A new San Diego based company, called You Walk Away, helps people walk away from their homes, for a $995 dollar fee. Companies like this are a sign of the changes in the way Americans will look at their housing.
Median down payment on a house purchase was 9 percent last year, far short of the 20 percent in 1989. First median for first time home buyers was 2 percent, with twenty five percent of buyers in general putting no money down at all. To top it off, buyers were borrowing more to cover the closing costs.
What is scary is, Bank of America, JP Morgan Chase and Wachovia have all noted that borrowers are less reluctant to walk away from their mortgages now.
Many of these borrowers would have been stuck continuing to rent had they not chanced the market. Had the home price decreased, they simply walk away from their homes, however, had they rose, they would be a happy owner.
Historically, home ownership has been very stable and profitable as a long term investment. The shift has been that the value is associated with the home's likelihood to rise, but when the investment falls, people have been walking away.
Companies like You Walk Away are not helping, reminding their clients in California that he would not be liable for his debt, even going as far as offering them enrollment with a credit repair agency.
Jon Maddux, founder of You Walk Away, is quoted as saying "It's not a moral decision. The moral decision is, ‘I need to pay my kids' health insurance or my car payment so I can get to work.' They made a bad decision, but they shouldn't make more bad ones just because they have this loan."
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