Underwater Homeowners are considering the NUCLEAR OPTION in dealing with the housing bubble crises that continues across the nation and here in South Florida.
Some owners are asking the question, " Why keep putting money into a house or condeo thats going down in value? This is a question that is being debated in many households.
Let me shed some LIGHT on the subject. Why should you keep paying that mortgage?
(1) A Moral Obligation to do so.
Even though walking away from a mortgage could be a temporary good "business" decsion, one must weigh the moral considerations. You signed a contract with another person or party that gave you money that DID NOT BELONG TO YOU, with the promise of you paying it back. Just because that decision is no longer making you more equity is still not a right or morally correct decision to walk away from that contract. When you do walk away, you are leaving those people holding YOUR bag. Fair? No. Hard to justify? YES Remember that you are teaching by doing to your children and those that watch YOUR business ethics and actions. What may seem like an easy out today, WILL at some point catch up with you.
(2) The Lender is likely to collect
Borrowers have to weigh the practical considerations of so called strategic default, They risk being sued by the lender for theunpaid mortgage balance for up to 20 years!
(3) Destruction of your Credit
Those that default on mortgages suffer huge hits to thier credit rating. It will make it difficult, if not impossible to get car loans, credit cards, store credit or good car insurance rates. It can also affect FUTURE employment years down the road when a potential employer pulls your credit history and sees your default. Those that take this option see credit scores drop by 200-300 points. These defaults will stay on your record for at least 10 years. and you will be unable to get another mortgage for at least three years.
(4) IRS Liability
Remember that GREEDY and BROKE Uncle Sam will come looking for you. If lenders forgive the mortgage debt, borrowers who walk away will be required to pay income tax on the forgiven amount!!!
The bottom line to all of this is that a mortgage is a contract that your signed agreeing to pay the money back. If you break that contract a house of cards will fall on you big time. There is NO EASY OUT. Some say that the banks deserve it and that they are the ones that caused this entire mess. Thats only partially true. Lets remember who caused this.
1) The politicians that YOU elected and continue to hold unaccountable for wild speculative borrowing practices FORCED on the banks and lenders so that people who had NO CREDIT and no history of sound financial management could own a home.
2) The loan YOU signed for and possibly fudged on your application to get that loan.
3) The fact that YOU had eyes bigger than your stomach in wanting more than you could afford
4) The fact that YOU ran with the crowd believing that the housing prices would continue to skyrocket and make YOU lots of money...And now that REALITY has set in,.... you blame someone else or a bank for your poor money decision. Own up, straighten up, Shut up.. AND PAY UP!
