions have got to be more attuned to the real market. For all of those families out there, I wish you the best.