We are living in interesting times. Just a few years ago if you weren’t buying real estate, you were viewed as foolish as those not buying tech stocks in the 90’s. And here we are just a few years later watching the last pieces of the bursted bubble fall to the ground.
And we now have some homeowners walking away from their homes because the values have fallen so sharply. According to CNN, “Almost 20% of homeowners – or 8.3 million people – are “underwater” on their mortgages, owing more than their properties are worth.”
Why walk away?
As mentioned in the Credit Crisis video we are now in the middle of a cycle where home prices are falling, banks have an abundance of foreclosed properties, and supply is high and demand is low. Some homeowners are facing situations where they owe the bank $300,000 for their house, but the house is now only worth $200,000. So they are packing up their things and giving it back to the bank to let them deal with it. Now the bank has to deal with the $100,000 gap.
Logically, I can understand why someone would walk away from their mortgage, but morally I just can’t justify it. I found this clip from 60 Minutes asking, “Should you walk away from your mortgage if it makes sense?” In it, the homeowners argue the logic of the decision to walk away…
What does the bible say?
I found two scriptures that provide some light on it…
“If a man borrows anything from his neighbor, and it is injured or dies while its owner is not with it, he shall make full restitution.” Exodus 22:14
“The wicked borrows and does not pay back, but the righteous is gracious and gives.” Psalm 37:21
The way I see it is that when you borrow money from the bank, or anyone, you agree to pay it back. It isn’t a conditional agreement that let’s us off the hook if things are working out for our benefit. Just like with a marriage, raising kids, or serving God, it isn’t always easy and sometimes it feels like we are getting the short end of the stick, but we made a commitment, so we should stick with it!
We are living in a world that is forgetting what personal responsibility is. The government and big corporations aren’t setting much of an example for us either – but just because someone else is doing it, doesn’t make it right!
Would you walk away from your mortgage?
I know that everyone’s mortgage situation is unique and that there will be a variety of solutions to the problems that we are facing – but what would you do? Better yet, what are you doing if you are in that situation? Are there justified cases of walking away from a mortgage?
Related posts:
- How to pay off your mortgage early (4 methods)
- Maximum Reverse Mortgage Loan Amounts Have Been Reduced
- Is your mortgage hindering you from fulfilling God’s call?
- Walk with the wise
- A great year to be a first time home owner
- Debt is like wetting the bed…
- Do you need help avoiding foreclosure?
- $6500 home-buyer tax credit for current homeowners
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I like your post very much, since you based your insights from the bible, then this holds true.Thanks for sharing this.
I agree with you 100%. We have just purchased a new home and while we are not in a situation where we would consider walking away, it would not be a consideration as we feel that it is wrong to do so. We signed the papers and we agreed to the debt. Let your yes be your yes…. we are in this to the end.
If so many make regular payments on a car that they know is no longer worth what they paid for it, why would you not do that with your house? Isn’t having a place to live more important than having a car? Most people bought a house believing that it would only go up in value and when they find out their assumption was wrong they think that it’s ok to abandon it. That isn’t how it should work.
Ok, so I’m no mortgage pro, but won’t they still owe the money? If they just turn the keys over on a 200k house they owe 300k on, and the bank sells it, don’t they still owe 100k. Won’t the bank come after them for that money. Are they basically saying that they would just file bankruptcy if they came after them. It doesn’t seem logical (to use their terminology) to walk away from a house, then have 100k in debt and nothing to show for it. It seems more logical to try to ride it out, hope everything stabalizes, and make some extra payments to try to get the debt/value ratio to a place where they can refiance.
I think a person who would “walk away” from their mortgage based on information about its worth is operating under at least 3 mistaken assumptions:
1) Your home is an investment. I know, people say it all the time, “Your home is the biggest investment . . .” But to think of your “home” the same way you would think about a stock portfolio, or an apartment complex, or your business is wrong.
3) Your home is an asset. It’s not. It’s actually an expense–in any market. An asset can GENERATE income. Your home can only generate expenses (unless you have a renter) in upkeep, utilities, taxes, etc. . .And,
2) Your home will always be worth what it is today. Bubbles pop. If you’re using a piece of mortgaged real estate as an “investment” that you bought intending to sell for a profit at a later date, why sell now when the market is so bad? Why not wait until things turn around?
It’s amazing to me how short sighted people are–especially when it comes to money.
Great topic and blog btw
Chris
Good article Bob. I would not walk away from my mortgage. The way I see it the house was worth a certain amount to me when I bought it, and it’s still worth that to me now. It doesn’t matter what the market says, to me it’s worth what I paid. I wouldn’t suggest buying a house if you think down the road it won’t be worth it to you.
Nothing in their mortgage said that their obligation was contingent on the market value of their home increasing. Unfortunately it is unlikely that anyone schooled them fully on the risk. It is even more unlikely that they would have listened.
The mortgage is a contract, a covenant. I am certain that these people do not want to live in a world where their is no consequence for not keeping your word, not fulfilling a contract.
They knew what they signed and took a risk. They are on the short end of the deal. I feel bad for them, but this is their stupid tax to pay.
While I do believe it is in the best interest of society to have rules and laws we all abide by, the bible is nothing more than a collection of primitive tales that have little relevance in modern society. The 10 commandments seem like a fairly reasonable set of governing principles. The tactics of the religious zealots as well as financial zealots seems to be much in the same. You should believe in God because you fear going to hell. You should pay your mortgage because you fear having a foreclosure on your credit report. I might also add that terrorists use these same types tactics.
So all that being said for the most part it is best for society when people make efforts to pay their bills, but now we are in a situation where it strongly benefits individuals to not pay. We got here in my opinion because the banks scammed us all into believe property was worth a lot more than it really was. They did this through creative financing and 0 down money loans that they had to have known would eventually blow up. I am one of the idiots that got duped by the bank into buying a house though I didn’t really get in over my head. My payment is a bit of a stretch at 45% of my gross, but I had never been late on a payment for 2 years.
Your example is much too optimistic for places like Southern CA. Most houses have lost at least $200,000 in the past 18 months. My house was purchased for $372,000 in Dec. of 06 and as of last month same floor plan was going for $170,000. I put $0 down though I did get a fixed 40 year on my first. My 2nd has a 15 year balloon payment and I doubt my house will even have recovered by then. The funny thing is that at $170,000 the market appears to still be going down. I think most people understand that houses can go down, but when you buy a house and it goes down by $200,000 (60%) in the first 2 years you own it, clearly you got scammed and it was never actually worth what you paid.
So that is my situation, I’m not extremely proud, but I can find no reason to stay in my house. The Obama plan that came out won’t even help me because my LTV ratio is about 220%. CA taxes went up by about $1000 per person this year. I am basically being asked to sucked it up and pay higher taxes and pay for people who have better LTV ratios than me even though they are hurting way less. So I’m walking and doing what is best for me and my family. I haven’t been late on a payment in my 10 years worth of credit history on anything. My FICO was around 810, but at this point it is no longer worth the struggle. I’m 2 months of non-payment so far and the only loan mod countrywide has sent increases my 2nd by $200 a month(haven’t seen anything for the first yet).
Also for those asking if people will owe money the answer is that it really depends. For the most part the banks are eating it because most of the people don’t have money for them to go after otherwise they’d pay their mortgage. They end up just forgiving the debt in most cases. In other cases(my case) they can’t legally go after you. If you have never refinanced your home in many states(CA,AZ, others), your loan is considered to be non-recourse, meaning the bank can only take the item(house). The tax implications are where it gets weird but with all the laws past in the past year pretty much no one is getting stuck with the taxes. In a non-recourse situation it actually counts a capitol gain sale when you foreclose and whatever amount you are “forgiven” is non-taxable as long as it doesn’t exceed $250,000 for individuals and $500,000 for married couples.
DG,
thanks for sharing your situation with us… Sorry to hear about your home values, it really is a bummer – but do you really think you got scammed? I owned stock in the company I worked for and watched the share price go from $60 a share to $5… But, I have a hard time saying that I got scammed – there wasn’t any wrong doing involved, I just made a bad investment and lost a lot of money… Isn’t it the same when purchasing any asset?
Oh and regarding your first comment about the Bible not being relevant today – You clearly haven’t read much of your Bible because you would know how incorrect that statement really is…
It is truly a sad situation that our economy is in. However, doing the right thing is the hardest when it comes to money. I am also a person that bought a house at the height of the market ($599K) and now my home is work about $430K. Was my home overpriced? Well, in hindsight yes, but at the time in the market, it was not. Like most I assumed that CA real estate would always be a good investment and I was wrong. I pay my bills on time but in 3 years the Interest Only loan will adjust and I’m not sure how we will handle it, but we will.
All this said, I am responsible for this. No one else. If my home would have increased in value from $599K to $699K I would not expect to pay MORE to the bank… but when the value goes “DOWN” I expect to pay less. How does that make sense?
We have to take responsibility for our decisions. Only someone that doesn’t have a personal relationship with God can read the bible and think it isn’t relevant for today. The bible is really a guide for believers. If you are not a follower of Christ, you really won’t get it. It will seem like a book of stories. The only way that I can not “freak out” totally about losing almost $200k on the value of my home is that I know WHO holds my future. I couldn’t make it through without knowing God is with me through it all. Perhaps if more believers did the right thing and didn’t walk away from their responsibilities, it would bring others to Christ which is what we are here for.
We the government, need to encourage the banks to work on the terms of the loans. I agree that walking out is not an option for a christian on his/her debt. However, we are bailing out the banks and investment firms that was just as greedy. Not holding the banks accountable for risky practices is not an option either.
Remember the parable in the Bible where a rich ruler forgives a debt of a subject then the subject “shakes down” an underling that owed him a little debt. When the ruler heard this he thru his subject into prison.
dg alluded to a point I was wondering about myself. It seems to me the bank could go after other assets of the individuals who had a legal contract with the bank for the mortgage. DG seemed to indicate that all the bank could do is foreclose on the house but I was wondering about other assets, retirement accounts, etc.
Great Scriptures which remind us that it is God we answer to and God we represent when we make decisions. I think some people cannot make it and have no choice in losing their homes… but I think it would be wrong to walk away from something that you CAN pay. We are in that situation ourself. Our home is worth way less than we paid for it but we are still making it fine. Its a bummer but our faith is in the Lord and not on the market or housing prices. Its all God’s money to begin with!!
The loss of home equity is not a good reason for a loan default. If you had the ability to make your mortgage payments when you had equity, you should be able to make your payments without equity.
Hmm…., Has God not forgiven us? What if God held you responsible for you debts? Have you forgotten, “forgive us our debts, as we also has forgiven our debtors”. How about the story that Jesus spoke of about in Matthew 18:23-35? Where do you see yourself in that story? Are you the servant that was forgiven the debt (aka your sins) and then goes out and shakes down others for their debts? Some of you need to question yourself and inwardly ask why are you not forgiving like Jesus was.
I do agree that God does take care of us. I have a job, I can still pay my loan, and yes… my house is worth $100k less than when I bought it. Financially, it makes sense to leave. Spiritually it doesn’t. So responsibly, I can ask for the loan to be reduced. Remember, “For everyone who asks receives, and the one who seeks finds, and to the one who knocks it will be opened.” Matt 7:8. So be proactive people! God doesn’t want us JUST sitting around praying about it! The spirit “MOVES” for a reason!
Try being put in the situation, lets see what you all choose. Maybe the bible says something about having a job when they make a promise to pay a certain amount, then through no fault of their own the company files bankruptcy, so they find themselves out of work right in the middle of a recession. The family then chooses between mortgage payment that eats up 3/4 of a paycheck or rent which takes up 1/2. Pretty basic math there. I am a believer who is caught in a bad situation. Just because this hasnt affected the people on here obviously by the comments left, doesnt mean people are evil or unholy because they choose to save money in one area of their finances over another i.e- not paying credit cards or car payments instead of mortgage. Simply they got caught in an unfortunate mess. Myself included.
DG,
I dont agree with your beliefs on the bible, but with that said everything else is right on. I completly understand where you are coming from.
It is refreshing to have someone state facts instead of ohhhh people are not christian that can walk away from a mortgage. Basically, I have been a christian all my life and I am going to have to pay the consequences one way or another. Either I dont make payments on anything other than my mortgage or I pay everything else and not my mortgage. Either way I am suffering a terrible situation caused one by me for taking on a mortgage that is 40% of my income and one for the company I was working for because they chose to “Walk Away” also. Also I am paying the price because I am getting hit because my credit will suffer for the next ten years. Definately not what I had in mind when I signed that paperwork two years ago.
“dg alluded to a point I was wondering about myself. It seems to me the bank could go after other assets of the individuals who had a legal contract with the bank for the mortgage. DG seemed to indicate that all the bank could do is foreclose on the house but I was wondering about other assets, retirement accounts, etc.”
You really need to consult an attorney to answer this question as it varies state by state and even loan by loan. In places like California and Arizona purchase loans are non-recourse and the bank is not allowed to pursue you at all once they take the house. If you refied and took money out you are probably liable. In Florida and Nevada they can come after you as loans in those states are fully recourse. In most cases the banks aren’t even bothering to go after people as it is expensive and potentially wasteful. If they do go after you, you can declare bankruptcy, but I don’t know how you protect your assets in that case. I live in CA with an original purchase loan therefore I am not on the hook at all in the event of foreclosure. I have a retirement account and I’ll have significant cash in the bank due to the foreclosure process taking 10-12 months, but the bank can’t touch any of it.
I completely agree. When you borrow money you have the obligation to pay it back. It shouldn’t be an option to where you can just walk away if you want. This is why the financial system is in ruins right now.
C’mon you guys.. Im a devoted Christian and for you to bring bible scriptures or use the CAR analogy to relate to this modern day contract is ridiculous! How can you compare a corporate bank now run by the powerful greedy elite of the world to a normal debtor back in the old days of society!
every walk-away is a case-by-case basis.. I’m exactly in DG’s situation.. and we shopped cautiously for the last 3-4 years before we pulled the trigger at what exactly turns out to be a massively inflated housing bubble in the worst area to buy (yes, blame us for being an idiot for not knowing this would happen! But who did! if someone knew, they would be able to stop this mess before it happened!). This is not a regular economic boom/bust cycle but a gigantic bubble that was inflated by enormous fraud the sake of quick gains at the corporate level… we got forced out of our usual county (Orange County) into the Inland Empire (the most talked about County regarding foreclosures in Southern California).. job market here is a 3rd of what it is in the OC.. we sacrificed a good job market for a long commute to buy a house.. because we were in the RIGHT FINANCIAL situation to buy one and the idiotic part that we can admit to (and God forgive us) was we bought out of fear of being priced out.. again we were shopping for over 3-4 years.. we already got priced out of our County and moved to what seemed affordable at that time..
This is the way I see it.. EVERYBODY had a chance to buy a a home (or car, or any big purchase) at different times of their life when things are financially sound.. However, the timing of market prices doesn’t always work on your favor.. you know why? It’s because the banks control the economy through inflation and deflation.. it is only NOW, a first in the history of the United States that the public will begin to know the tyranny that is going on with our government.. I compare myself to my sister who was able to buy at a slighly better time (2002) and has at least 10% equity to keep her afloat and she was able to pursue her graduate degree and become a lawyer when the times were great. On the other hand, I am a first time home buyer in my early 30s that was renting for over 12 years prior to buying. I finally started making more than I ever did in 2005 and had money saved for a small down and the closing costs. But right when I’m done with my education and making a good career income, the market is at the peak of this stupid bubble.
Don’t blame us, the individual “mortgage-holder” who is about to lose thier home.. blame the leaders we all voted into office for bailing out these privately held corporations who just want to please their shareholders.. yet their CEOs and top execs and investors can easily steal massive bonuses out of the company while it is on its way to bankruptcy! How the heck does that happen!
When times were good, they were raking in billions in short-term profits at a faster rate than Individual homeowners were raking in equity… but guess what EQUITY is nothing but a number on paper… until the house is sold or refinanced, equity is not cash..
and at the peak of this housing crisis were buyers like me (who bought on emotion and fear that we would be priced out.. because in the last 3-4 years since we started looking in 2002, we HAVE Been priced out!) now we got priced out to an area that was filled with subprimers and a crappier job market than what we were used to. We lived life with optimism (which supposedly should be the way to live life).. but now we know deceit can come from all angles..
I was laid off from 2 companies when I left my job in Orange County.. did I know I was going to get laid off? NO! nobody knows this kind of stuff.. so now my income is 30% less.. now my brother, who lives with me, who still works in Orange County where the job market is better is also about to be laid off next month! ..
We didn’t care about home values plummeting 40-50%+ in our area till just about now.. we have a great loan but now we we realized we were just the little players in a global banking ponzi scheme.. we don’t want to be the last ones hanging on to our moral dignity while others have jumped off this fast sinking ship.. it has now become a moral obligation to one where our family’s future is on the line..
Don’t you guys ever read?? 50% of the nation’s wealth has disappeared.. well, not exactly.. it was STOLEN.. this is exactly what they like to see.. neighbor pitting against neighbor, the end of the collaborative community aspect of America.. but don’t blame it on the little guy..
A 3rd of my neighborhood (a neighborhood built in 2006) is already gone so now I don’t feel too bad for considering leaving.. I’m not going to bring my neighbor’s house value down.. you know why? It is already down! And good thing this neighborhood is new so people here are not too attached or sitting on their high horses with their many years of homeownership (equity) pride.. And I am not expecting a bailout because I don’t plan to stay and get help (which I know the banks aren’t offering even if they say they are! Trust me, I’ve read deeply into what the banks are offering).. and its our corrupt government for giving this bailout money to these banking institutions that then use it for their own personal interests as usual.. why not let the free-market work and let these banks collapsed and reap what they sow.. but now, our government is lobbied by the greedy upper class that also consists of foreign investors who don’t live in the USofA so why would they give a rat’s ass about the homeowner who’s about to lose everything..
IF you think we are not losing by walking away, think again.. its harder than you think.. we are losing over a 100k from our hard earned money by walking away.. but we tell ourselves, at this insane rate of depreciation, we are promising ourselves that we will have our good jobs (when unemployment is increasing! hah!) and that we won’t move (job losses are doubled here in our county.. why should we not move back greener pastures?) for the next 20+ years because that is when we would be able to break-even and sell it normally…
are you freakin kidding me? we never used or pulled out any equity to finance a lavish lifestyle and thank goodness for being in California for the non-recourse laws.. but stop pointing fingers and giving us this lecture on morality when you don’t understand what is really going on..
its easy to point the “housing and financial crisis” to the little guy (your neighbor who is walking away).. its because many of you have not educated yourselves about what is going on at the top… go read all about it at
http://www.infowars.com
this is exactly why the corporate elite (the biggest thieves in the world) can get away with this.. they just love seeing us taxpapers point at each other for this mess.. wow, they are having the time of their lives using our bailout money to give them performance bonuses for LACK of performance and lavish company parties and corporate jets..
while the walk-away has to struggle with a tarnished credit record, moving expenses, dislocated children, and the emotional hardship of losing their home..
only God knows the truth…
Well said!
There seems to be an assumption that you must not be educated on what’s going on or be impacted by this situation if you believe that God wants you to take responsibility for your debts and not walk away. That’s just not true. God’s word doesn’t change because it is extremely difficult for us to do it. I really wish it did because it is hard doing what is right sometimes. BUT this is what makes us different from the World. As Christians, we do what is right even when it is hard or could cause us pain, suffering, hardship, etc. In this world, life isn’t fair. BUT it is only our temporary home and we need to remember that.
Every situation is different, but I believe what God’s word tell us to do is the same. Pay back what you OWE no matter what.
I have been laid off from a bank I worked for over 10 years. I am the breadwinner of the family and my income makes up about 75% of our total income. It’s a tough time. My condo in CA is worth 200k less than I paid for it and I have an adjustable loan. My situation is not the worst one, but is not a good one. However, I feel I still have to pay back my debts. Not because I am better than anyone else or more righteous, but because I believe God expects me to do it. It’s really that simple.
My situation is not the banks fault. I bought a home that I wanted and they agreed to loan me the money. That has nothing to do with bonuses, lavish parties, or how much money the bank made. They didn’t force me to take a loan with them. I asked them to loan me the money and they did.
If I would have built my house on solid ground (less stuff) and not sand (treasures in this world), then I wouldn’t be in the mess I am in. I need to face the consequences now. If I can’t get a loan modification, perhaps my husband and I will need to get two jobs each to pay our mortgage and other bills. Yes, we do have a child that will need to sacrifice as well. Perhaps we will have to move out of our home and rent it out, make up the mortgage difference while renting something less than we want. Perhaps we will need to give up cell phones, cable, and whatever else we can to lower our bills. Whatever sacrifice we will have to make we will so that we pay back our debt. This again it what I feel God expects us to do so we will do it. Obedience is not always fair or fun, but it is necessary.
Please know that I am not making light of anyone’s situation and am not judging anyone for what they choose to do. It is really a sad and very difficult situation for alot of people. We must all make our own choices. God doesn’t just know the truth; He is the truth. His word tells us what we should do. Whether we choose to do it is our choice.
What about praying for each other and helping each other where we can? If you know of someone that is losing their home or lost their job and you are capable of helping them, then please do so. Don’t wait to be asked. Ask how you can help! Those of us that need help, ask for it. Who knows perhaps there is someone that could help (your church, good neighbors, friends, family). If anyone posting here knows of programs or other ways to get help, let’s post that and stop debating whether to walk away or not.
Even though I don’t agree with walking away, I also think that those that do make that choice don’t make it lightly. They most likely feel desperate and don’t know what else to do. It is certainly not an easy decision.
Whatever we choose to do, we can trust that God will NOT walk away from us. Although He wants us to do the right thing and there will be consequences for our decisions, God will stand by us NO MATTER what we choose. He will always love us and forgive us. How AWESOME is that?! I can’t screw up bad enough to stop God’s love for me. So Let’s love each other and forgive as well. That’s truly what God wants us to do.
A mortgage is a contract- a legal agreement between 2 parties. Each party should live up to that agreement or face the consequences which are spelled out in the contract. Morality is taken out of the equation each party has agreed to a set of terms which INCLUDE consequences for failure. Each home buyer should evaluate the best scenario based on this contract–even if it includes walking away. I don’t understand your comment “morally walking away” when 2 parties have agreed to the consequences of both success and failure. The only immoral (or stupid) thing to do is not to consider all scenarios.
I was once on good money but so peeved at the ‘artificial inflation’ of house prices, that I wouldn’t consider buying. I likened it to a noose around my neck. I knew what real estate around this area cost 20 years ago and what it’s ‘valued’ at now days. It’s just a rip-off for what is not a prestigious address. The artificial inflation was fueled by sellers ripping off usually young double income earners on good money. If the market dug their heals in and didn’t pay ridiculous amounts of money for even modest homes, perhaps there’d still be some stability instead of mortgage defaults due to the grossly inflated cost of living for much the same reason. Even when a relative of mine was looking for a house people kept saying to her ‘just take it’, as though she should just pay what the seller asked or put in an offer very close to the asking price. She didn’t ‘just take it’. She made low offers which sellers refused and looked for a whole year until she found a house that was nice but much cheaper and she bought it. Not enough people did that.
Covenants generally stipulate what happens when both parties perform as they agree, as well as consequences if one or both parties fail to perform the terms of the covenant.
Consider the form of the suzerain-vassal covenant that Yahweh made with Israel at Sinai (mediated by Moses). Basically, the L-rd said ‘if you follow my law, then I will bless you and let you possess the land I promised your fathers and protect you from your enemies; but, if you do things that I hate and are an abomination to me then I will dispossess you from the land, remove my protection from you, and scatter you among the nations.” Of course, redemptive history in scripture is the story of Israel failing to live up to its terms in the covenant they made with G-d and, as promised, the L-rd did as He said he would: ejecting Israel from the land.
The mortgage covenant has a similar form. If the borrower pays according to the terms of the note, then they will own the property free and clear and the end of the term. However, if the borrower defaults, then the lender has remedies: namely, the lender has the right to call the entire balance of the loan, plus interest and fees, due in an accelerated manner or at a time of their choosing (with appropriate notification to the borrower and allowance of a reasonable time for remedy). Ultimately, the lender may dispossess the borrower and take the property as the ultimate remedy.
This being the case, it appears to me that the terms of the mortgage itself allows the borrower to ‘make full restitution’ in Ex 22:14 by virtue of the fact that the lender takes the property (assuming the property is kept well-maintained and is in the similar shape as when it was purchased).
In response to Psa 37:21, I would argue that a borrower who has to move his family and forfeit his home is not a borrower who “payeth not again”. That, including the other penalties (ruined credit, social stigma, etc.) is a high price to pay indeed.
Finally, I think this verse from Psa 37 is also relevant here:
“The wicked have drawn out the sword, and have bent their bow, to cast down the poor and needy, and to slay such as be of upright conversation.”
I think to moralize and condemn those who are in a situation where they are no longer able to service their mortgage debt is outright legalism as bad as the venom that the Pharisee spewed.
Thank you for your comments regarding people who walk out on their mortgages. As a Christian it is something I am agonizing over. We can pay our mortgage but our house value has dropped here in Salinas, CA from 693K to 250K. We are paying on a mortgage at a 30 year fixed rate of 6.3 with monthly payments of 3600. We have seen neighbors come and go, lawns turn brown, for sale signs “planted” in yards and moving vans. Our same model across the street from us sold for 250K. We have been in this neighborhood for 10 years. Our credit rating is 800-850. We have always paid our bills. Now we want to move. We have put it off and have put our lives on hold simply because we can’t sell our house. Now we are contemplating the awful thought of walking away. It’s a tough decision but one has to wonder when is it unethical and then when is it just good sense? I think in the grander scheme of life the Lord is way bigger than all this and he definately looks at our hearts. Thanks again for your response on this blog!
Using the bible to make an economic decision for you and your family is probably not the best approach to a serious problem. I am sure you can find many biblical quotes about forgiveness to justify walking away from your home. While we are still on Earth guidance from the bible is good, but more importantly a family in serious jeopardy economically needs legal and financial advice. Remember, if you fell on hard times in a good economic environment and couldn’t pay your mortgage, the bank wouldn’t hesitate to foreclose on your house. It’s just business.
If you have a non-recourse mortgage in California, all the bank can do is take back the property. You did not write the terms. They did.
sin would only enter the picture if you refused to give back the house.
In as much as it is right in God’s sight to pay your debt, what happens when the bank is obviously being greedy? Yes, i made a mistake and bought my house in 2006 at 360,000. Currently, paying almost $2,800.00 per month. The value of my house has gone down to 200,000. The bank has refused to modify my loan as of yesterday. I have been refused any refinancing since i am under water. The first part of my loan(80%) is interest only and the second(20%) is at 12.75%. So,i really do have a bad loan. Unfortunately, at the time i bought the house, i was told by the broker that i should be able to refinance after 5months to a better interest rate. From March of 2006 till now, i pay $1,900, interest only to Chase. I am not trying to run away from my debt but feel that Chase should be able to help me out here. It seems i am paying to rent my house. I am not working any more even though my husband is.So, are you guys trying to tell me that it is a sin or wrong for me to walk away from my house considering that i have tried to make the bank work with me? Remember, Chase has interest only loan with me. God knows my heart and knows i deligently pay all my bills on time. I think some of you should not be quick to point fingers at others. Everyone’s case is not the same.Thanks.
I read everybody’s comments and advice. What I did not see addressed is what caused this foolish situation to arise in the first place.
What happened was that the mortgage industry (really it is the secondary market that buys the mortgage backed securities) decided to forget about asking or proving that the borrower had the ability and the willingness to repay the obligation.
That caused a huge imbalance of buyers to sellers. That is why home prices rocketed straight up. Supply and demand.
These loans should have been illegal. You should not be able to lend to consumers unless you prove there is a reasonable expectation of repayment.
So they were making mortgages available to just about anybody.
Fast forward and all the sudden they say oops. All of these banks would have been bankrupt if they did not receive assistance. But hey they made a bunch of money and gee to bad about the rest of us that did not get assistance as they did.
We are all talking about our moral issues, yet the truth be known we got ran over by an unforeseen and due to no fault of our own train. I call it the greed train because belive me they made a ton of money on all those real estate transactions and then as callus as can be sold that toxic mortgage junk all over the world and brought down the very institutions they worked for as well. Washington Mutual was a huge mortgage originator and held a bunch of the mortgages themselves, they imploded as well. Tulip Mania.
So what is the lesson? Caveat Emptor
What the solution to all these people in crisis. I think The Body of Christ should join and help each other.
There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land