Comments about ‘Underwater: Walking away from your mortgage’

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Published: Sunday, Nov. 27 2011 10:00 p.m. MST

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Pocatello, ID

Kudos to Alan Smith for being moral, and shame on Brent White for justifying "situational ethics" ("the end justifies the means...").

There ARE absolutes in this world - right and wrong are absolutes. To make a promise, and then to intentionally, voluntarily break that promise, is immoral and wrong. The modern application of "situational ethics" is just a symptom of a much deeper disease in our society - that of turning away from God and the immutable recipe He has given us for happiness (which "recipe" is composed of His commandments).

A person cannot do wrong and feel right about it: The associated consequences of this eternal truth are as immutable as the consequences of skydiving without a parachute. One can rationalize, sear their conscience, harden their heart, etc. - but the truth remains unchanged. Fortunately a lot of people are like Mr. Smith, understand this truth, and choose the consequences that bring greater peace and happiness in the long run. Hats-off to all of you who don't succumb to the lie that "breaking your promise is ok because Mr. White found you a loophole...". There are no loopholes when eternal truths are involved.

Mr. Schneebly
Syracuse, UT

All of these great low mortgage rates which are being promoted right now are NOT available to a person who happened to purchase a home before the real estate crash devalued homes.

Lenders will not approve lower rates for those who haven't defaulted and are stuck in a negative equity situation. It's a tough spot to be in, but banks don't care, government doesn't care, but they will hunt you down if you are late or miss a payment!

Pres. Obama has stated in public speeches that he cannot understand why Americans are not thronging to refinance through all of his new programs. Maybe he should try talking and listening to some of the millions of American citizens in this situation before making obviously uninformed statements.

I will not be able to move or sell my home for many years until I get out from underwater. Hopefully I can keep up with payments until then...

Heber City, UT

People underwater on their mortgages are not the only ones getting hammered. I paid my mortgage off. The value of my home has dropped 50%. I'm stuck just like everyone else. If I sell my house, I realize a huge loss. I can't just walk away and say "not my problem". In some ways, people totally underwater are in a better position, except for the credit rating damage.

Kellie Wood
Orem, UT

If our mortgage payment is the same as what we would pay for a rental home then we need to keep our homes. At least we get tax breaks and still have all the perks of ownership.

Ricardo Carvalho
Provo, UT

I have always struggled with the premise that having your house underwater is such a big problem. This article makes some good points about mobility which add to my thinking. If, however, mobility is not an issue, why should I walk away from a home and a loan that I could afford when I signed the papers? If I could pay $1,200 per month when I bought the home, does that change just because I could now get the home for $1,000 per month?

New York, NY

if corporations can walk away with yearly negative gain and loss reports, claim bankruptcy and pay no taxes or pass them 'forward against future years', and reorganize under a slew of clever arrangements, there should be the same options afforded for private individuals to do the same. consider your home, family and life as a mini-business with the same investment in work, time and effort. your end 'profit' is simply the capacity to survive (some more comfortably than others). banks and institutions that place strangleholds on persons, their earnings or their credit standing, yet never themselves bear any weight when they fail, are a deviant and destructive component of our society. pharses such as , 'too big to fail', while individuals are 'small enough to go under', is perhaps the best demonstration of a country that has lost it's very soul.

watch while we all submerge under the weight of sullen and cold policies.

Layton, UT

The dirty little secret about houses that are underwater is that they were never worth what they were originally sold for in the first place. The housing bubble was precisely that: A BUBBLE. There's no substance to it.

We have consumer protection on an assortment of goods and there are programs to protect consumers from scams, and exploitation, but the biggest forms of fraud still aren't even being considered.

I like the suggestion given in the article where underwater mortgages are revalued accordingly, with appreciation being shared between bank and consumer. At least then, the consumer has some protection, while the bank has some motives to keeping its loans equitable.

Austin, TX

FreeMan, I'm in a similar situation. My loan is nearly paid off, the value of my house has gone down, but I think you're looking at things the wrong way. Even if you were to sell your home today, you're fine because you don't owe a dime to the bank, and every penny (minus taxes) is yours. If you were renting for 10=30 years, then left you would have nothing in your pocket. Today you would have the money from the sale.

Kellie, once you get to the end of your loan, or it's paid off, there are no tax benefits to owning a home. There are financial incentives, such as only owing taxes and not a mortgage, but that's it.

Real estate is an investment, sometimes things go up, sometimes down. We can't always have it go up.

Ogden, UT

I have been hearing a lot of commentators lately make the statement in regards to home mortgages they would do it to you, so why dont you do it to them. How many situations could you apply this justification to in life? Couldnt you say, they would steal from me so Im justified in stealing from them or they would hurt me if they could so Im justified in hurting them. The whole financial crisis was brought about because of unethical behavior. Is continued unethical behavior going to help improve things?

I am also tired of people who made bad financial decisions acting like they are victims. If you knew up front what you were getting into then you are responsible for the consequences of your decision. The Smiths took a calculated risk by taking out a second mortgage to finance a business. The business failed. It sounds like the Smiths are fulfilling their part of the agreement and I applaud them for that.

Howard Beal
Provo, UT

I don't see anything evil about walking away from your home. You simply pass the title to the bank. It is their property. We basically own nothing until the mortgage is paid off. The bank loans money because they think people can pay off the loan and that they think the property is worth something. Just like the poster said above, businesses can claim losses all the time, restructure their debt (and get bailed out by the govt. sometimes), why can't the individual in America do the same thing? Why are individuals held to a higher standard?

Mchenry, IL

If the house went up in value the bank has no right to ask for a larger payment each month over the life of loan. I don't see why the value of the home has anything to do with continuing to live in the home and make payments agreed to in the original loan. There can be refinance for a person paying on time once they stop being upside down for a lower rate.

Springville, UT

Not once in this article did I see it mentioned that the greedy banks and our government are the major reason why our mortgages and home values are where they are today. AIGs lawsuit against Bank of America is a case in point. I am one of those who chose to walk away. Up to about three months ago, I had an excellent credit rating and I mean excellent. I had a well-qualified buyer who was willing to assume my existing loan. I contacted the bank and requested the necessary paper work. I was told it would take up to 10 business days to receive the package, a minimum of 60 business days to transfer the loan over to the new owner; and, that it would cost him $1,250 just for a credit check and putting the loan in his name. After several calls, I never heard from the bank, nor was the package ever received. The guy backed out, and after several months, I couldnt sell the home. So, I was forced to walk. The message from my bank was crystal clear! And I have a very clear conscience about that decision.

Orem, UT

Good discussion, folks. I would, however, plead with the "righteous" crowd to refrain from judgment until you have suffered financial setbacks and been forced to make excruciatingly difficult decisions.

Ms Molli
Bountiful, Utah

I think it is immoral to incur debt that one cannot afford to pay back. And if it takes working two jobs to pay the bills, then work two jobs. And by the way, most Americans are underwater on their new cars the moment they drive it off the lot. Should they walk away from that debt because it isn't fair, because some salesman "talked" them into buying a new car that was going to immediately lose value once it was no longer new? The blame game needs to stop. There is no one but ourself to blame when we purchase anything on credit and end up on the losing side of the investment risk.

Salt Lake City, UT

The decision to pay off your mortgage isn't just a matter of home value. It's a matter of INTEREST. Most mortgages are heavy on interest the first 10 years, so you're practically paying rent for the first 10 years and mortgage companies LOVE when you re-finance because you start paying "rent" all over again. On a $250 home and a 30 year mortgage you're going to pay more than $500K to own that home. Unless you pay if off early and pay yourself the interest for your retirement rather than pay the mortgage company.

Nobody should have a 30 year mortgage, unless you are buying your first house and are in your 20's. Those who don't understand interest pay it, those who do understand it, earn it.

Laura Ann
Layton, UT

Fortunately for me, my house is paid off. I stayed in a smaller house although I could have easily bought a big and newer one. Strangely enough, I never really thought of my house as an investment. Before the Bubble hit, I couldn't believe the houses people bought even though they really didn't need six bedrooms, six bathes, etc,... I'm afraid a lot of our problems come from greed. I saw my relative's house just a few days ago in Arizona and I was so envious, but then I thought of the house payment. I think I'm the way I am because we had so little money in my home growing up. I hate debt. We spoil our children and they expect more and more instead of earning it. I applaud those people who are sticking to their commitments, although I do realize that some people just have no choice but to walk away. I hope things get better for these people and that we have all learned a lesson, including me, because I also was tempted to buy a new home.

Salt Lake City, UT

Simple interest baby! Let's go back to it.

Banks and their interest scam of amortization is the problem. Charging 3 times the purchase price for a house is what is immoral.

It's crazy that everyone wants to talk about morals when the banks have manipulated the whole system to their advantage.

The banks played a huge game with everyone and now they are losing. It's their game. They lost and they want us to feel guilty and to bail them out.

Most everyone (I'll avoid using ALL) is guilty of Greed, Especially the banks.

Let's change the system back to simple interest.

Highland, Utah

How is it behaving in a "ruthless economic manner" for a bank to expect both sides to abide by the terms of the contract?

If I expect a bank to reevaluate the cost of my mortgage when property values drop, can I also expect to pay more when my home appreciates in value?

This is all about situational ethics. If I'm living in a home and can still make my payments but choose not to, I can argue it any way I want to, but it still means I broke my contract and am not being honest in my dealings with others.

One thing this doesn't address however is predatory lending when a bank lends money to someone that they know can't afford the home. Then, when they foreclose they turn around and sell it to someone else. We saw this a lot in our previous home state of Indiana.

Springville, UT

One point thaat no one has made, is that home values will continue to drop - our economy overall is on the verge of collapse. And again, Obama wants to give more money away. But this time, instead of the banks absorbing the losses, he want's to pass those losses on to you and I. Call it the "blame game", or whatever you want. But after you've read the history of how this Administration, congress, and the lenders have brought this about, you may think differenty. Had my bank given me the time of day, I would have hung in there. It may appear to some to be over the top, but, I am of the belief that they want these forclosures. Just try to purchase a home on a short sale - you'll find the banks nearly impossible to deal with.

West Valley, UT

The government and banks don't really want to help anyone out. The housing bubble was created to erode the one major asset that middle class families still had, real estate.

The last 30 years of this nation's history have been all about crushing the middle class.

High paying manufacturing jobs are sent overseas and replaced by "service" jobs, most paying little better than minimum wage.
Inflation eats away at what income middle class workers do bring home.
Banking regulations are relaxed to create the housing bubble.
The rapidly rising cost of a college education has a high percentage of young adults in debt for tens of thousands before they ever work their first day on the job.

Unless things change and change soon expect to see full out class warfare in America. This first round of unorganized OWS mess was just a preamble.

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