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Paying on an Underwater Mortgage May Create More Problems than it Solves

By
Services for Real Estate Pros with TheHousingGuru.com

An interesting article in today’s LA Times describes how paying on an underwater mortgage may create more problems than it solves. And while we often speak of the moral hazard of “strategic default,” there are also hazards to staying and paying.

 

If we honestly analyze the consequences, we may realize that ignoring the problem of negative equity harms all of us and only hampers our chances at recovery. In another POST I describe a possible solution and why negative equity must be addressed.

 

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Comments (5)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

What a problem. Some were innocent victims of timing, others were greedy profit-seekers. Too the former we need to offer help and to the later, let them sink!

The real problem is the banks lack the personnel to deal with people one-on-one. They also lack qualified personnel to deal with these situations.

Nov 01, 2010 03:54 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Wayne - Unfortunately, it's a problem that must be addressed.

Nov 01, 2010 04:11 AM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

It is an unfortunate and incredibly new phenomenon we have here!  So, what exactly is the benefit of paying for something worth so much less than you are paying for?

Nov 01, 2010 12:30 PM
1~Judi Barrett
Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Definitely a personal decision.  Everyone should weigh carefully how they are going to handle being upside down when/if they CAN pay their mortgage.  There are consequences tha they may not want to deal with either way. 

Nov 01, 2010 02:11 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jay - Glad I'm not facing that problem.

Judi - I agree.  I'll make my decision and try not to criticize others for the decisions they make.  After all, I can never know the full extent of their circumstances.

Nov 01, 2010 03:23 PM