Is walking away from foreclosure becoming socially expectable?

Real Estate Agent with JH Realty Partners 6501309180

An article I read from Realty Trac, one of the paid foreclosure web sites I do like.  This article really got me thinking.  I have to say we are in danger of this attitude!

I got a phone call not too long ago from a potential client who wanted to sell his home as a short sale; he had made a bad investment.  However he was not behind in his payments, but it was taking all of his extra cash and just wanted to be done with the house, thinking everyone is doing it now.  After showing him what this can do to his credit, he has decided to wait. (I think)

I wonder how many people are washing their hands of a home, who could be counseled about bills, credit and home management that may not have to walk away. 

We have several local companies who are non-profit that help people get back on the right track.  The services are NOT reported to the credit burro and I have seen the get payments reduced as well as give free/or low cost classes on home ownership.

Walking away from your mortgage is getting as common as people filling bankruptcy.  Bankruptcy was originally design for hard working adults who had unforeseen bad luck.  So I ask you, now that it has gotten easier to file and you can buy a new home in about 2 years after filing, are we taking the easy way out?

In the article they talk about a person who owns a home, knows he can not get what he owes on it if he sells, so he buys another home, moves into the new home and then sells his 1st home as a short sale.  Yes, his credit takes a huge hit............but so what, he already has his new home.  DANG!  Not everyone can afford to do this, but just another twist to this crazy market!

So the irresponsible lender that sold the "high risk" loan, are they just as much at fault?  Should they have to take some kind of responsibility for their actions?  That is if they are still in business.  Or do we take responsibility for our own actions, for making the bad financial decision?

I think there are some true hardship cases, death, job loss, illness etc..........I worry that the benefits for these people will go away or the guidelines eventually become stricter due to people who take advantage.

After reading this article, I realize we have a long way to go, before things even out.



Posted by

Michelle Gordon is a Realtor with JH Realty Partners - Ada, Michigan -  With a team of Realtors who's Focus is 1st time home buyers, Relocation, Luxury listings and Commercial Properties in West Michigan.  You may find Michelle on facebook, twitter or linked in and she invites you to join her.


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Women's Council of Realtors on Active Rain

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I have seen that here too much in the last couple of months.  The part where they buy another house and just let the "old" one go back to the bank.  Who cares right?

Most of our foreclosures are still investor owned (not occupied by the owner).  They were bought as speculative investments.

I still think they should be prosecuting these types for fraud.

Apr 17, 2008 12:40 AM #1
Lori Lincoln And Associates
Top Agent Serving Dighton Taunton, Rehoboth and more! - Taunton, MA
Top Agent Taunton,Dighton Rehoboth &more

Can't say I blame the homeowners. I worked with a gentleman recently who's interest rate went up to 12%. We did a short sale, but putting off the bank was a real challenge. Some say banks don't want the house. I disagree in this case.

Apr 17, 2008 12:45 AM #2
Sean Allen
International Financing Solutions - Fort Myers, FL
International Financing Solutions

We have seen numerous people walk away from their homes because they dropped in value so much, losing up to 40% or 50% of its value. The home owners decided it wasn't worth paying they walk away. In todays age, filing for bankruptcy is so easy and the consequences are very little. It doesn't matter how much in debt you are, it gets wiped away and you start with a clean slate. Then after filing for bankruptcy, after a couple years if you hire someone to clean up your credit, and they know what they are doing, you can have the bankruptcy and forclosure removed from your credit report and no creditor will know any difference. The negative stigmatism about bankruptcy and forclosure is nothing like it use to be 5 to 10 years ago.

Sean Allen

Apr 17, 2008 12:57 AM #3
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

I have a client that wants to do this.  Buy a new home and just let the other go to foreclosure.  I told her not to do that.  First of all, she signed her loan papers as a promise to pay back the loan. 

I talked to one of our attorneys and she said that the buyer should not to that because now the banks are coming after these folks and putting liens on the new homes that they purchase for the loss from the foreclosure of the first property.  Or they may get a 1099?

I understand the concept, I just think there are more repercussions here than meets the eye.  They should seek legal advice before doing this.

Apr 17, 2008 12:59 AM #4
Melody Botting
Broker Associate PenFed Realty - San Antonio, TX
You Deserve The Best
Wow!  Thanks for sharing the article.  I am a 'glass half full' type person.  I think we are going to see it get better because lenders and buyers are making better decisions due to the current market condition.  It is a shame it had to get this bad before people 'got real' about real estate investments.
Apr 17, 2008 01:05 AM #5
Michelle Gordon
JH Realty Partners - Ada, MI
Finding Your Place

Audrey, I was wondering about the banks finding out about the 2nd home and placing a lien against it.  so they have caught on huh?

Melody, I do believe we are going to get better with new "stuff" but just going to take a while with the old stuff, however if people are doing the scenario of buying a 2nd home then letting the first one go, it is going to take a Little longer!

Sean, we have had values decline here, but not as bad as 40 - 50 percent, you are in a tough market.

Lori, for people who has interest rates go up, I think there is some relief by countrywide home loans and in Michigan I think MSHDA has a program.

Renee, the worst investment foreclosure that has happened here, is when a there is a renter in the home and is paying their rent on time and the Landlord does not pay the mortgage and they loose their home due to foreclosure.  We had a real bad case about 3 months ago, a woman who was ill and got booted out!

Apr 17, 2008 01:23 AM #6
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Michelle Gordon

Finding Your Place
Ask me a question
Spam prevention

Additional Information