Seattle Residential: I Do That: Walk Aways on Sixty Minutes

Walk Aways on Sixty Minutes

Walk Away on Sixty Minutes

In This Post

Whose money is in your pocket.

Walk Away on Sixty Minutes

On May 9th Sixty Minutes aired eighteen minutes of news/editorial on four homeowners who owe more on their homes than their homes are worth. About the man who bought a home for $1.4 MM which he says is now worth about $800K, but he loves the home and plans to stay there and keep paying the mortgage; him I applaud.  Sixty minutes didn’t say what his mortgage was and that might have been important to know in comparing him with the others.

Concerning the three others who have decided to not pay their mortgages any longer, I’m disgusted. All of them still had the ability to pay. They had their jobs or retirement income. But for purely financial reasons, they’ve decided to renege on their contractual obligations and, in essence, steal from the bank and help in the downward spiral of prices in their neighborhood, i.e. steal value from their community. One couple even added in closing that they would save a lot of money by not paying their mortgage for six months, but they would still live in the house until the sheriff threw them out.

The laws in our states that protect homeowners from foreclosure were made with this in mind: The people wanted to keep their homes, but because of ill health, job loss, or other temporary set backs they were unable to make a few payments. Hence the six months to a year of “chance to recapture” for the mortgagee with problems.

The people in the Sixty Minutes piece don’t have these issues. They are just unhappy because the chance they took to make money buying a home didn’t pay off. Does that make it okay to steal that payment from the lender by remaining in the house? Did the lender promise them a profit when they bought the home?

Sixty Minutes mentioned a large land owner who defaulted on an apartment complex in New York. They didn’t say if that landholder kept rents that should have gone toward loan payments. Sixty minutes also mentioned a company which consoles people who want to walk away. For a fee they ease the scofflaws’  consciences.

Sorry, my heart wasn’t broken by any of their tales of woe. How about you?  






Glenn Roberts



Comment balloon 70 commentsGlenn Roberts • May 10 2010 09:31AM


Too bad they didn't mention any couples who have had financial problems and tried to get a loan modification to stay in their home, only to get a runaround for at least a year from the bank while they drained their retirement hoping for a modification.

Posted by Geoff ONeill (John L. Scott Medford) over 10 years ago

I'll be honest...I have such mixed feelings about this one.  I'm having great difficulty imagining myself taking the "walk away" route for myself, but then again I am not in their position.  I know that everyone is justifiably irritated at banks right now, but I don't think I would be able to do that.  For the one family, it sounded like many of the homes in their neighborhood have already been foreclosed on.  What would it be like to live in a mostly empty neighborhood?  On the other hand, the home was once worth the $260,000 to them when they bought it.  To be $100,000 upside down is such an extreme situation - that seems to be more common right now.  Extreme situations test us in interesting ways.  Wish I had the answer, but I was just a little stumped by the report.

Posted by Kristen Wheatley, Supporting Success - Best Job in the World! (Better Homes & Gardens | The Masiello Group) over 10 years ago

I feel no empathy for these people.  It's hell to complain about the problems (which they do) and yet be a major contributing factor at the same time.  Personal responsibility is out the window.  If everyone else is doing it, then it's ok, right?  WRONG! 

Posted by Jenna Dixon, 55 & Over | New Constructions | Horse Farms (Momentum Real Estate Group LLC) over 10 years ago

These "Faux-homeowners" are merely renters disguised as homeownwers :)

Posted by Charles Buell, Seattle Home Inspector (Charles Buell Inspections Inc.) over 10 years ago

Geoff - I would rather have seen 60 minutes do two segments or  whole program and really analyze the different problems people face, not just one subset.

Kristen - Theissue between the government with a handful of money (whose money?) to fix the problems and the banks not willing to use the money the way the government thinks it wants, is a tough problem. If you help one set of people, then do you equally give the same amount of money to everyone, mortggee or not? That sounds fair.

Jenna - It's never ethical just because everyone is doing it. Learned that at home many years ago.

Posted by Glenn Roberts (Retired) over 10 years ago

Now I have to go watch sixty minutes to get my blood pressure going instead of coffee this morning...
I hope your week is off to a grand start Glenn,

Posted by Paul S. Henderson, REALTOR®, CRS, South Puget Sound Washington Agent/Broker! (Fathom Realty Washington LLC) over 10 years ago

Charlie - Makes me wish some people would have stayed renters.

Paul - Would you like one lump or two with your 60 minutes.

Posted by Glenn Roberts (Retired) over 10 years ago


60 minutes was not an accurate portrayal of what is going on.....but a TV show. The truth has yet to come out. I do not need to be entertained on a subject of this magnitude. We need intelligent, decisive action until there is remedy. There is a serious leak on the mortgage ship and if not fixed, will continue to sink........and take us all with it.

Thank you


Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 10 years ago

Richie - The news and tv news programs have become entertainment, and when the personalities don't give us that, the rating go down. Will blogging become the next reliable news source? It could be at least as accurate and yet more thorough than current new presentations.

Posted by Glenn Roberts (Retired) over 10 years ago

Glenn...there is wisdom afoot in your #9 response.......blogging promotes free speech which promotes people to have a broad view on subjects.....only then can  we make good decisions...thank you Glenn.....

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 10 years ago


I lost any sympathy I had, and it wasn't much, for the first homeowner when he said they're just going to live there for free until the bank kicks them out. Nothing but a freeloader.


Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) over 10 years ago

Every situation is unique, but overall I would love to see people accept more financial responsibility rather than walk away. Simply being upside down is not a good enough reason.

Posted by John Novak, Henderson, Las Vegas and Summerlin Real Estate (Keller Williams Realty The Marketplace) over 10 years ago

Richie - Something is going to happen in the news media segment, and it's going to be like a frozen lake turning over in the spring.

Rich - I would love to see those homes they are walking away from be worth more than they paid, before they are eligible to buy again.

Posted by Glenn Roberts (Retired) over 10 years ago

Glenn -- they are making such bad decisions. Even if, and I believe they are, they selfishly choose to do this walkaway thing "for their own good" they are wrong. This is damaging to them and damaging to their market area R.E. prices and damaging to all who carry their abandoned burden. When people are truly in hardship, I truly feel for them. And I help them. A lot. I even bought one person's children's Christmas presents one year. But they were American Airlines layoffs many many years ago... that is what we do, right? But jump ship is not right and I am really tired of ppl saying it's ok.

Charles -- I like "faux homeowners" just because I am tired of strategic default today :) REAL TIRED.

Posted by Kristen Correa, Broker, I love coffee & real estate. I am out of coffee! (Kristen Correa Real Estate & Reedy Creek Realty Services) over 10 years ago

People with a strong sense of personal responsibility would not do this. When did so many Americans lose their pride?

Posted by Pat, Ben and Martin Mullikin (M3 Realty) over 10 years ago

Glenn, I was so upset and disappointed. Those who have lost their jobs in depressed areas are the reason for the neighborhood drops. Just because your house is worth less, you feel you are entitled to walk away? What about all of the people who lost millions in the stock market? They made bad financial decisions. Same as these people. But they don't get to walk away, and these people shouldn't either.

Posted by Marney Kirk, Towson, Maryland Real Estate (Cummings & Co. Realtors) over 10 years ago

Glenn,  I didn't see the show; however, I'm with ya.  The more people that walk away from their homes just hurt those of us who keep making our own payments.  It hurts the taxpayers who have to bail out the banks, and it further depresses the housing market.  I'm disappointed it's even allowed.  There should be stiff financial consequences for the three you talk about.

Posted by Nathan M, President (Rentec Direct) (Rentec Direct Property Management Software) over 10 years ago

John - I know Nevada is one of the hardest hit states, but weren't many of those buyers out of area speculators? When they walk away it hurts the residents.

Kristen - I'm expecially miffed at the company that is charging people to tell them it's okay to walk.

Pat - I wonder too. Was it really Mr. Rogers fault that so many think they are entitled to smooth sailing..."just because you're you."

Marney - I was pretty upset that the FDIC took over Washington Mutual, sold the assets to Chase at a big discount, and let the stock holders go home empty handed. Yet AIG an other banks got bailed. Who is making these decisions? I gambled owning WAMU stock and lost.  

Posted by Glenn Roberts (Retired) over 10 years ago

I wish I would have seen the special. 

Posted by Cindy Roeschen (Tricon Homes) over 10 years ago

Nathan - I expect there will be some retribution. Katrina Gassett wrote a great post as a warning to walk aways.

Posted by Glenn Roberts (Retired) over 10 years ago

Cindy - You can see it. Spence Rascoff of Zillow posted it in his article this morning. I think the news story falls short of examining the issue. 60 minutes was just telling the story they wanted to tell.

Posted by Glenn Roberts (Retired) over 10 years ago

I missed the broadcast but it was discussed at our Monday meeting. You can make the ethical argument that he who has the capacity to pay should honor the mortgage contract that they signed. In reality, there are no ethics today, so what do you expect...should I invoke Bernie Madoff, Enron, Adelphia, Tyco, Goldman Sachs...people see this disgusting behavior and think, "why should I play be the rules, nobody else does". And there are limited consequences...

Posted by Michael Solarz over 10 years ago

Glenn, your point about blogging becoming the next reliable news source resonates with truth. With events being tweeted first before the traditional media can get its spin hands on it, programs like this that highlight just one sensational area of the mortgage crisis further discredit the media. To give a complete overview would have been a good idea - to just do a show on something that is bound to be controversial, shame on them.

What about the people who have tried to refinance? What about the short sales that are stonewalled by servicers who make more money if the house forecloses? What about the fraudulent loan officers and others who got people into houses they in reality did not qualify for? What about them? Let's tell the whole story, not just one salacious tidbit. Grrr....

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 10 years ago

I wonder how many people watching that show were on the fence about making a similar decision and decided to join them. How about some news that would actually help the economy now that would be a good story!

Posted by John Marshall - FORE!, Specializing in Golf Course Properties (LoKation Real Estate) over 10 years ago

Of course, I have no crystal ball, but like the panic over the stock market, when it plummeted, many people were in a panic and sold at a loss...those who held, have seen the market improve.  I sold a property one time for exactly what I had in it; six months later I could have double my money.  It's easy to be ethical when times are good but true nature comes out when times are bad. 

Posted by Linda Hinson (S & L Properties) over 10 years ago

There is nothing wrong with walking away. Its not a moral issue. The mortgage provides for such a possibility and both parties agreed that if the loan is not paid the lender gets the home back. 

Check it out for yourself, most mortgages will have a provision that outlines certain consequences for not paying. This is an 'either/or'  provision; either pay and stay or dont pay and move out. There is nothing wrong with the second option. This was the deal that both parties made at the settlement table.

Both parties went into the deal assuming certain risks; the problem is that both parties assumed that home values would rise, or at least not decline, Neither party believed we would see a decline in value like what has actually happened.....So now, neither party wants the house, but the mortgage gives the borrower a choice and a way out. I say there is nothing wrong when someone makes that choice.

There is a solution, and that is to re-negotiate the loan principal


Posted by Ron Parise ( over 10 years ago

Michael - Agreed

Sharon - It's the spin that is so aggravating. When you know something about a story and see all the holes in it, you wonder about the stories that are "news" to you.

John -  too too many

Linda - Yes, there was no promise of profit, only a promise to pay.

Ron - good logic, but I couldn't disagree with you more. There was a time when deals were consummated with a hand shake and the participants took pride in carrying out their obligations. There was a time when a man would go out of business with heavy debt but he and perhaps his sons would keep working until they paid off everyone that was owed money, even though they didn't have to. Times have changed. You want to say it's only business and if there is a way out, it's okay to take strings attached...well, that's you and a lot of other folks. It's kind of like we are all anonymous to each other now. Like a video game where you can shoot for hours at real life figures...but no one really gets hurt. We're all terminators.


Posted by Glenn Roberts (Retired) over 10 years ago

Pure entertainment! They did this show for shock value and to cause discussion and it has worked.

Posted by Kim Dove, Realtor - Jacksonville FL (Watson Realty Corp) over 10 years ago

Glenn- I am not the moral police. What I feel about it has nothing to do with running a business or my contractual duty to seller who choose to do strategic short sales. My personal opinion does not matter much in the big scheme of things nor do I have the right to judge someone else's motives or moral values or not. There is only one judge of man and that is not me. We list and sell strategic short sales, we hope more homeowners who are choosing strategic defaults will be told the truth, that they can mitigate down their losses by doing a strategic short sale but there are so many people telling them that banks won't do strategic short sales. 

We look at is as purely a business decision on short sales- between the bank and their borrower. I get a lot of the holier than thou agents who don't like that we do short sales for the rich and famous, but you know what, that is their problem, not mine. If they want to judge us, that will fall back on them. There is nothing wrong if both parties agree to take a loss. Many well to do business people will let's say owe 600K on a second home here in Florida and the house is only worth 300K now. We sell the house and then negotiate the 300k loss down to 75K. The seller brings the 75K to closing, the buyers have a new home, there is no foreclosure and the bank gets part of their money back. Strictly Biz. There are no morals, no good, black, white or gray involved. Just a business decision based on the numbers. Katerina 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 10 years ago

Glenn- The other part of the equation is this' the banks in non judicial states where the property owners no longer have legal rights to a judicial process- those same banks use a clause in the note to force homeowners and especially investors to bring up their LTV to a place the bank feels comfortable for the risk even if the party was never late on their payments. A man in GA is being told he has to fork over 75K or else they will foreclose. He has always made his payments on time. They are pulling that clause on him. Here in FLorida- the judge would send the bank out of town for that. 

So my question is, so the bank wants the homeowner to increase the LTV when the market goes down, do they give back the money to the homeowner when the market swings up? I don't think so. 

The banks are out of control in this country, in the world for that matter. That does not make it right to do what is not right but they certainly have no foot to stand on. Katerina 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 10 years ago

It's "60 Minutes".  When I read you post title, at first I thought it was how to do a walk way in sixty minutes. 

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 10 years ago


This happened in Alberta in the 80's. Tens of thousands were under water and walked away. In Alberta banks can't go after the personal covenant only the house.

Posted by Terry Chenier (Homelife Glenayre Realty) over 10 years ago

Nothing has changed...walk away and wait a year or two and we'll finance you again!  Oh and as a reward we'll give you up to $3,000 as "start-up" money!  Most of these homeowners did not have to put any substantial amount of money down on these properties and therefore it causes them no pain to walk away.  We can blame the banks...but...a lot of these loans were mandated by the government so that everyone could be a homeowner!  NOT EVERYONE SHOULD BE A HOMEOWNER...sorry.  It is a trickle down effect and it has snowballed into an avalanche.

Posted by Donna Rattee, Turning Dreams Into Reality (Coco, Early & Associates) over 10 years ago

Glenn, I did watch the program on 60-Minutes. It might be a business decision to walk away, but I don't think they realize what it will do to their credit situation.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 10 years ago

The 60 minutes Walk Away was badly presented and the Banks and Mtg Company should sue for Breach of Contract.  There are severe consequences and they made light of it.  Owners I know the Lawyers have come after their assets and court cases are pending.   Families have to live some place and the actual cost is the New Rent plus the loss of Mortgage Interest and Property Tax Deductions that could save 30% on Tax Liability.  Too many issues were left out and made it look too easy and gave homeowners the wrong impression, these are the folks who make the crisis worse.

Posted by GordonT over 10 years ago

I certainly don't feel sorry for the banks as they, and the financial institutions behind them are what created this nightmare in the first place. Those who will will pay a penalty of sorts & maybe not what they deserve. The people who really lose are those who remain but are negatively impacted by all these defaults.

Posted by Tina Gleisner, Home Tips for Women (Home Tips for Women) over 10 years ago

I watched this program with dismay.  The most interesting was the young fellows that have started a business to collect a fee to help people through the process.  I wonder how many commercials they have paid for on late night TV, right along with the guys that take your money to teach you to buy foreclosed and tax distressed properties.  Banks wake up - if you don't start processing Loan Mods this is a sign of the future.  And, don't worry about your credit, the lenders will always need to lend and walking away from your home will be viewed in the future as "a bad time" and probably not bother your credit in the least.  On the other hand, maybe those will save enough by not making payment on the homes they are living in to purchase their next home with cash.

Posted by Laura Berman over 10 years ago

Banksters get away with looting our country, while the media focuses on the real victims the consumers. 

Posted by Cliff Kavanaugh, - 434-466-5128 - (Keller Williams Realty of Charlottesville Virginia) over 10 years ago

AIG threatened to walk away from credit default swaps which would have collapsed Goldman Sachs and the financial system.  Goldman gave about a million bucks to Obama.  AIG got bailed out so they could pay Goldman Sachs and keep the bonus pool there intact.  No 60 minute special on that one.  If someone wants to become a lifetime renter, in absence of cheaply purchased friends in high places, who cares?

Posted by Thomas Johnson, SRES, Green (RE/MAX TOP) over 10 years ago

OK here is what I DONT understand in all this, Real Estate is a "long term" investment, not an overnight profit maker.  So what if some value is lost for a couple of years? In the end real estate will appreciate again.  If you don't Have to sell, if you can keep paying the mortgage...just pay the mortgage, keep hold of the investment, wait for it to come back and live happily ever after.

Am I missing something here?

Posted by Deborah & Steve Love (Salt Lake Homefinders at Aubrey & Associates) over 10 years ago

Thanks to all for the interesting and enlightening responses. I don't want to be the morality judge any more than anyone else, but clearly, all cases cannot be judged by the same standard. Surely when an owner strips a home (physically or financially) there is a moral issue involved. There are victims and there are perpetrators on all sides in the handling of bank loans these days.

Posted by Glenn Roberts (Retired) over 10 years ago

Part of the problem with walk aways is it is too easy to get back in the game. In theory, if I owe 400K and the home is worth 200K then it may take the whole term of the loan to break even with principal paydown and equity build up. So.....after 20 to 30 years I owe the lender what the home is worth - 0 - equity and that is where people are rationalizing this as a business decision. Heck, if you have bad credit and can't buy a home for 5 - 7 years then that appears to be a much better solution. The walk aways need to get hammered on their credit scores and not be able to get back into the market for at least 10+ years then they might think twice about....the business decision.

Bill Burnett
Virginia Assn. of Mortgage Brokers

Posted by Bill Burnett over 10 years ago

If the home were to be maintained while a solution was worked out, that would be best for the value and the neighborhood, which is why I vote for short sales. I didn't see the show - did they talk about that option? 

Posted by Joetta Fort, Independent Broker, Homes Denver to Boulder (The DiGiorgio Group) over 10 years ago

Doesn't matter if it was a tv show, this type of situation seems to be happening way to much. Even with credit cards and taxes I keep hearing commercials how they will get your debt reduced. Hmmm, lets see, they bought all this stuff and now don't want to pay for it, so everyone else will by companies raising their fees. How is that fair or just? Well, those people have to live with themselves and sooner or later they will wonder why they aren't happy with things "happening" to them in their lives. The Universe knows what to send.  Hmmmmm

Posted by Robby Leviton, Knowles Team (Keller Williams Realty) over 10 years ago

Wow, there's a lot of emotion on both sides of thsi issue!  But if you favor punishing walk aways, you also have to punish the banks and lending institutions that refuse to deal with the reality of the great recession and its consequences. 

Walking away would cease overnight if banks would re-value properties at current rates and recast mortgages accordingly.  But they would rather hold the line and go through a foreclosure.  Funny that these same institutions didn't hesitate to take our tax dollars to save them from the mess they helped to create.  Funny how none of these executives returned their multi-million dollar bonuses while berating families who are doing what they have to in order to survive.  Don't blame walk aways until you have walked in their shoes.

Posted by Al Kernek (Pacifica Endeavors LLC) over 10 years ago

Glenn - I have to say I completely understand your feelings on this subject.  I have mixed emotions.  One side of me says - It is morally wrong to walk from your obligations.  You chose to make a purchase and now you are handing off the losses of your decision to others. 

Then the other side of me says - It is a contractual issue.  Assuming the home value soared after they bought it and had plenty of equity.  Homeowner couldn't make payments for whatever reason-their fault or not.  The bank would not hesitate to enforce their contract and foreclose on the home selling it at a profit.  The bank would make a decision based on contract and not give thooughts to displacing a family.

I'm not sure how I would face this situation had I been in it.  Do I spend my life savings and suffer the consequences of my decision or do I excercise my contractual right to walk keep my savings and let the bank deal with it?


I guess it all depends whether or not I can support my children's basic needs.  If it's a matter of a bad investment and does not hinder my ability to provide I would do the wrong thing financially and the right thing morally, I would stay and pay.


Posted by Nevin Williams, Senior Mortgage Advisor (Fairway Independent Mortgage Corporation) over 10 years ago

What ever happened to personal responsibility and contract law? The people in the 60 minutes piece could afford to make the payments, they just wanted to walk as one said because it is "the thing everyone is doing". Look, I interviewed a lot of people that were trying to get loan modifications and a lot of them were grossly underqualified for the original mortgage! You cannot simplify the process by modifying a loan or reducing the principal. Most of the mortgages were already sold off into the secondary market and those investors are making business decisions also. The economy needs to have a bottom in the housing market and that will not occur until all of the bad loans get resolved or go to foreclosure and we get them all off the market. This trickle toward the bottom of the housing market is just prolonging the inevitable and we would be in a much better place, a lot quicker, if we get to the bottom sooner rather than later. I think #26 may have a good point that lenders should re-value and recast all of the bad mortgages with an additional clause in the Note that the borrower will also repay or share in the future equity with the lender that is taking the haircut.  

Posted by Anonymous over 10 years ago

Like a lot of others, I too was disappointed in this news piece.  Unfortunately, I think it is just going to spur more people into thinking that this is ok.  I thought 60 Minutes did an extreme disservice by not going into more detail the repercussions these homeowner who walk away will face. 

It has been interesting to read all the commentaries and comments regarding strategic walk aways on Active Rain this week.  I too stated my personal opinion here.  This is one issue that can really make for a good debate, because there are strong points for both sides.  But ultimately it really comes down to a personal decision based on your personal situation and having to live with the decisions you make.  I just hope more people take the ethical road, for the sake of themselves and their neighbors. 

Posted by Sara Bonert, Real Estate Internet Marketing (Zillow) over 10 years ago

I did not see the 60 Minutes piece, but I agree with Katerina, we are not the morality police.  It is a business decision, pure and simple.  The banks could do a loan modification, foreclose, or accept a short sale.  It is not up to us to judge the "whys" of the situation, only that the homeowner has opted to do a strategic short sale and they need help selling it and negotiating the settlement. On the plus side these are homeowners who (in the main) are living in the house and taking care of the yard etc. 

Posted by Sue Follansbee (Golden Eagle Properties) over 10 years ago

Glenn - I am with you and commented as such on all the other posts. If the people who are strategically defaulting would just STOP, we could stop the proverbial cracks in the dam, and begin making repairs (on market value). But if they continue, they will keep dragging all of our values down, extend the downturn and the pain and make the climb out that much harder. Whatever happened to: It's not a loss until you sell???

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (Dickson Realty) over 10 years ago

Tyrone Baker Each market has winners and losers.  A residential mortgage is collateralized by the property.  Typically, if the borrower defaults the lender can eventually foreclose.  The contract states what happens in the event of a default.  If either party chooses to breach the contract then that party risks enduring the legal consequences set forth by the contract.  If the democracy feels that borrowers have too many rights or that the sheriff is too slow to kick people out after a foreclosure then perhaps those folks might consider lobbying for tougher laws instead of passing over generalized moral judgments on the masses without knowing each and every individual's unique situation and the terms of his or her contract.

Posted by Tyrone Baker, Mortgage, Home Loans over 10 years ago

When I first heard of strategic walk-aways I was incensed.  But once I heard some of the disparities of what some buyers paid (I believe one of these homes was originally $400,000 and now was worth $85,000), I might even think twice about staying.  And I would have never thought I could think that way.

I grew up in nice homes.  When I moved out at age 18 it was fun renting my first place, for about 6 months!  I hated being a tenant and wanted to own my own home.  I did at age 20 and have never looked back.  So it's difficult for me to imagine ever walking away from a home to have to rent again, especially now.

However, if I had a mortgage on a property that lost 50-75% of it's value, I might feel differently.  Like there's no light at the end of the tunnel.  Take my losses and bad credit for now and ride it out until I can buy again down the road.  That kind of equity loss is unthinkable to me.

What has made me change my mind is realizing that big business does this all the time and they don't face the stigma that the average citizen does.  Did people sign a mortgage to agree to pay their loan back?  Yes.  Did they realize they could lose their home if they didn't?  Yes, and that is what they are doing.  If it was illegal they would serve time, but it isn't.  They are breaking their agreement and will be facing bad credit because of it.  But for some, it's the least of two evils and I refuse to judge these people anymore since I am not in their shoes.

Posted by Judy Orr, SW & Near West Chicago suburbs (HomeSmart Realty Group) over 10 years ago

All I can say is I'm astonished at how little most of the people commenting here seem to know about mortgages. Every mortgage in every state that I'm aware of requires the lender to look to the collateral to mitigate risk in the event of default or certain other events like the homeowner "wasting" the property. That is, "not maintaining it," whatever the reason. Further, they have the power to accelerate the mortgage (Demand payment in full) when certain events occur like transferring the title without notification. Again, the collateral serves as the remedy, not the borrowers financial situation. It's pretty cut and dried. Now that the lenders are losing money because of their own mismanagement, that's somehow the borrowers fault?

When they made the mortage, they agreed to look to the collateral for remedy in case of default. Now that the assest is decreasing in value, they want to switch gears and look to the borrower? That's disingenious at best and outright fraud at worst. And let's not forget that they sold these loans long ago. In fact almost immediately after making them. They've already been paid. It's the people or institutions that bought these loans that are on the hook for the losses. The reason the government was so willing to give them bailout money to offset these losses is because many of these institutions have your and your parents retirement money invested in these instruments. Were they to just let them fail, millions of people would lose those assets as well.

People walking away from their mortgage when they can pay does indirectly affect all of us. However, the law of mortgages allowed for that to occur when it was signed. Therefore, it's not all the property owners fault regardless of the reasoning for the default. Just like it's not the lenders fault if the owner falls off a building and can't work anymore, and therefore can't pay anymore. There's no difference because the mortage law itself allows for that upon contract. Therefore, judging a homeowners motives while ignoring the lenders motives is naive at best and ignorant at worst.

For twenty six years I've watched hard money lenders (let's call them what they are) loan money to homeowners behind on their mortgage with the full intent of using the power of foreclosure to obtain the property for less than its market value in order to sell it upon possession while making a ROI of hundreds of percent in short periods of time. Where was the outrage while that was happening?

I don't recall ever hearing a peep out of anyone when homeowners were literally getting their remaining home equity raped out of them by lenders. Now that the tables have turned we're supposed to defend them? The homeowner is the thief now? I think not.

For the most part, mortgages are as much a part of a real estate transaction as marketing is. Please people, learn a little bit about what you sell before passing judgment on others for doing what's best for them. Lenders are not on your side no matter how much you like your loan officer. They're only in the business to make money. Don't be fooled by their advertising. They're not here to help you out of the goodness of their hearts. If you don't believe that, try getting financing without being able to prove you have the ability to repay the loan. See where the goodness goes then.

Please people, learn a little bit about what you sell before you return to the marketplace to promote home ownership to your friends and neighbors.

To the author: Historically, no bank ever did anything on a handshake with anyone unless that person had more money than the bank. That's a fact. Look it up.

Carl S

Posted by Carl Schumacher (CIDM Real Estate) over 10 years ago

IF one of my neighbors were to just "walk away", I'd immediately put my house on the market at a premium price.  After six monhs, the neighbors and I would be in court discussing how they were going to re-imburse me for my loss and inability to sell.

Posted by Greg Peterson, Broker/Property Manager Oklahoma City Metro Area (Favor Real Estate) over 10 years ago

One other thing; The laws of foreclosure were never designed for the benefit of borrowers. They were made for the benefit of banks. Without the power of foreclosure, it's doubtful any bank would lend any citizen the amount of money required to purchase a home, unless that person didn't need the money.

Carl S

Posted by Carl Schumacher (CIDM Real Estate) over 10 years ago

#55 Interesting analogy. I'm guessing then if your neighbor was able to sell his home for twice its actual value thereby enabling you to sell your home for even more, you'd give your neighbor part of the cash you "stole" from the person who bought your home then?

Or is being foolish just a one way street?

Carl S

Posted by Carl Schumacher (CIDM Real Estate) over 10 years ago

Good luck with that, Greg! (#55)

Posted by Judy Orr, SW & Near West Chicago suburbs (HomeSmart Realty Group) over 10 years ago

Some of the realtors here are asking for retribution that the lenders can take upon folks who "strategically" default.  How about 20% down payments coming back into vogue (and we, as a society, not promoting that everyone become a homeowner)?  If people have no skin in the game, what's the incentive to stay?  After all, a mortgage is just a contract.  It says right there on all of them that the house is collateral for not paying on the mortgage.

Bottom line, whether you have defaults or you require people to have a down payment, prices were overheated and need to come down.  Prices would never have gotten so high had lenders required a down payment and not passed some of these loans to the secondary market.  They, too, did not have enough skin in the game.  While I do not agree with the reasons for these "defaults," in my opinion, the fault lies with the lenders for not requiring down payments when they knew things were - ahem - frothy, not the people who are walking away after the fact.

Posted by Dave Chandler over 10 years ago

If you want to look for someone to blame, look at the people who promoted all of these ridiculous programs under the guise that homeownership is a right and not a privilage....Rep. Barney Frank and Sen. Chris Dodd!

Posted by Anonymous over 10 years ago

Regardless of whether you agree or disagree...this is a real problem that will continue to haunt any recovery for the foreseeable future. On the one hand you have contractual obligations...on the other...a fifty percent loss of perceived equity that you may never see again. If you want to cast prepared to throw out a wide net. There were many folks fanning the flames and they would like to point the finger elsewhere now that its unraveling. Deregulation, Loose Lending Standards, Unscrupulous Appraisers and Realtors, Opportunistic Home Builders/Tradesman and Dishonest Home buyers all fueled by infectious GREED! Look inward were all part of the problem.

Greg Peterson...that would be something to you honestly think you would pull it off or just leave the courtroom looking like an idiot?

Posted by Blame Game over 10 years ago

From here in Toronto, ON, Canada I watched the segment on Sixty Minutes.  How fortunate we are in this country that our laws protected us from the real estate disaster you are experiencing. 

Posted by Donna Webber (ArcRealty Inc., Real Estate Brokerage, Toronto, ON, Canada ) over 10 years ago

Uh, #60, why must these discussions always devolve into a political rant?  While Dodd and Frank are on the list of those responsible, so are those whom you somehow fail to mention.  (On purpose just to support your hypothesis?)

Question.  Which recent President called his new desire for society, the Ownership Society?  This isn't a partisan issue #60.  Lots of players of both R and D persuasion share the blame.

Posted by Anonymous over 10 years ago

I guess those folks will have to live with the morality of their decision for the rest of their lives.  This whole mess is a shame.

Posted by Dawn A Fabiszak, The Dawn of a New Real Estate Experience! (Private Label Realty ( Denver metro area, Colorado) over 10 years ago

I guess those folks will have to live with the morality of their decision for the rest of their lives.  This whole mess is a shame.

Posted by Dawn A Fabiszak, The Dawn of a New Real Estate Experience! (Private Label Realty ( Denver metro area, Colorado) over 10 years ago

Don't judge a person until you have walked a mile in their shoes. It is a slippery slope to bring a "moral" spin into this perfect storm.

Posted by DEBORAH STONE (Balboa Real Estate San Diego, CA) over 10 years ago

I don't think we need anyone walking away because they just want to.  There is an inherent value in having a home for your family that goes beyond a monetary value.  Those who walk away just because they want to don't deserve help.

Posted by Damon Gettier, Broker/Owner ABRM, GRI, CDPE (Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert) over 10 years ago

Our government is giving away Billions, maybe Trillions to those well connected financial leaders.  Everyday I struggle to take care of my family.  I am as far to the right as you can be, but at this point people have to make the best decision for their family.  Certainly the banks and financial institutions are watching out for themselves not the American People.  The government is looking out for the banks and the financial institutions, not the American People.  What they are doing is legal, just like it has been legal for big business to steal billions. 

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 10 years ago
  • In my opinion Donna (#33) and Christianne (#51) got the picture.
  • Canada has got their real estate laws right. Maybe we should look up. We were good before all the deregulations.
  • I say No down, No house. That just encourage speculators.
  • Many recent "owners" are in fact speculators. They look for a quick buck with the govt blessing. If you buy a home to live in, its value has a meaning only WHEN you SELL it.
  • The govt has "good intentions" (for the needy) but is shortsighted and is understood really to secure the future and pockets of big guys.  Behind the regulators is "you pat my back, I'll pat yours. After I'm out of office you secure my and my family's financial situation" disguising bailouts as compassion. Instead it made a thicker mess.
  • Corruption up there in the govt is overwhelming but many people are naive or turn a blind eye. How many are inquisitive? For so long as their boat is not rocked they want to leave it alone and be a spectator.
  • There is no better time to see the worst in people. If the govt does it why can't we? Their attitudes get corrupted and devious motives emerge.  They want a piece of the pie, they became revengeful after seeing others do it and the only way they can get back is take advantage of the situation and follow suit. They conveniently forget their heritage, their morals, and how they were brought up.
  • There's no accountability, no consequences, no punishment, no deterrent, no pride. So why not walk away after freeloading and stripping the once liveable house? What bankrupt? Do I hear bailouts for those who lost in the stock market? If I can't buy another house in a year or two my wife can, my mother, my father, one of my children, my other half, or what have you. And you and I know it!
  • The whole situation is despicable and the law-abiding, honest, hard working citizens are stung with increased taxes and a bumpy road supporting those who made a bad decision, a bad investment, are greedy, and not worth supporting. I believe in FAIRNESS but who am I anyway?
Posted by Trace Faulkner over 10 years ago

I cannot really comment on any particular homeowner that walks away unless I know the complete story.  I feel that most of them are doing it ethically, but some are not.

Posted by Jirius Isaac, Real Estate & loans in Kenmore, WA (Isaac Real Estate &TriStar Mortgage) over 10 years ago


No my heart isn't broken either!  But it does break for the people who purchased in good faith ,had something awful change in their life, and now must leave their home for an unknown future!

Posted by Kathy Opatka, Serving Ocean City, MD, & The Delaware Beaches (RE/MAX CROSSROADS) over 10 years ago