Is anyone having issues with trying to convince family members that walking away makes sense?
Is anyone having issues with trying to convince family members that walking away makes sense?
Not in my case, in fact my mom and sisters could not understand why I am trying so hard to keep my home when I can save $1000 each month by walking away and renting a comparable place.
I've been surprised actually - family members we've told immediately think it's a great idea.
We have only told my parents so far. They say whatever is best for our family is the thing to do. And actually, the few friends that do know have been very supportive.
Most of our family/friends can see why we'd consider it in our situation but I think at the same time some are irritated b/c they'd like to walk away too but wouldn't do it for various reasons (mostly credit reasons).
My family have been very supportive of it they all seem to understand that it is a decision to save my family. I think my wife has more an issue and it's mostly emotional with this whole deal. I have not had any really bad reactions to this though a few people you talk to have the 'you can't walk away' mindset, but I did too until I looked it it from every angle and saw that the only choice was to walk.
My 1st and 2nd payments came to about 2900 a month. with a reduction in pay I took and increase in insurance premiums I ended up with a 800 dollar every month shortfall after cutting back everything I could. Houses that are the same size and areas of town as my home rent for about 1300-1600.So it is clear that I have to walk. Also I tried a long time to save my house and used up my savings to cover the shortfall I wish I had not. Everyone has been supportive but even if they had not I know I made the right choice it was not a knee jerk reaction.
The argument against it seems to be , why walk when this is the place we wanted to live in. The rationale seems to be if you could make the payment 2 years ago , why not now. Im having a hard time convincing some that it might make financial sense and that being able to refi in 5 years might not happen. I appreciate all the responses
Well the thing is refi is not really possible if you owe 325,000 and the house value is 120,000. So maybe try to explain that to them. Even if we could make the payment now the value in our homes are not going to be going up anytime soon. I think the floor will come about in 2011. The thing people fail to see is that as in past trends a market floor will stay for 4 - 6 years so you are talking 2015 before prices go up and then how fast till it goes over your loan value ( some people talk like someday some one will say burst is over your home is not worth what it use to be 'snap'. ). The hit you are going to to take to your credit score will be bad but in 7-10 years you should be right back to where you were. Your score will actually start to go back up slowly right away. And in 7 years when it is gone from your report you can buy another home at the rock bottom prices or not.
Do a calculation as to what you will save renting compared to your home payment + taxes and other expenses minus tax benefits of owning, and you should see clearly weather walking is right for you.
Really...you dont have to explain yourself to anyone (even family members)...they are not the ones who's paying your mortgage, property taxes, cars, insurance, kids, gas, food, etc...you do what's right for YOU and only you. who cares what anyone else thinks
I'm bouncing between holding on and walking away every few minutes. I was set on walking until I started looking at rentals in a better area. It'll cost us about the same if not a bit more than our mortgage.
I know eventually we will have to walk because the Debt Relief Act will only last till 2012. After that, walking away will costs us even more. It's really depressing. I guess the sooner we walk, the sooner the credit will be rebuilt.
Clueless I understand what you mean but, when part of the family is your wife it changes the disussion a little, know what I mean?
Nope. My Mom wonders why I continue to try to make the payment. Our payment is 2/3 of our income and we have student loans, food, etc and we still try to pay. Not only that but we're underwater, and to her it's stupid to keep dumping money into a place where it will never be recovered.
I have been SHOCKED by how supportive every single person I've told has been. I can't believe it.
Interesting topic. About August of last year I had trouble convincing everyone about me walking on my house, and the economy in general.
I remember a good friend took me out for a drink during the Olympics. I said to him, I don't understand it, but the economic numbers are insane. I said, I have a feeling this is going to be serious. At the time, he thought I was nuts. He doesn't feel that way now. He's working his butt off trying to keep job.
Last year my relatives also thought it was a mistake to walk. I had to convince one relative who offered to pay my mortgage for me. I'm glad i didn't let them waste money on it.
They all know I'm doing the right thing now. As the house values continue to fall closer, and closer to their balance owed, others are starting to understand too.
Still, I have some cousins who are spending like there is no tomorrow. They said they want to buy a second home. I tried to tell them to wait a while longer.
There are still some, maybe even alot, of people out there that can not concieve of walking away from thier home. People....like my brother-in-law...who have a great job, great credit, a very affordable mortgage, and last but not least....still have $100,000 equity in thier house. He has been living in denial. I think I burst his little bubble yesterday when I tactfully pointed out that housing prices in HIS area have dropped 26% in the last 4 months.....he had no idea. After he checked to see if that was true, he called me to say he was sorry for his own ignorance....he was shocked to know how much his house was now worth....through no fault of his own......there in lies the point. We are NOT walking away just because we feel like it, we are doing it because we are left with no other choice!
Good luck to all
Nana. Good point. some people are living in a vacuum if they don't have to sell a home and still have a good paying job. Denial runs rampant, but one has to do what he believes is right for his own situation.
One thing I have a hard time grappling with is some people are living in tent cities, or the woman who drives a lexas is now living in that lexas becuase her real estate business has dropped off a cliff. Sad state of affairs.
However! things Will get better, jobs will come back (probably at lower pay levels), and people need to adjust to the new reality that standards of living are coming down. Everybody in the world has to compete for resources and jobs.
In my mind we are in a global shift where the world just got much flatter due to technology and the rise of many developing countries is putting pressure on resources. This puts downward pressure on developed countries.
Nobody is going to go hungry, but many people will have to learn to enjoy the simple life. Like spending time with family, hiking, doing crafts at home, cooking homemade meals. Simple stuff that is still enjoyable, but not not real glamorous compared to what we watch on TV.
I'm just trying to keep my health good and everything else is just icing on the cake.
Time to pull up our bootstraps people and adapt to the new realities!
I'm concerned that Americans have developed an attitude that says take care of yourself and the heck with everyone else. Which comes from our cut-throat capitalism we have developed over the last 30 years. One that is total survival of the fittest to the point we have resulted in cannabalism when it comes to ones personnel fianancial health. Mainly from CEOS thinking.... I sell the heck out of these mortages that I know that can't be repaid. Won't make any difference because "hopefully I be retired and rich by the time this house of cards falls"
I sure hope we can get back to what really matters.
Now that I have come to terms with .....most days.....the inevitable loss of our house, I am looking forward to living the simple life. We are lucky in that we know where we are going from here and we can afford it. It is like starting over, but I'm okay with that....I always enjoy a challange. With 6 kids and grandchildren #7 & #8 on the way this fall.....you could say my life has ALWAYS been a challange. We have made it this far.....we will pick up and move on. Inner peace is a wonderful thing, espically in a crazy world
*note*pls. do NOT mis-interpret any comments i make LOL!
I disagree with the notion that people will not go hungry. Many people were already on the edge, even before the global meltdown started.
My retired mom used to be a kindergarten teacher in one of the poorest schools in downtown Phoenix. She had to keep breakfast cereal in the classroom because sometimes kids would come to school without having eaten breakfast!!! She would ask them why? Because their family didn't have any food that day. And this was years ago.
I have a relative that is now sponsering a lady with two grandchildren, whose daughter left her with the kids. They were turned away from various social services due to capacity. Private individuals offered a place for them to stay, and my relative, along with a group of other people, are helping provide food.
The food banks simply do not have enough food. Demand will be rising exponentially. The numbers are simply not sustainable.
I saw an article last year that blew my mind. Already, global food crop demand outpaces production. And, the United States eats most of it. (google: The Future of Food: How Science Will Solve the Next Global Crises -- Wired Magazine)
We all need to adjust our mindset. The days of easy living are over. I think I'm still in denial myself. I'm not yet prepared for what's coming.
In the economic climate we live in today, the stigma that used to be associated with foreclosures and repossessions is quickly passing. I don't walk around with a sign saying "hey I'm walking away from my underwater albatross" but with the housing/mortgage crisis affecting so many people, it's definitely a subject that comes up a lot. It is surprising how many people are facing the issue personally or know someone facing it. With the exception of one friend, who lives and breathes by her FICO score, most understand it's a good business decision on our part and respect our decision to put our own financial well being ahead of all else.
I have spoken with a couple people (non-family) who consider it morally wrong that we want to "walk away". They know it is a sound financial decision and what's best for our family, but believe it will affect everyone else (which I guess it will, in a way) when they pay higher taxes and such.
Honestly I can't argue with that - I have always tried to be responsible and live up to contracts I have signed. We made a poor decision and are able to get out of it in some capacity ; others aren't so lucky.
We've been doing the right thing for a lot of years. We've always paid as agreed. In 25 years we've never missed a house payment until this month when we decided enough was enough. We have completely exhausted our savings and ran up our cc's all to make the house payment each and every month. Granted nobody twisted my arm 2 years ago when I (the loan is in my name only, my husband was going to school at the time we bought) signed the 80/20 loans to buy this house. We never would have guessed what was on the horizon. We planned to refi as soon as my husband finished school and life would be grand. I just keep looking at the situation as if it were a business. Would a store that was continually going in the red keep it's doors open? Definitely not. The lender is sending us a loan mod package. From previous conversations with the lender, I'm not real confident they will offer anything that makes staying worth it. Don't worry about what others think. All that matters is you do the right thing for your particular situation. The peace of mind and financial upside for you and your family is paramount!!
I read so many of us lamenting about our poor financial choices and whether this is a moral decision and we have paid all our bills on time, etc. It strikes me there is a certain amount of guilt on our parts (collectively) about making this decision and yet corporations never question that kind of decision-making. Yes, my foreclosure will affect my neighbors home values and for that I do feel bad, but I’m fairly sure the brokers, lenders and investment bankers who created this situation aren’t loosing sleep over having helped tank the entire economy. I agree with cactus that things are bad and getting worse and all of our standards of living will change over the next couple of years. It is what it is. Prepare yourself for it, make the best financial decision you can in this circumstance and let go of the guilt. We all participated in this situation to some degree, but we were certainly lead down the path by individuals and corporations whose sole interest was their profits. They made so much money it is obscene and now we all suffer for it.
Google - the crisis of credit visualized – it is video on youtube that I plan to have all my friends and family watch when they shake their heads about our choice.
However, in repsonse to the kid coming to school hungry. It's a shame, but may not necessarily be due to no access to food or foodstamps. maybe some of the parents are drinking or smoking instead of buying food for the kids?
You mentioned some being turned away from social services due to capacity. Glad they are being turned down, instead of not having those safety nets there at all. But it may mean they can't afford a nice apartment, in an expensive city, with a car to drive, and a color televison. I would think that providing food to people in need is a little extreme. However, THings are very tough and peoples success will depend on ones ability to adapt. I know I live in fear of having an uncomfortable lifestyle like the one you describe. My reponse has been to save, live within my means, and make sacrifices.
Most people try to live up to contracts they've signed. Nobody wants to be this situation. We followed rules, taken out conforming loans and paid a big downpayment on our house. Then, because of what's going on around us (houses foreclosing, neglect, vandalism, severe drop in house value... and etc.), we are joining the millions who are walking out.
I do find it more morally wrong to stay because I would have put my family in an undesirable situation. And I know many years down the road I couldn't sell my place without owing more than I can pay back. That's my child's education fund going down the drain there.
In life, sometimes we have to choose between 2 undesirable situations. We have to pick the one that will not damage our family as much. Sure, everyone else is affected. But we are one of the "everyone." We can continue to make payments but it's like throwing cash into an incinerator. Until those people who consider it morally wrong walk in your shoes, they have no right to judge. Don't waste your time convincing them otherwise.
Don't beat yourself up. Even if you made the right decision, circumstances can still be against you. We made the right decision but it was at the wrong time and at the wrong place!
It took almost a year to get my wife over the emotions involved in walking away or trying to stay and delay the inevitable. I had to show her the numbers in a business sense and show her what our financial picture will look like down the road as compared to what it will be like if we try and stay.
I also showed her the hundreds of available homes for rent in our area at less than half our mortgage payment an she began to come around. Now she is leading the charge and asking me every day when we are finally going to stop paying and get this over with. I still haven't missed a payment yet.
Its like circling a pool, trying to find the best spot to jump in for the first time. You know its going to be cold and an immediate shock to your system; however, after the shock it just feels sooo goood!
Also looks like my wife's parents will be walking with us so no problem with support there.
Yes us girls tend to get very emotionally attached to where we live being the nesters that we are. My husband was ready to stop making the payments months ago. I can't begin to count the number of sleepless nights I had before I finally went to see an attorney. He encouraged me to put pencil to paper and add it up. What would it cost us to stay? What financial gain would be realized by moving on? The numbers jumped off the paper. Definitely better to move on. The emotional ties were cut.
We jumped into the "pool" this month. Come on in. The water does feel soooo good.
Morally wrong it may feel to many; however there is such an "anti-homeowner help" sentiment in this country right now it is disturbing.
The "always do everything right, do-gooder crowd" is just irate according to many reports that there are ANY programs out there to help distressed homeowners at all. This to me is morally wrong.
How could anyone possible support bailing out muliti-billion dollar banks, (that lent the money in the first place) wall street, AIG and just about anyone else that puts a hand out without thinking about the hard working family down the street that is going to lose everything in this mess while the others collect their bailout money and raise a glass of champagne at their next million dollar party in Las Vegas??
It's absurd and in my opinion morally wrong. I am over it and don't feel bad in the slightest that my walk away will destroy any home values in my area and along with it I will take jobs, businesses, pensions and anything else tied to this financial mess.
So much for always doing the right thing. Lenders, banks, servicers etc taught me the art walking away with a smile. But no bail out for me.
I sent a letter to the Arizona Republic a couple weeks back after one of the real estate reporters wrote an article about home foreclosures. One of her recommendations to curb foreclosures was penalizing homeowners who walk away. Don't you know I saw red when I read that article. I thought this person hasn't got a clue what a ton of homeowners are going through. I suggested she read through the hundreds and hundreds of posts on this website if she wants to get a feel for what is really going on.
I love this website. It's very informative, but also everyone is sooo supportive. I think next month is the beginning of our walk away process. We are in Michigan so I don't know if anyone has any advice or clues as to what may happen to us. I'm just ready to move forward and start fresh. We've tried, struggled and depleted basically every account we have to our name. My mother is so against it, but I'm done.
Hang in there, my mom is against it too. She's worried about loss of credit, I've told her over and over we're going to cash only but she is so used to just charging whatever she feels like....
Thanks for all the replies, I guess for us it comes down to fear on what to do, which does not feel good at all. I am really torn on this one because it goes against my beliefs. I value being able to make my payments and make them on time. I feel like I’m doing what I am suppose to do. But I can’t figure out how I will be able to refi these loans when they reset. After getting caught up in the run up in real estate I told myself never again. I worry that if I walk away I am doing the same thing I said I would not do. I would hate to put my family through this and have them do something in 6 months to help those in our situation and it turns out we could have stayed. It took me along time to buy when prices were going up, I did not trust my gut and stay out and I got burned by a bubble. I’ve gotten over that but I just don’t want to be late on the downside either. I hope that makes sense?
I know I can’t have everything in a situation and there are no guarantees. But it is nice to have a forum to bounce these ideas back and forth.
I haven't told most of my family. I already know they are going to go beserk over it so I just live in a lie and keep everyone happy.
My Dad knows my situation real well. He thinks it's a great idea and keeps offering support if I need it. I keep telling him I'm going to save ~$18k this year because I have no house payment but he wants to help anyway
Some of my old friends are pretty irate about my decision. They already look to me as the "rich" one in the group and think it's morally wrong to do what I'm doing. One of my best friends from 7th grade has been avoiding me since I told him about my decision. He's openly told me he doesn't like the situation and he's disappointed that I'd "sell out morally" just to save a few bucks.
That stung a little. It's made me rethink my decision a few times. Is money the only thing that matters? Losing a few long-time friends over this will be sad... any ideas on how to convince them? They already know the numbers...
House is currently worth: $145k
Last payment on: 12/16/08
Status: No resolution with lender. Still in limbo...
your last post hit a nerve. i am so sorry your friend has that attitude. of all the "morally wrong" things one can do, this is a pathetic one to possibly end a friendship over. absolutely pathetic. and his loss. might be a lesson in who your friends really are. might make you question where he'd be when you truly needed him on a much bigger issue.
and since when is it your job to convince them? do you owe them money? at the end of the day, you have only you to answer to on this one, and only you will be dealing with the aftermath of your decision. do they consult you on every financial decision they make?
my family do not know the numbers or the details. i have not told friends, because i feel my finances are my business only. parents get the gist of the basic walk plan. they may not agree with it (in the fact they might not follow the same path if they were in my shoes) but they are certainly not judging me or ready to abandon me.
i hope your friends come around, but i would advise keeping them out of your personal financial business in the future. there is such a thing as sharing "too much information". usually the people most defensive about "morally wrong" things have many secrets of their own they are ashamed about. most people's moral compasses do not point inward!
please, do not doubt yourself and your instincts. if you make life's decisions based on other people's emotions and judgements, then who's life are you really living?