Will walking away turn into an epidemic?

Can the credit based system in the US be broken by consumers who don't pay up?

  • Yes absolutely

    Votes: 56 57.1%

  • No that is crazy talk

    Votes: 14 14.3%

  • Yes and I'll be helping

    Votes: 11 11.2%

  • Not very likely

    Votes: 17 17.3%
  • Total voters
    98
Quote from austinp:

<i>"If the defaulting mortgagee has other assets, the lender can strive to collect. If there are no assets, the defaulter gets "1099-ed", then has to deal with the IRS for income tax due. Bankruptcy would be the only true relief."</i>

Big picture: the majority of people do not care about future consequences.

Here's what they know for sure: mtg payments cannot be made when food, clothing and transportation are taken care of. Deal with survival today, and walk away. That's the first step. Whatever happens next will be dealt with as it comes.

All of the other consequences may hurt later, but the masses do not care about future problems when faced with immediate crisis. They will walk away today, then resign to face comes what may.

Net result is a mass exodus just getting started. See other real estate bubbles in the past for what lies ahead. Threats of asset seizure and IRS issues are moot... they will not stop the majority from abandoning houses which are upside-down. Banks will still be saddled with a glut of overpriced houses while seeking recourse from people with nil assets to seize.

That's the reality
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When people have no other assets and abandon their homes, I don't view that as "walking away"... that's more like "foreclosure" (even if the bank hasn't kicked them out yet, they will in the near future.)

"Walking away" is more like when someone HAS other assets, but doesn't want to honor his mortgage because the house is worth less than the mortgage amount.
 
Quote from cgtrader:

Not yet. The question is can it turn into one?
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With artificially low rates and high inflation? I doubt it. The situation will remain regional. Vegas, SoCal and SoFla will bounce like cats. Or in the case of AZ, rise like a Phoenix. The northern big cities like Detroit will continue fading into oblivion.

Housing is still VERY weak and I expect the situation to worsen. However unlike the Federal Reserve I see a global currency collapse looming. In that scenario all bets are off. I'm one of the few people who thinks unemployment and wages will rise simultaneously. That's what stagflation is all about.
 
Quote from gnome:

And most of them will be receiving a bill from the IRS for "taxes due on the $150K of forgiven debt".
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THAT HAS BEEN RESCINDED FOR HOMEOWNERS ONLY

YES CAL. HAS A NO RECOURSE .I MET MANY BUILDERS WHO HAVE GONE BANKRUPT (SMALL BUILDERS) AND TOLD ME ITS NO BIG DEAL:D
CHEERS
JOHN
sorry about the caps
 
Quote from gnome:

There is a high level of misunderstanding on ET about the ease/difficulty of "walking away" from a mortgage.

In most states, a personal residence mortgage is a full recourse loan.... (I keep hearing about how in California it is not, but I still find it hard to believe.)
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Where are all these fuckers WALKING to? Even to rent an apartment, you need decent credit or you will need $$$ more upfront as a deposit

Dazed and confused

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People who walk away may not have assets, but they still have an income. And can walk away to cheaper places to rent. It's a big difference to have to pay 3k to 4k per month on a mortgage than a 1k payment for a rental.
 
Quote from Pa(b)st Prime:

With artificially low rates and high inflation? I doubt it. The situation will remain regional. Vegas, SoCal and SoFla will bounce like cats. Or in the case of AZ, rise like a Phoenix. The northern big cities like Detroit will continue fading into oblivion.

Housing is still VERY weak and I expect the situation to worsen. However unlike the Federal Reserve I see a global currency collapse looming. In that scenario all bets are off. I'm one of the few people who thinks unemployment and wages will rise simultaneously. That's what stagflation is all about.
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you might want to look at the information on the fed reserve site...it might change your mind about the situation and whether it is local or not. some good info there

http://www.newyorkfed.org/mortgagemaps/
 
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