Underwater: Walking away from your mortgage

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  • antonetteB Los Angeles, CA
    March 17, 2012 12:04 a.m.

    The 5 biggest home loan lenders just settled with the government over the Ârobo signing affair. A select number of people will get their home loan principles lowered. However, individuals who have mortgages owned by Freddie Mac or Fannie Mae, the bulk of homeowners, that are underwater are still left twisting in the wind. Underwater Freddie or Fannie backed mortgage owners left to drown. Its alarming that many homeowners whose homes are underwater or in other words owe more than the home is worth, which is called negative equity, arenÂt thrilled about the exclusivity of the principal reductions. Fannie and Freddie currently own roughly half of all mortgages currently held in the nation.

  • Brighton MADERA, CA
    Dec. 26, 2011 12:15 a.m.

    This is a far mor complicated issue than some people realize. I think we should not judge others. For many home owners there has been many sleepless nights spent pondering and praying. Some of the comments I have read make the problem black and white but is not black and white. For some a default may be morally wrong but for another it may be the best option. Another thing to note is that many home owners are required to buy pmi in case they default. This is insurance that the homeowner pays for but that really the bank benefits from. If they are required to pay for this service is it morally wrong to use it?

  • ImaUteFan West Jordan, UT
    Nov. 30, 2011 5:28 p.m.

    I personally know Alan and his wife and they are wonderful people. Financial crisis is not the only difficult thing they have been through. They helped us through a very difficult time in our lives and we will be forever grateful to them.

    I was saddened to hear about the Smiths current trials but applaud them for doing what they can to weather the storm. And I'm glad to read minimal judgmental comments here. There are so many people in the same boat or even worse.

  • DeltaFoxtrot West Valley, UT
    Nov. 30, 2011 10:58 a.m.

    @Reasonable Person: Things won't improve, at least not anytime soon. The global financial crisis was decades in the making and it will take decades to recover from. We've all been played, turned into mere pawns by big business. People aren't going to put up with that kind of treatment forever. Historically when a small group of people is exploiting a large group revolution isn't far away. I just hope the Second American Revolution will be a nonviolent one.

  • Kellie Orem, UT
    Nov. 29, 2011 4:37 p.m.

    Like I said earlier, our RENTAL payments are going to be the same as our mortgage payments, if not higher, for the same quality house. So keep your home even if it is under water!

    The banks are so swamped that they won't kick you out of your house for a long time, especially since you already paid a fortune into your loan. They really shouldn't kick you out until they can find another buyer. This way the home will stay in good shape. That home belongs to us who have savings accounts that were used to finance these homes and we don't want those homes abandoned just because someone can't pay. Some people have already paid the full price of their home and then some, so they shouldn't be evicted!

    If a bank wants to evict someone who's invested tons into their house, the bank should forgive the rest of the loan AND pay back all of the equity once the home is sold. I know a guy who hasn't paid his mortgage in THREE years and the bank still hasn't gotten around to evicting him from his almost-paid-for home in Idaho!

  • michaelm Waukesha, WI
    Nov. 28, 2011 10:35 p.m.

    Lets see, for decades banks and title companies have played buyers in every scam imaginable. They create forms and reports that no one reads or needs just to charge consumers more. They get laws passed to help create charges and closing costs in the 10s of thousands of dollars that do nothing but create profits. Lenders write into contracts schemes intended to trick consumers and punish them if they do not catch it.

    They train predatory sales people to twist, contrive, entice, and lie to get you to overspend, over commit, and "just sign here, no reason to read the 9 inches of paper, you won't know what it says and anyway". We'll back you into a corner, want a house? Need a house, you got to play by our rules or else.

    They have lied and manipulated us for long enough, then turned and sold those toxic loans they knowingly made to people who could not rightfully or morally keep up and knowingly sold those bundles as scams they knew would crush the world economy. I see no reason to feel bad when the tables are now turned against their fortunes, they are reaping what the sowed.

  • Oswald Gilbert, AZ
    Nov. 28, 2011 9:33 p.m.

    Taking a financial risk to own a business is part of the American dream. It didn't work out this time for the Smiths but I hope things work out for them going forward. For full disclosure I'm related to Alan and I know they put their hearts and souls trying to make that business work out. I think it would have if not for the mess we are all in now. I admire how hard they work now trying to pull themselves up from the difficulties they find themselves in. If anyone's looking to buy or sell a home Alan works really hard to serve his clients. I'd like to see some people reward him for his morals and his hard work ethic. Our world would be a better place if more people were as honest in their dealings as Alan.

  • buckbeaver Lake Forest, CA
    Nov. 28, 2011 8:30 p.m.

    When, and only when, homebuyers realize that a home is first and foremost a place to live and not an investment will they be able to weather the ups and downs of housing values. Unless you are able to buy the house outright (without the help of a mortgage loan) you are simply in a lease/option with your finance company untill the loan is paid in full. Yes, I believe that banks should accept responsibility of irresponsible loans, but only a fool would barrow against their home based on "paper equity". Good job to Alan Smith for setting an example of living with his commitments.

  • carman Wasatch Front, UT
    Nov. 28, 2011 8:23 p.m.


    Really??! The housing crisis was a big conspiracy to crush the middle class? C'mon...

    There is plenty of blame to go around for the housing crisis, and NONE of it was a conspiracy. Congress wanted to expand home ownership to the poor. The Fed kept rates low for too long to boost employment and economic growth. Individuals (many of my neighbors included) wanted to make a quick buck speculating in real estate. They also wanted to "live the American dream" by buying too much home, too early in life. The banks wanted to make money on selling mortgages. Appraisers wanted to get the bank's business so they ignored signs that their appraisals were not realistic. Real estate agents wanted to generate commissions so they encouraged buyers to pay more for homes than these clients could really afford or than the homes were worth. And many believed housing was a "sure bet" in the long run.

    I could go on. But PLEEEAAAASSEEE! Let's drop the language of conspiracy. This was more old fashioin greed by many parties, including the homeowners, that caused many to ignore the danger signs.

  • carman Wasatch Front, UT
    Nov. 28, 2011 7:39 p.m.

    Those of you advocating simple interest simply don't understand markets or economics. There is a required return that mortgage lenders demand in exchange for giving you money to use. That rate would simply be higher if quoted as simple interest, vs the more common interest on outstanding balance that is most common now. Frankly, the market migrated to the current system because it is easier to understand and more transparent. And interest is not some "big bank scam", but an incredible benefit of open credit markets in this country. Please stop buying the anti-business leftist media in believing that this is some kind of conspiracy. It is a mutually beneficial transaction, the hallmark of a free market. Yes, there were some unscrupulous lenders, just like there wer naive and greedy buyers. But by-and-larrge, a free market system is best for all involved.

  • Most Truthful and Patriotic Layton, UT
    Nov. 28, 2011 5:35 p.m.

    @Kami - you are absolutely correct.

    Those claiming that no "real money" was borrowed, are the same thinkers who used to claim that the national debt does not exist because it wasn't "real money".

  • Reasonable Person Layton, UT
    Nov. 28, 2011 5:25 p.m.

    This is the state of "personal responsibility", isn't it?

    Stay in your home and pay it off. IT DOESN'T MATTER if it's worth less (right now) than you owe. Things will improve.

    UNLESS you bought your home as a get-rich-quick investment, you're fine.

    Remember: you're upside down in your car, too - but there's no hope of ever getting a penny of that money back.

  • K Mchenry, IL
    Nov. 28, 2011 5:13 p.m.

    Most mortgages are owned by government sponsored frannie and freddie. The banks just facilitate. The banks are told who they can loan to and get into trouble for not making enough loans.

  • Kami Bountiful, Utah
    Nov. 28, 2011 3:53 p.m.

    To those of you who are claiming that banks LOVE to foreclose, you are showing your complete lack of knowledge in that regard. You might want to study up a little bit on how real estate owned by banks negatively affects them.

  • Lasvegaspam Henderson, NV
    Nov. 28, 2011 3:52 p.m.

    The worst was Nevada at 60 percent (of homes underwater). Indeed. AND we also lead the nation in our unemployment rate. Why, wheres Harry Reid, you might be asking? Why is he not at the forefront, fighting for his beloved home states well-being?

    The fact is I do not know one single person here who has benefited from Obamas Making Homes Affordable program, or all the refinance programs he thinks we should be thronging to. Little hard to refinance when ones employment is also unsteady.

    Prediction: Watch for Obama and/or Reid to soon offer lots o money to Nevadans who are underwater and/or have lost jobs. Obama is determined to win this state in 2012, despite the hellish state its in.

  • Kami Bountiful, Utah
    Nov. 28, 2011 3:51 p.m.

    Recommendations: 0 Jonathan Eddy | 3:28 p.m. Nov. 28, 2011
    Payson, UT
    @ Kami

    Sorry my friend, but you know nothing about our system of "monetary" exchange, debt as "money" or fractional reserve banking.

    @Eddy, And the wire the bank sends into escrow, which is often to another bank? And the funds given to the seller of the home, which are often deposited into yet another bank?

  • Jonathan Eddy Payson, UT
    Nov. 28, 2011 3:49 p.m.

    @ Kami

    Sorry my friend, but you misunderstand our system of "monetary" exchange, debt as "money" or fractional reserve banking.

    Trust me when I say that no real money was loaned on most house purchases.

    The homeowner creates a note (IOU).

    The bank then turns the note into a check and then cashes it in their bank as if it were money.

    Then they loan that cashed money back to the homeowner and call it a debt that needs to be paid back with interest.

    Then the bank, through fractional reserve banking multiplies by 10 that cashed amount on the "assets" side of their bank ledger and "loans" out that so called money to other unsuspecting home buyers in need of "loans".

    It is really a quite brilliant but dastardly counterfeiting operation that you and I (and our children) will be paying off for centuries to come. This makes us slaves to a well planned legalized criminal Ponzi scheme that most Americans will never understand, much less believe.

    Dumb Americans are banker's most valuable assets!

    Read the Federal Reserve website's explanation of Fractioanl Reserve Banking.
    Also watch the movie Inside Job.

  • Jonathan Eddy Payson, UT
    Nov. 28, 2011 3:28 p.m.

    @ Kami

    Sorry my friend, but you know nothing about our system of "monetary" exchange, debt as "money" or fractional reserve banking.

    Trust me when I say that no real money was loaned on most house purchases.

    The homeowner creates a note (IOU).

    The bank then turns the note into a check and then cashes it in their bank as if it were money.

    Then they loan that cashed money back to the homeowner and call it a debt that needs to be paid back with interest.

    Then the bank, through fractional reserve banking multiplies by 10 that cashed amount on the "assets" side of their bank ledger and "loans" out that so called money to other unsuspecting home buyers in need of "loans".

    It is really a quite brilliant but dastardly counterfeiting operation that you and I (and our children) will be paying off for centuries to come. This makes us slaves to a well planned legalized criminal Ponzi scheme that most Americans will never understand, much less believe.

    Dumb Americans are banker's most valuable assets!

  • lost in DC West Jordan, UT
    Nov. 28, 2011 3:28 p.m.

    mortgages do not allow compound interest.

    And as to whether or not the love foreclosures - banks are required to file financial statements each quarter with federal regulators; that is publicly available information. Go look at their financial statements and you will see they LOSE monay on foreclosures. Look at the line "gain or loss on sale of OREO" (OREO is Other Real Estate Owned) and tell me again why they love foreclosures when they lose their shirts on them. Makes a lot of sense to me!

  • LAL South Jordan, UT
    Nov. 28, 2011 3:23 p.m.

    Alan Smith, thank you for being honest in your dealings with your fellow man. I agree completely with what you are struggling to do & the lessons your children will learn because of your choice. You're decision is admirable in a world that often surrounds us with examples that are anything but. Thank you!

  • Jonathan Eddy Payson, UT
    Nov. 28, 2011 3:13 p.m.


    All points well taken. Add to this the fact that the banks, by design knew that mortgage securitization would eventually facilitate rapid foreclosure, their Ponzi scheme is working like a charm.

    Again, I encourage homeowners to invite the bank into an equity share proposal. They will not pay any attention to the offer or they will reject the proposal, similar to how they respond to loan modifications (another sham).

    When the bank refuses, the homeowner should conduct a mortgage securitization investigation and gather evidence of mortgage fraud preparatory to a a quiet title action to claim legal title away from these criminal elements. This is the only way to establish ownership of real estate now for the eternities.

    Sad but true.

  • libertarian Cedar City, UT
    Nov. 28, 2011 2:05 p.m.

    Don't be fooled, banks LIVE for forclosure, they LOVE it! Thanks to fractional reserve banking, the money they "loan" you is created out of thin air. Your work and sweat go into making the payments (slavery), but when you default, not only does the bank get your real property, that they paid NOTHING into, they keep everything you have paid, plus COMPOUND interest. Banking, the world's biggest scam.

  • libertarian Cedar City, UT
    Nov. 28, 2011 1:54 p.m.

    The two biggest crimes in the world are counterfeiting (FED) and COMPOUND INTEREST. If I was "king for a day", I would convert all existing and future loans to simple interest. The "financial crisis" would end almost immediately.

  • Kami Bountiful, Utah
    Nov. 28, 2011 1:43 p.m.

    @ Michael De Groote, I understand remedies in contracts. I understand that one may legally walk away and pay damages. The difference between your cell phone example and the landlord example vs walking away from a mortgage is that a bank actually wrote a check when you bought your house. The money was borrowed. This is very different from entering into a contract and agreeing to pay remedies should you elect to cancel the contract. The parties agreed to a remedy in an early break to the cell contracts. There are remedies under the law that a landlord may pursue if the tenant breaks a lease. In both of those situations, it is easy to make that party whole again. In the situation of the mortage, the bank should have the right to receive its money back. That is the only way to make the bank whole again. It may get the house and sell the house. But the loss should be paid for by the borrower.

  • davidjay Tooele, UT
    Nov. 28, 2011 1:27 p.m.

    @patriot The Republican Party members of the Gang of 6 were the ones who wanted to do away with the mortgage deduction. I know it is convenient to blame everything on the President, but in our system of government, the congress does the budget. President may recommend, but the congress approves it. The President may then veto or sign it.

  • awsomeron Waianae, HI
    Nov. 28, 2011 1:19 p.m.

    House Prices change and change rapidly. I would just hold the line the Price will go up, if their is No Need to move then don't move.

    The idea of having to have a bigger and better house every 5 years is just so much B.S. Its more about other things in the house the in the house.

    When the youth line clicks and sets its rough on the kids to move any way.

    I love my house. But if I did not I would have stayed just so my kids could stay in one place. I did and I think I did better because of it.

    My house could have sold for $200,000 more then it did had the realator marketed it right. My wife went looking at the house,yard ect. I sat on the kitchen counter top and when they came back up stairs, I just asked how much.

    She told me, I said Sold. My wife asked why? I said that! and pointed to the View. Both Mountain and Ocean and big front windows.

    I am right side up but if not its still mine. Keep it love it, your good times there.

  • patriot Cedar Hills, UT
    Nov. 28, 2011 12:03 p.m.

    If Obama gets 4 more years your home will be devalued another 50% to be sure. Also Obama is already talking about removing the home mortgage deduction which is just more salt on an open wound.

  • Jonathan Eddy Payson, UT
    Nov. 28, 2011 11:57 a.m.

    I encourage anyone considering walking away from their home to reconsider.

    1. Put the property into a trust and turn it into an income producing property.

    2. Get an occupant to take over the payment and treat it like a commercial lease.

    3. Wait for property values to come back up (they always do) and share future equity when the time is right to sell with your live in property manager/occupant.

    4. If the payment is high, invite the lender to share equity in exchange for a better monthly payment. Equity sharing is good business!

  • Southern Phoenix, AZ
    Nov. 28, 2011 11:38 a.m.

    This guy's situation is nothing. Try being $150K underwater, with the house now worth ~$100K. And you know what I'm doing? Paying it off and getting to know my neighbors better. We're all in it for the long haul.

  • Michael De Groote
    Nov. 28, 2011 11:35 a.m.

    White uses the example of a cell phone contract. Imagine you got a new cell phone and agreed to a two-year contract at $100 a month. A month later, you can get the same deal for only $50 a month. Your contract has a $300 penalty for canceling the contract. Most people would not feel it was wrong to break the agreement and pay the pre-agreed-upon remedy of $300. What is different with a mortgage that also has built-in remedies?

    White also talked about a young couple with kids. They decide to move to go to college in a nearby state to make a better life and sign a year lease for an apartment. Then the spouse dies and so the surviving parent decides to stay put for the good of the kids, etc. The landlord in the other state has a signed agreement, yet, White says, we would think him a scoundrel if he enforced it -- even if the parent could afford to pay.

    So what do you think of his examples? Are mortgages more sacred because they are a larger amount of money? What changed circumstances should allow people to break promises?

  • lost in DC West Jordan, UT
    Nov. 28, 2011 10:32 a.m.

    Did you make the decision in 2006 to pay $300k for a house?

    Did the bank decide to lend you money based on the house then thought to be worth $300k and on your PROMISE to pay?

    Can you still afford to pay, even though the house is now only worth $225k?

    change "house" to "car" and drop a "0" out of the figures and then tell me why we are even talking about this.

    I knew a guy in Alaska in in the 1990s who was paying an 11% mortgage on his townhome in Anchorage even though refinance rates at the time were around 6-7% because his place was underwater. No situational ethics for him, just honesty.

  • VA Glen Allen, VA
    Nov. 28, 2011 10:16 a.m.

    If I were to faithfully pay my health insurance premium and become sick for whatever reason and rack up large medical bills, no one in their right mind would call me unethical or immoral if I let the insurance company pay the portion of the medical bills they agreed to pay (per the contract). Why? Because I had been paying insurance premiums against the risk that something like this might happen. What people fail to remember is that within every mortgage payment you make, you are paying an insurance premium against the risk that at some point you cannot pay your mortgage any more. Mortgage Insurance is an integral part of a mortgage payment. And if you owe less than 80% of the value of the home and dont specifically pay MI, the interest you pay each month still includes a portion that goes towards a credit risk premium (or the risk you might default). This credit risk premium we all pay as part of our mortgage is no different than a health insurance premium, and it affords us the right (per the contract) to walk away (and of course face the consequences outlined in the contract).

  • DeltaFoxtrot West Valley, UT
    Nov. 28, 2011 9:30 a.m.

    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.

  • Keith43 Springville, UT
    Nov. 28, 2011 9:15 a.m.

    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.

  • HighlandsHome Highland, Utah
    Nov. 28, 2011 9:10 a.m.

    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.

  • Red Salt Lake City, UT
    Nov. 28, 2011 9:09 a.m.

    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.

  • Laura Ann Layton, UT
    Nov. 28, 2011 9:03 a.m.

    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.

  • USAlover Salt Lake City, UT
    Nov. 28, 2011 8:55 a.m.

    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.

  • Ms Molli Bountiful, Utah
    Nov. 28, 2011 8:53 a.m.

    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.

  • oldcougar Orem, UT
    Nov. 28, 2011 8:40 a.m.

    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.

  • Keith43 Springville, UT
    Nov. 28, 2011 8:30 a.m.

    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.

  • K Mchenry, IL
    Nov. 28, 2011 8:17 a.m.

    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.

  • Howard Beal Provo, UT
    Nov. 28, 2011 7:55 a.m.

    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?

  • JP71 Ogden, UT
    Nov. 28, 2011 7:48 a.m.

    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.

  • wb Austin, TX
    Nov. 28, 2011 7:39 a.m.

    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.

  • raybies Layton, UT
    Nov. 28, 2011 7:33 a.m.

    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.

  • hapticz New York, NY
    Nov. 28, 2011 7:07 a.m.

    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.

  • Ricardo Carvalho Provo, UT
    Nov. 28, 2011 7:05 a.m.

    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?

  • Kellie Wood Orem, UT
    Nov. 28, 2011 6:58 a.m.

    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.

  • FreeMan Heber City, UT
    Nov. 28, 2011 6:58 a.m.

    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.

  • Mr. Schneebly Syracuse, UT
    Nov. 28, 2011 1:07 a.m.

    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...

  • Idahoan138 Pocatello, ID
    Nov. 28, 2011 12:09 a.m.

    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.