Know when to walk away


I never thought I would write something like this.  I used to believe that it was wrong to just walk away from a home.  I am not talking about taking the dog for a walk — I am talking about not paying the mortgage and leaving.

Yes we all signed legal documents that say we have to pay back our mortgages, but some people can’t, and as we all know, many owe more on their homes then they can be sold for.  In the past I have represented sellers who sold their homes because they could no longer afford the payments due to a change in their life circumstances, like divorce or the death of a spouse.  

When that happens some home owners can’t afford the mortgage on one income.  Loan modifications are few and far between and so are short sales.  Some home owners have tried everything and every program and there isn’t any help and they can not pay.  It seems that the bank would rather take the loss than modify the payment or entertain a short sale, and even if they do say yes to the short sale they may not say yes to an offer so that the sale can take place.

Walking away may be the only option, but keep in mind that the foreclosure process is slow.  It can take a year from the last payment until the bank owns the home.  A person could live rent free for six months to a year before they had to leave — giving them some time to pack and to save some money.  It may mean the difference between years of struggling to come up with enough money and having little money for anything else like home repairs or food, and being able to make a fresh start and have a life again. 

Like I said when I started, I never thought I would write anything like this but now I get it.  I have talked to people who have tried everything.  They have called the bank many times, they have checked into various programs designed to help distressed home owners and there isn’t any help. There is help for some but not for all. Programs that teach money management are nice, but there are some who simply don’t have enough money to manage.

This may all sound wrong, but there have been so many foreclosures that I don’t think it has the stigma it used to have.  It may hammer a credit rating, but again — with so many foreclosures — I suspect the time will come when lenders will need to loan money to people who have gone through a foreclosure.  I understand that a home loan is a legally binding contract but if there is no money, there is no money, and banks could modify loans or be more cooperative with short sales.

With the way things are today I don’t think it is a good idea to try and save a home at any cost.  It just doesn’t make sense anymore.   On the other hand I have no respect for people who walk away just because they owe more on the home than it is worth when they can afford to make the payments. I made payments on my home for at least three years when the value was less than what we owed and never would have considered walking away because it is my home. We bought it so that we would have a place to live and raise our children.