When A House Is A Bad Investment, Is It OK To Just Walk Away?

Here’s one that’s sure to start some intense debate: If you’ve made a bad investment and your house isn’t worth what you thought it was going to be, is it OK to just walk away?

Some people think so. From the LA Times:

“I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

“Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I’m not a ‘hardship’ case they’d apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won’t even talk to me until I miss a couple of payments.

“I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

“I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

“I don’t really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal.”

We’re not touching this one with a 10 meter cattle-prod.

A tipping point? “Foreclose me … I’ll save money” [LA Times] (Thanks, Stephen!)
(Photo:Meghann Marco)


Edit Your Comment

  1. darkened says:

    I say more power to him. He beat the system from beating him. I hope it works out the way he’s planned.

  2. luminus says:

    A real estate agent told me (and she seemed to be knowledgeable about this) that foreclosures are more and more common now not only because of ARMs etc, but because the damage to your credit only lasts a few years, whereas it used to be more like a bankruptcy. I imagine it does still last for 7 years in both(?) cases, but as an example, my parents filed chapter 7 bankruptcy several years ago and bought a house 2 years later, so their credit wasn’t exactly ruined.

  3. cashmerewhore says:

    I’ll think of this guy when I say: “My condo owns me.” I’ve lived in it for almost three years, and Ohio really didn’t have a huge inflation/crash in the market, prices have dropped and sales are slow.

    There’s little equity in my place, but I’ve got a 30 year fixed.

  4. beavis88 says:

    A moral lapse would be, say, burning down the house to collect insurance on it, or lying on your loan application. Playing by the rules set down by you, your bank, and the bankruptcy courts does not, IMHO, constitute a moral lapse.

  5. noquarter says:

    Could someone explain to me how a foreclosure is a bad thing for a bank? Don’t they keep both the house and whatever payments were made on the house? So it’s like they get to sell the same house twice, or 1.2 times or whatever depending on how many mortgage payments had been made by buyer #1.

  6. cashmerewhore says:


    Bankruptcies are on your credit for atleast 7 years. When I worked at an apt complex as a leasing agent, I’d see stuff longer than 7 years on people’s report.

    Unfortunately since it wasn’t my job to review/discuss their credit with them I couldn’t tell them to get them removed.

    I’ve heard that once you file bankruptcy credit offers will start coming back in, since you can’t file again for another 7 years. (Well, I think if you file Chpt 13, you can still turn around and file Chpt 7 later if necessary)

  7. Hambriq says:

    I don’t really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions… make mistakes… they are not excoriated and vilified with the same righteous zeal.

    Reality check: Yes, they are.

    Anyway, this guy is a scumbag. I’m sorry, but the whole “But Enron did it, too!” argument just doesn’t fly. This wasn’t an example of a large lending institution making a predatory loan. You make it obvious enough that it is within your means to pay for the condo.

    It’s simultaneously funny and sickening that he tries to rationalize this act by saying he is “[W]ithin my rights to walk away from a bad deal and suffer the consequences,” as if the consequences are only affecting him. The only person who gets screwed when you get stuck with an overpriced condo is you.

    Now, on the other hand, everyone else in the country gets screwed when people like you pull stunts like this. Have you not been watching the news? Have you not noticed we are on the brink of recession? People like this guy are, in my mind, equally as culpable as the predatory lending institutions which facilitate these loans.

    Ugh. Time to sneak some extra blood pressure pills at work today.

  8. cashmerewhore says:


    Banks aren’t interested in the residental real estate market.

    I doubt this guy paid anywhere near the $180K the home has lost in value.

  9. Lmam says:

    It shouldn’t be seen as a moral failing. A failure of judgment? Sure. The person took a risk buying an overpriced house at the top of a bubble using a risky type of mortgage (when he/she could have likely qualified for a better one, since the commenter can afford a second house) and got burned. Given that dumb decision, this is an eminently reasonable response.

  10. Hambriq says:

    @darkened: “He beat the system from beating him.

    He beat the system at everyone else’s expense.

    This line of rationalization is no different than saying stealing a Hummer H3 is acceptable. After all, you’re beating the system from beating you, and it’s an overpriced car anyway.

  11. noquarter says:

    @cashmerewhore: I understand how, in this case, with the value of the place going down by so much, the bank might end up losing money on the resale. But, in general, a foreclosure isn’t a big financial loss for them, is it?

  12. chas7926 says:

    I am probably mistaken here, but I thought that if you defaulted on any loan and the bank foreclosed, after they sold the property they then had a right to sue you to get the rest of the money owed. So if this guy owes 500K on his house, the bank forecloses but only gets 180K for the Condo, can’t they sue him for the other 320K?

  13. darkened says:

    @Hambriq: No it’s not, your logic is entirely wrong. What you meant to say it’s the same as buying a hummer, saying screw the payments and have it repossessed.

    Contracts are written to establish this, any contract written no matter what it says can force you to pay, they will most likely outline the consequences of not paying.

    He is perfectly free to make this decision, (whether there would be unforeseen legal complications of it, i’m not a lawyer to agrue on that) He is using the credit system exactly for what it’s worth. Your credit score has very little to do with your ability to repay a loan, it has to do with your profitability for banks.

    The bank refusing to meet the terms he wanted for continued payment, he stayed with in the system to get a new mortgage on a second residence under the system saying he is currently profitable and would rather live there and take the consequences of his actions by leaving his other obligation.

    I see nothing immoral about this. One person attempting to screw another person in the end gets screwed the most for not accepting screwing them less. Corporations and banks do all kinds of tricks to do this to each other and especially to us, the consumers. Actions like this are the corollary of their actions.

  14. darkened says:

    @chas7926: Normally it will end up becoming income to the original debtor and become a tax liability. But seeing as they can’t even sell homes at the auction block he could go years before having to deal with that. But stuff like this is what lawyers are for, I wouldn’t be surprised for 20-30k a lawyer could get you out of any of the liability so spending that on a lawyer to save 5-10x that on your other residence is still very profitable.

  15. Inhocmark says:

    I hope some day somebody walks away from a financial obligation to him, see if he can have such a c’est la vie attitude about it.

  16. Pixel says:


    He isn’t stealing anything. If he had managed to keep the first condo without paying for it, that might fit your comparison. But since he didn’t your comparison is false.

    If you want to Compare it to a Hummer H3, he would have had to Buy the hummer, then after making payments for a while realize the car was too expensive. Go out and buy say a Hyundai and start making payments on that, then let the dealership come and repossess the Hummer.

    Going back to the house, it is not an optimal solution for him or the mortgage company. However they are clearly unwilling to work with him, and he has found himself completely upside down on the mortgage. He even stated he was willing to take the $120K value hit if he could refi.
    So yes, the mortgage company is going to be out the rest of the payments, but they do get the condo to mitigate the damage. And he is going to skip out on the rest of the payments, but he loses the condo, and gets hammered on his credit for a time.

    I don’t congratulate the guy, but I don’t condemn him either. He took a long hard look at where he was, and did what he felt needed to be done.

  17. Hambriq says:


    I see nothing immoral about this. One person attempting to screw another person in the end gets screwed the most for not accepting screwing them less. Corporations and banks do all kinds of tricks to do this to each other and especially to us, the consumers. Actions like this are the corollary of their actions.

    Again, I fail to see how the “Enron did it!” argument is acceptable.

    If the consequences of this guys actions were solely limited to himself, it would be acceptable. He does the damage to his credit, but that’s a calculated risk he’s willing to take. But it’s not. Because every penny lost on the foreclosure of this home is getting passed on to the rest of us. People like this make life infinitely more difficult for the rest of us.

    This isn’t self-contained. The consequences aren’t limited to just this one guy. This isn’t him making a “calculated risk”. This is him being selfish. Plain and simple. And just because the big corporations are doing it doesn’t make it acceptable for the little guy to do it, too.

  18. qwickone says:

    @noquarter: not exactly. the bank only keeps whatever it’s owed (meaning the balance of the loan and whatever fees), the rest, if there’s anything left, goes back to the owner

  19. hypnotik_jello says:

    @chas7926: Depends on whether the mortgage is non-recourse debt: [www.businessfinance.com]

    It should be noted that even if the borrow is absolved of the remaining mortgage debt after foreclosure, he/she may still be liable for any equity loans/lines of credit attached to the property.

  20. Tracy Ham and Eggs says:

    @luminus: Foreclosure isnt as big of a deal because, humorously, the sub prime market has created a product for people recently (2 years) out of foreclosures to still get a loan (say 30% down or so, rates 3%+ higher then the going rate). While its often a high risk/high payment product, its well worth it for someone like this guy.

    @noquarter: @chas7926: Foreclosures are a bigger loss these days, thanks to a weakening of the market and the high number of 100% loans. Thats why 20% down used to be so important, since that covers their cost in a foreclosure (people tend to trash the house, quick sales, ect). Its also why PMI exist.

    And yes, they can sue your ass for money they wind up short. You default on a 500k loan and they only recoup 350k you are still on the hook for the remainder. And, if they forgive the debt (not likely for that large a difference) the Feds will take your butt on the forgiven debt, since its viewed as a form of income

  21. VicMatson says:

    Why isn’t the guy scared of his creditors going after his car, pay check, and bank account?

  22. Snarkysnake says:

    Can’t really agree with everybody calling this guy a scumbag…He’s making a conscious decision to wreck his credit (at least in the intermediate term). If he thinks that a foreclosure won’t cost him plenty later on in life,then he’s kidding himself.The fact is,businesses do this sort of thing lots of ways (most notably to get out of bad leases )and they keep coming back to borrow more money to keep going (K Mart walked away from hundreds of bad stores when they went chapter 11 in ’01)Does this make it right ? Ask this guy in 5 years when every creditor that gets a peek at his FICO charges him commensurate with the risk that they take…As for making everyone else pay for his stupidity/venality , thats not really a concept with home lending.If a bank raises rates on home loans too much above the competition to “make up for losses” on loans to people like him,they would be at such a competitive disadvantage that they would soon have only the worst risks taking out loans…Not a recipe for a healthy bank.Typically,it’s the banks owners(shareholders) that take it in the poop chute when a loan is bad.They are the ones that ought to key this guys car…

  23. Tracy Ham and Eggs says:

    @snarkysnake: It also drives down the property values for his neighbors.

  24. Rando says:

    “I know the forecloser will stay on my credit for 4 years, but I will have saved a lot of money.”

    I don’t know how many times I have told people this but you can’t put a price on your credit. 7 years of bad credit is probably more costly than $300k.

  25. jamar0303 says:

    @Inhocmark: Except the equivalent here would be if he then took property of equivalent value from whoever owed him money. After all, most of the foreclosure is the fact that you’re getting your (house/car/whatever) taken from you for not paying for it. What’s the problem here?

  26. Rando says:

    Also, the bank could sue him for the money… Some people think walking away is ok, but in some cases banks sue for the money.

  27. headon says:

    Don’t listen to HAMBRIQ. Just go for it dude, do whats best for you. Don’t listen to all his fellow man crap. It’s a crock.
    You make a decision based on the facts and be prepared to suffer the consequences legal and financial. Get a good real estate lawyer he will guide you in the right direction.

  28. BlondeGrlz says:

    @noquarter: Banks really don’t like forclosing, since as cashmerewhore said, they aren’t in the real estate business. Once the bank takes the property, the entire thing (utilities, maintenance, etc) becomes their problem. Most banks end up taking a loss on the property, esp since when someone hears a property is in “forclosure” they immediately plan to offer far less than the house might be worth. But it’s a risk buying a forclosure, since I’ve seen people pour sugar in their oil tanks, intentionally ruin plumbing, or dump paint all over the floors as they leave.

    I think the guy in this article should ask his bank if they’ll do a short sale, where the bank agrees to take a loss on the difference between what he owes and what he sells it for. It doesn’t hurt your credit the way a forclosure would.

  29. lilith100 says:


    “Because every penny lost on the foreclosure of this home is getting passed on to the rest of us.”

    That’s not true. It goes straight to the bottom line of Wachovia or BoA or whoever loaned him the money. I do not pay for it and neither do you. Unless you are a shareholder. Then you are currently paying for it big-time.

    It’s absurd to lampoon him for “selfishness.” Business is selfish. Two parties enter into a business contract and then each pursues his own self interest under that contract. That’s the deal. He has the option to walk so he can walk. But if he has assets and they take a bath on the sale, he’ll probably end up making them whole anyway.

  30. anatak says:

    @chas7926: You are exactly right. The calculated hit on this guy’s credit is not the only draw back to walking away from his bad deal. Its not quite so simple to say, “Oops! My bad!”, take the credit ding and go on with your life. The bank will foreclose, though it may take up to 6mo. to a year from when he stops making payments. They will sell it for drastically less than its worth (if its bad off now, what will it be like in a year from now?). And they will hold him responsible for the balance.

    “I don’t really understand why people view a business decision by a homeowner as a terrible moral lapse. “

    Really? You don’t see how not honoring your end of the deal is immoral? Its not a business decision anyways. You are not a business. You are an individual making a personal decision that says loads about your character.

  31. Hambriq says:

    @headon: Don’t listen to HAMBRIQ. Just go for it dude, do whats best for you. Don’t listen to all his fellow man crap. It’s a crock.

    I’m sure he is staying up at night, waiting with baited breath to see what we at Consumerist have to say about his moral turpitude.

  32. JustAGuy2 says:

    I don’t see any real issue here. The deal he signed with the bank is: make your monthly payments – if you don’t, we’ll take your condo. He’s well within the terms of the deal. If he were whining “the bank’s being mean, they’re hurting my credit, that shouldn’t happen to me,” or “why are they taking my home away just because I can’t make the payments,” I’d have no sympathy, but so long as he’s willing to accept the consequences, it’s his call.

    FYI, this strategy only works in some states (like CA) where mortgages are “non-recourse.” In those states, the lender can only go after the house itself to recover its losses. In other states, where mortgages are “recourse,” the lender can go after all your other assets to recover its losses.

  33. anatak says:

    @hypnotik_jello: A non-recourse mortgage? Unless he owns the entire condo building, I doubt it. As stated in your link, those are for large (multi-million dollar) commercial mortgages.

  34. headon says:

    @ANATAK: Geez, backoff the dude. It’s nothing more than a business decision. There is nothing personal about it at all. You must run your financial life as a business that’s what permits you to make proper fiduciary decisions.

  35. trollkiller says:

    Not immoral at all. The mortgage is a secured loan. The contract says if you don’t make payments they repo the house. He can’t make payments so he loses the house and takes a hit on his credit. He is following the contract.

    Him doing this is no more immoral than the bank throwing someone out of a house they have made payments on for 29 years. Yeah it sucks but not immoral.

  36. misstic says:

    Clearly he only cares about himself and thinks this an acceptable risk with him being the only to suffer. If only that were true. If he abandons home #1 and it’s foreclosed, that property will sit vacant until it’s sold by the lender. Neighborhoods all across America are suffering because of these empty, foreclosed homes. They bring down property values for everyone else, pose a safety hazard for being vacant, take away property tax dollars, etc…everyone around him will suffer. Our school system has a SIGNIFIGANT budget shortfall for two reasons: declining property values and an influx of illegals in the school system who require special resources. Now I think I need BP medication….

  37. sleze69 says:

    @Tracy Ham and Eggs: It’s a condo. It’s not like he is leaving a lawn to mow or a roof to re-shingle.

  38. notbetty says:

    So is it also immoral to do a short sale? I have been trying to sell my house for 1 1/2 years, and at this point I think the only way to sell it is to take a loss (when the realtors’ fees are figured in). I have truly been trying to sell it, but I have put my life on hold for 1 1/2 years and really need to be moving to another city for personal and business reasons.

  39. cabalist says:

    Just because something is good (economically) for an individual does not mean that it is morally right.

    It is economically good for an individual to rob someone if that person knows that he will not be caught. However no one would argue that what he did was morally right, just economically advantageous. The primary reason it is morally wrong is that someone that is innocent is hurt. It is that simple.

    People who walk away from their bad investments (stocks, bonds, etc–things that they put their ACTUAL MONEY into) is one thing.

    People who walk away from a mortgage are not walking away from an investment that they have put their ACTUAL MONEY into. They are walking away from an investment that they have put VERY LITTLE ACTUAL MONEY into (principle v. interest) but that a bank (and the investors behind it and the other citizens have money in and take loans out through) has put a LOT of ACTUAL MONEY into. This hurts the bank (whatever), the shareholders (big business but also the average Joe, retirees, etc.), and those that are qualified and seek to take out new mortgages.

    Black and white, really.

  40. andrewe says:

    So he runs away from his obligations and adds his debt to the rest that are dragging your economy down.

    Well all right. As long as things work out for him. Why should anyone else care?

    I can only pray for karma.

  41. GregC1968 says:

    Keep in mind that when guys like this walk away, it drives property values way down such that those who remain suffer for it.

  42. trollkiller says:

    Ok all this “it effects everybody” is a load of shit. Going by this logic I should be pissed off at everyone that pays $30k+ for a new car. If it wasn’t for all you bastards willing to pay that for a new car the prices would line up with the inflation rate and I would be able to buy a new car for $10k.

    The man has a contract. This is just between him and the bank.

  43. Jean-Baptiste Emanuel Zorg says:

    I don’t really understand why people view a business decision by a homeowner as a terrible moral lapse.

    Because most people view a contract as a formalized version of giv… Since most people also believe that corporations have no morals, they are neither surprised nor indignant when the big companies do it, but you’ll get the ol’ fisheye when you do it.

    @Hambriq: He beat the system at everyone else’s expense.

    He’s going to lose the condo, lose all his equity, and have an enormous black mark on his credit for the better part of a decade, and you think he’s “beating the system”? Take a breath, dude.

    And “at everyone else’s expense”? Spare us. It will be at the bank’s expense, and theirs alone. If the larger picture of banks making too many risky loans, or being unwilling to renegotiate less profitable loans is causing an economic crisis then take it up with the banks. He certainly seems to have given them plenty of opportunity to avoid this situation, but they wanted nothing to do with it.

    this guy is a scumbag.

    And you’re a… sigh, you really do bring out the best in people, eh? This guy made a business decision, pure and simple. He realized that honoring the contract was not in his best interests, so he breached the contract and willingly paid the appropriate penalties. A simple, and common, business choice.

    Acting in your own best interests is not immoral if you’re not harming anyone else, or if you make whole anyone you do harm.

  44. Derffie says:

    Just so folks stop asking .. in California first mortgages are non-recourse loans… they can’t go after his personal property etc.. they can only take the house back.. yes eventually he would get a 1099 for the forgiven loan ‘profit’ equal to the lenders loss… however he could take legal action against the appraiser who worked for the bank who set the high price for the condo .. thus getting him that original loan…

    As far as I’m concerned.. foreclosure is part of the same process that got him the loan for the oondo in the first place.. and the possibility of that eventuality would ( should ) have been factored into the rate he was charged when he got that loan.. The fact that foreclosure is the outcome in this situation is just the way it goes.

  45. Cycledoc says:

    Our Libertarian friends would say let the marketplace correct itself. Of course you and I and our grandchildren will be paying the bill for the mortgage finance fiasco for years.

    The free “market” allowed mortgages for those not qualified; falsely elevated property valuations; marketing of bonds made up of flawed debt. Everyone gamed the system.

    We need some rules, regulations if you will to keep these guys from harming themselves (and us).

  46. yskel says:

    @Hambriq: Really? “Moral Turpitude?”

    Let’s say I hold 1000 shares in a blue chip, fortune 500 stock, one of the bellwethers of our economy. I need cash, and I think that the stock price is going down, so I list a sell order for considerably less than the current trading price. My shares sells right away, but the stock is now trading a little lower than it should, so every other share holder is worth a little less than than they were 5 minutes ago. Do I have a moral obligation to hold my stocks and not sell them for a price at which I think they can sell? Absolutely not – our free market economy is founded on the idea that individuals will act in their own self interest.

    The mortgage contract lists repayment terms and it lists penalties for failure to meet those terms. It’s not a morally binding covenant. That’s not to say this is a good idea (which I’m not sure of), but I don’t understand where all this bile is coming from.

  47. zibby says:

    Wow. I can tell from the last sentence that this dude doesn’t pay overmuch attention to the news. And yeah, the whole thing is just, “It’s the store’s fault for making you want it so bad” rationalization.

  48. Landru says:

    Regarding whether it was moral or not, or comparing it to the Enron defense, I don’t think these really apply.

    What he did was not illegal, and he won’t end up in jail.

    Ways of dealing with a loan that isn’t paid, i.e. foreclosure and the settlement of the debt were all structured in advance; all parties involved could see this as a possible outcome of the deal when it was set up.

    And that tax liability is a killer.

  49. cabalist says:

    We live in a capitalist country with no price controls. Laissez-faire, my friend. Your house is only worth as much as you are able to sell it for. If you want to sell your house/condo/hut SOMEONE WILL BUY IT AT THE RIGHT PRICE–I GUARANTEE IT.

    My home value has decreased as well. Leave my house without paying it off–are you mad? I didn’t buy my house to make money, my wife and I bought it to live in and raise a family. Strange, I know. The great thing about your home is that it is about the only investment that you can pay off in installments and live in to boot!

  50. savvy999 says:

    What’s disturbing to me is that the OP clearly CAN pay the loan on the first property, he/she simply doesn’t WANT to. That’s where the moral question ends.

    This is not about do-or-die, feeding the kids vs paying the bank, it’s a question of profit (on paper, no less… this person hasn’t even lost anything yet). And for making it into that, he/she is an utter d-bag in my book.

    This person is effectively forcing foreclosure (‘almost’ going bankrupt) under no hardship, therefore under false pretenses. A similar a-hole move would be to call your credit cards or student loan and ask for a forbearance, and lie to them about having cancer or being out of a job, but really be OK and then go on vacation with all the money you ‘saved’ by not paying your due.

    It’s tards like this that will screw up the system for everyone or anyone who actually needs this ‘out’.

  51. Jean-Baptiste Emanuel Zorg says:

    Whoopsie – that link should read “because most people view a contract as a formalized version of giving your word of honor”

    makes much more sense that way, though anyone following the link prolly could have figured it out.

  52. trollkiller says:

    @savvy999: But he is not lying to them. He is saying “I need a refi or I have to walk”. The bank is choosing to let him walk.

  53. dgcaste says:

    @Hambriq: HUGE overreaction, and you’re making wild statements without evidence. People like him are NOT causing our lives to be infinitely more difficult. That would be true if people forcing foreclosure were magically making my payments a fixed $7000 a month on a $200k house over 30 years. That sounds like infinitely harder to me.

    I am riding the interest drops by renegotiating all of my credit cards and refinancing my auto loans. They all dropped an average of 3% in interest. This guy made my life a little bit easier IMHO.

  54. cabalist says:

    ” From SAVVY999:
    What’s disturbing to me is that the OP clearly CAN pay the loan on the first property, he/she simply doesn’t WANT to. That’s where the moral question ends.”

    Exactly. This is far from a hardship case ($520,000 house versus my $99,000 house). When people say that they bought a house that they could not afford and it is $100,000 I think, “you should have paid more attention, sought additional help, but I understand (somewhat)”. But when someone tells me that they bought a half-a-million dollar house and the profit is looking shaky so they are thinking about walking out on it I think, ” –well, on second thought, let’s try to stay positive, shall we?

  55. soulman901 says:

    I honestly wouldn’t give this guy any limelight. He’s just being a complete retard about what he got himself into. He didn’t read the fine print and now he is upside down on his loan. He’s akin to the same people that trade in cars they are upside down on and keep rolling it into their payments until they owe more than what the cars are valued.

  56. HRHKingFriday says:

    @randotheking: Depending on your overall financial situation. If the OP is smart enough not to carry balances on credit cards and has a stable job (which I’m assuming so, if they’re paying that much for a condo). Sure, they might not be able to buy a new car without a significant downpayment or take out a HELOC to redo the new place. If anything it’ll save them money by limiting their purchases.

  57. Anonymously says:

    If the bank (via their appraiser) didn’t overvalue the property so much in the first place, this wouldn’t be an issue. Both parties were equally irresponsible when they entered this contract and they both accepted this situation as a possibility.

    The bank gets to keep all of the payments the guy made and recover what they can from the mortgage insurance.

    The guy never explicitly states that he can afford $900 more a month, so when the ARM adjusts, he might become a “hardship case” just like the rest of the foreclosures.

  58. Keter says:

    This behavior — along with the arson — is a predictable part of the market correction. When analyzed from the 10,000 foot view, the very same thinking was used by this debtor as was used by the lender in deciding not to deal with him in good faith, so one “screwage” is offset by another “screwage.” This type of thinking is what got us into this mess, and it will not get us out of this mess.

    What I want to know is who is profiting from this? Someone is, because the “lost” money is going somewhere. Perhaps the economy is simply shrinking, and the money was imaginary to begin with…but I’ll bet someone (bigger than the banks!) has a huge invisible wedge and is finding a way to profit. It brings to mind the “fractional cents” fraud of the 70s — where unpaid fractional cents of interest were skimmed from savings accounts and diverted to an insider’s account, where they aggregated into large sums — but on a lot larger scale.

  59. SoCalGNX says:

    The really fun part will be when the IRS sends him a bill. And, oh yes, they can and will.

  60. BlondeGrlz says:

    @Greg P: I thinking blaming the bank and the appraiser is unfair. What a house is worth is directly related to what someone is willing to pay. There is a difference in living in a very desirable market where real estate is at a premium and people are willing to pay almost any asking price, and a shady bank/appraiser/real estate agent falsely inflating the value of a property for a scam. Otherwise a home would only be worth exactly the cost of the wood, nails, bricks, etc. that it’s made of.

  61. cabalist says:

    It took us two years to find a house that a) I would buy (location, condition, age, etc.) and b) that my wife and I could afford. It didn’t make me happy to tell my wife, over and over again, that we just couldn’t afford this or that house we couldn’t live here or there. I would have given anything, except my good judgment for bad, to just say “Honey, you can have whatever house you want–forget a regular mortgage, pick a wraparound or an ARM, whatever will make it happen–because speed is always better than good judgment and forward thinking; we’ll figure out how to pay for it down the road.”

    IMHO: The subprime mess should be cleaned up by moving all loans to a fixed rate and moving the the difference in interest rate to the back of the loan (adjusting the amortization of the loan and significantly extending the it in most if not all cases). This is a good compromise in that the banks and individuals will both be somewhat unhappy and the general public will be less impacted.

  62. savdavid says:

    He is right. The corporations can do it so he should. As far as the IRS is concern, it is still cheaper to pay them than the bank.

  63. overbysara says:

    Power to the people!

  64. Skankingmike says:

    I think the biggest problem with his rational is that he thinks the banks wont’ look at the fact that he has other assets and they could possibly go after his other house.

    Though he may be lucky in that so many people are being foreclosed on that it’s probably all cookie cutter now.

    personally if you got an ARM because you thought you could make some money in a few years, then you weren’t paying attention to the housing market.

  65. MonkeyMonk says:

    I don’t understand why the guy doesnt at least attempt to refinance the original loan. It’s not like he has to go with the original bank in order to refinance. Rates are already nearly back to the lows of the last 5 years so he should even have to pay that much.

    Personally I don’t think this guy is a scumbag but I do think he’s an idiot if he buys another place rather than renting.

    If he has house #1 forclosed then the bank could sell it for a huge loss and then go back after him for the remainder. If he’s not careful he might find the bank owning both House #1 & House #2 (and his car, garnished wages, etc., etc.)

  66. Unnamed Source says:

    One has to wonder how much the value of the property in question, and of all those comparibles around it, were inflated by the appraisal practices that are now getting big banking houses like WaMu in trouble in some areas. Would not then the bank hold some culpability here?

  67. darkened says:

    @HRHKingFriday: Exactly he very well might have plenty of credit on cards available and plenty of new cars to last 7 years. And even 7 years seems unlikely in fair of having the rest of this established credit. I wouldn’t be surprised if that only hurt his credit score 40-80 points which if he qualified for not one but TWO mortgages that total nearly a million dollars, that point loss will be insignificant.

  68. JustAGuy2 says:


    Again, depends on the state. In CA, first residential mortgages are non-recourse – the lender can only come after the house that’s being foreclosed, not other assets.

  69. cef21 says:

    In many states, this would be a bad idea — if you owe $200,000 on the house and the bank eventually sells it for $150,000, you now owe the bank $50,000. As another poster pointed out, this apparently isn’t true in California.

    As far as a moral question, I don’t see it: he made an agreement with the bank: “You lend me this money. If I don’t pay it back, you get the house.” If the bank didn’t like the deal, nobody was twisting its arm.

    Banks do not say “Well, he’s a good guy who we can trust. He’d never decide to stop paying.” It’s not like the mortgage was from his mom or an elderly aunt.

    @TinyBug: Many people do view contracts that way, but they have not been viewed that way legally for a very long time. That’s partially why it’s difficult to force somebody to perform their obligations under a contract — a court would just rather assign monetary damages.

  70. dgcaste says:

    @cef21: Fuck that. That’s what risk is on a finance – the bank risks foreclosure, therefore, being in debt. In a state like this there’s little risk for the bank unless the customer goes bankrupt and owes nothing.

  71. vdestro says:

    I don’t know about the morals of it

  72. vdestro says:

    Sorry, hit something by mistake and it posted. I was going to say, I don’t know about the morals of it but it seems like he’s panicking a little and jumping the gun before seriously considering other options. For example, I would rent the condo out, pay the mortgage with the rent and make a some profit as well. Then just ride out these bad times and maybe the value will eventually go back up, to where he can sell it at a profit if he wants, or continue to rent it out.

  73. Tracy Ham and Eggs says:

    @Keter: Wow, paranoid much? There is no “bigger” group reaping the benefit. People defaulted on loans and lending standard tightened up. That means there was a surplus of homes on the market due to a reduced buyer pools. This drove down prices, simple supply and demand. Let me guess, your secret profiteer is the illuminati, the masons or the Jews?

    And are you sure you arent confusing the fractional cent fraud with Superman (or Office Space)?

  74. picantel says:

    1)I doubt the IRS will send him a bill. They rarely do. The company could possibly send a 1099-C form but once again that rarely happens. I would give it maybe a .1% chance and that is pushing it.
    2)People lose their cars and homes all the time because they cannot pay. Does missing payments make you immoral? What a joke.
    3)Banks exist to screw people. This bank had the opportunity to make it a fixed loan and will not do so. THe OP cannot keep up on the loan and will pay even more and will eventually be run into the ground where all the creditors do not get paid. In the last 7 years of doing what I do I have seen some of the lowest scummiest things a bank could possible think of. How would you like to get one of those 0% transfers and when you put your money on their credit card they decide, for no reason at all(and they need none), to raise your interest rate? How about this scenario? You have, for example, a 20k credit card and put 15k on it. Suddenly they lower your credit limit to 1k and start charging you over the limit fees and high interest. I have seen that more times than I can count.
    4)States have different ways to collect money. In Florida, where I live, you cannot garnish a head of household(you have kids). You cannot put a lien on property. You cannot garnish bank accounts of a head of household until the money is 6 months old. For a condo that of that price there is some chance he lives in this state.

    Some people think life is perfect and they are perfect. Get a grip and get a clue.

  75. giggitygoo says:

    I have to agree with those that point out that the key thing here is that this person is able to pay and just doesn’t want to. That is just wrong. What’s worse is that he doesn’t seem to realize that the bank is going to come after him for the balance anyway – so basically both person and bank are going to get screwed. Why would anyone think that they can walk away from a mortgage scott free without declaring bankruptcy? As if the bank is going to be perfectly fine with this person owning another home and having sufficient income and not try to sue for the $150,000+ that will be left? This is not only immoral, it’s stupid.

  76. loganmo says:

    I don’t see what the big deal is. The home owner and the lender had a contract. It is a very basic concept of contract law that either party has the legal right to breach, or walk away from the contract-you just have to suffer the consequences envisioned in the contract for doing so.

  77. humphrmi says:

    A house is a place to live. Fidelity Magellan or Gold Futures or Apple Stock is an investment. Stop confusing the two. That’s what got us in this mess to begin with.

  78. @noquarter: At least around here, it costs them quite a bit of money to keep the actual HOUSE on the books, and they’d much rather have the mortgage than the house. Even bad mortgages can be sold to other financial institutions; nobody wants the physical house. There are costs for the bank to SELL the house, including a listing agent or the auction or however they do it, and there are costs involved in either doing repairs to bring it up to market value or to selling it under market value. There’s a time lapse between foreclosure and resale that loses the bank money (and homes sitting empty are good targets for burglars and vandals, again losing them more money).

    In a not-overheated market, more foreclosures occur on homes where the owners have personal problems, such as health problems or drug addictions or job issues, which typically have prevented ongoing maintenance that every house needs, so the house is frequently in poor condition before we even get to the foreclosure part. When a house is foreclosed on, I’m told it’s not unusual for the outgoing owner to absolutely trash it before leaving, adding to the cost before it can even be put up for auction. (They will auction foreclosed houses “as is” which means you better go check the basement for piles of human feces before you bid. On the flip side, if you’re willing to deal with that, you can buy decent houses in reasonable neighborhoods cheap at auction (usually from someone who developed a drug problem), do some heavy cleaning and light repair work, become a neighborhood hero, and “flip” it for market value, and you’re like the Robin Hood of flippers and everyone loves you.)

    In overheated markets, there’s the issue of the home being worth substantially less than the mortgage, and money being lost that way.

  79. Pinget says:

    You can walk away from a house. Just leave the keys on the kitchen counter and walk out. You’ve stolen nothing since you’re leaving the collateral behind. Some people choose to mail the keys to the mortgage company. Either way, you’ve done NOTHING WRONG if you just walk away. [www.foreclosurefish.com]

  80. Indecision says:

    @MonkeyMonk: “I don’t understand why the guy doesnt at least attempt to refinance the original loan.”

    Sorry to be crass, but did you even read the article? Because it’s right in the second paragraph of the quote.

    @skankingmike: “I think the biggest problem with his rational is that he thinks the banks wont’ look at the fact that he has other assets and they could possibly go after his other house.”

    I think three other people have said this already, but in California, the banks can’t do that.

  81. ogman says:

    Sounds good to me. If it’s okay for the corporations and the wealthy, it should be okay for the rest of us.

  82. Anonymously says:

    I didn’t mean to blame the appraisers, just the banks and the strong-arm tactics they’ve used on them.

    However, IMO, the “buy now, refi later” ARM route was a great way to maximize origination fees, and is very scammy.

  83. gte910h says:

    Talk to an accountant in your state about the tax ramifications of the forgiven debt, and also make sure the bank cannot still come after you for the losses on the loan.

    The banks told a line of fibs the width of the Atlantic selling mortgages these last few years. You are morally justified in caring more about yourself and your current or future family than “neighborhood effects” or the like. This hole american is in was caused by a lot of people, most of whom weren’t home owners.


  84. savvy999 says:

    @trollkiller: Based on what we know from the article, he doesn’t NEED a refi. He WANTS one. Big difference.

    BTW, all of the arguments thus far about him ‘paying the price’ by ‘ruining his credit’ are technically true but realistically worthless. He won’t suffer; he will be able to do anything he wants–buy a car, another house– after this foreclosure. Sure maybe not at rock-bottom rates, but still within his ability to pay (esp if he’s floating 2 mortgages now w/o difficulty).

    Having pride in defaulting on one’s obligations is just a new, weird sign ‘o the times, I guess. I wonder if this fine character had child support payments due, would he similarly walk away with a free conscience. It’s just an agreement or order to pay money, after all.

  85. HRHKingFriday says:

    @cef21: Maybe thats what makes California such a bad and dirty state for banks to be caught up in. I’m sure a lot of the speculators and flippers are sitting pretty there, knowing the rest of their assets are safe. I know I would be.

  86. Hambriq says:

    Basically, the argument about the morality of things boils down how you view a contract.

    “I have Option A (in this case, repaying the mortgage) that results in Consequence A, or I have Option B (defaulting) which results in Consequence B.”


    “I agree to uphold Option A. The penalty for not upholding Option A is Consequence B.”

    Basically, does a contract outline a set of options and consequences? Or is it an agreement to perform a certain action, with certain penalties for not agreeing to them? Obviously, whichever view you take of contracts will affect the way you view the morality of the situation.

    I tend to err towards the latter side of things. I’ve heard one too many friends of mine justify maxing out all of their credit cards immediately before declaring bankruptcy to be comfortable with the first view of contractual obligation.

  87. JanetCarol says:

    Regardless of who this screws and how much you care if they are screwed. Don’t make a commitment if you cannot handle it. People sign contracts way too easily. Example – divorce rates.

  88. randombob says:


    Looking forward to MORE people doing this. The housing market has been in an uncontrollable (esp. in cali) upward spiral, essentially locking new families out of the market.

    All those goddamn house-flippers FUCKED up the american dream. A home should be a place to live, not an investment vehicle. And the fact that people saw fit to turn it into that has really kept the next generations from being able to settle.

    The more people “walk away” from these shit deals, the more the prices will come back down to earth, and the more likely that my generation and following gens won’t have to be “forever renters.”

  89. teapartys_over says:

    If he were a corporation, there wouldn’t even be a question of what to do. He made the right business decision. Morally it’s not for me to say, but we’re not just talking about Enron here: any corporation would do this if it helped the bottom line more than it hurt. Look at the layoffs they do all the time, sometimes in very immoral ways. Our economy is screwed up when everyone from corporations to our own government tells us that we must keep the economy going by spending, then blames us when we failed to save and got in trouble with a bad loan or health crisis. Then it’s all “where’s the individual responsibility?” But watch the Wall Street Journal freak out when consumers decide to become individually responsible and stop buying things they don’t need or can’t afford. I think the system is rigged against the individual right now, so do what you have to do to try to even the score.

  90. iMike says:

    If you think it’s OK for this guy to proceed as outlined, you also think it’s OK for a company to default on its obligations to consumers and employees.

    Just make sure you don’t put yourself into a logical tension by taking the side of the homeowner.

  91. kromelizard says:

    When exploitative lending is the norm I’m pretty damn okay with people ducking out on the party early. How can you argue for an ethical obligation on the part of only one party? That is what evades me about people taking a moralizing stance and decrying the lack of responsibility on the part of individual borrowers. How can you hold individual borrowers responsible for preserving a system that has abandoned any ethical obligation to them? When banks will happily and with full foreknowledge do business with you to your detriment, why are you morally obligated to hold up your end of a shitty bargain?

  92. JollyJumjuck says:

    It’s odd that some people feel that a human being ought to be held to the same moral standard when dealing with a corporation as with dealing with another human being, yet when a corporation pull a fast one, these same people feel that it is “just business” or toss the “buyer beware” epithet around. Almost as if the corporation has all the rights of a human, but none of the responsibilities.

  93. trollkiller says:

    @savvy999: Child support is a bad analogy, it is not an agreement to pay it is a court order.

    Ok so he WANTS a refi. Is that any different than wanting a raise at work? When you were hired you agreed to X amount of wages per hour/week/month or whatever. Later you go back and ask you boss for a raise. You don’t NEED a raise you WANT a raise. Boss says no and you walk. Immoral? I don’t think so.

    Now your argument may be that the raise scenario does not involve a contract, you would be wrong. It involves at the least a verbal contract because you agreed to the wages. Unless you also agreed with your company that you would be asking for a raise in the future at the time of hiring, by your logic it would be immoral to ask and immoral to quit.

    To me it would be immoral if he declared bankruptcy in order to KEEP the house and not pay. He is not doing that. The bank agreed that the house was sufficient collateral if he failed on the loan. He fails the loan, bank gets the house. Just like the contract says.

  94. SuffolkHouse says:

    The a-holes teaching business these days would consider this brilliant business. As a consumer, however, they would wish to pass laws against this kind of behavior. I say, ‘Good Job!” Wish, if I’d been in the same situation, that I’d thought of it.

  95. ThinkerToys says:

    The OP was ultimately foolish for spending $520K on what is now a $350K condo.

    The bank (and consequently its stockholders) took the risk of lending $520K for this guy to buy what is now a $350K condo. Another ultimately foolish move.

    He walks and the bank gets what they bargained for: the deal was either pay the bank or they get the condo. No moral judgments apply, disregarding the OP’s gloating attitude.

    The real winner here, and I am not sure anyone pointed it out, was the person/business that sold the condo originally. They got $520K for a property that is only worth $350K. Is it morally wrong for them to keep this windfall?

    (Basically the same question, just taken back a step to make it look stupid…)

  96. Majisto says:

    I just look forward to the day when houses are once again places to live and not “investments”!

  97. savvy999 says:

    @kromelizard: and the bank dragged him to the signing table, and forced him to sign this deal how?

    If you buy the ‘he was exploited’ angle, then it’s not worth arguing any more. Home ownership is not a right, it is a risk. He knew the odds and terms; he gambled, lost, and should be sacking up to pay the consequences of his wager. Which he obviously can afford to do.

    It’s not about whether or not the real estate ‘game’ was rigged (it wasn’t), or whether or not he lost paper value (he did), it’s not about whether or not he can pay his debt (he can and does right now), it’s about whether or not he likes it (he doesn’t).

    He is a loser CRYBABY. If he wanted to act like a shitty corporation, he should have formed one. Then he probably wouldn’t have gotten the loan to begin with, and wouldn’t have been in this mess.

  98. @savvy999: “I wonder if this fine character had child support payments due, would he similarly walk away with a free conscience. It’s just an agreement or order to pay money, after all.”

    Except for the part where they eventually put you in jail for that.

  99. Daniels says:

    We will loan you this money with the understanding that if you can’t pay it we will take the house.

    I can’t pay it. Take the house.

    Yeah, real douche that guy is.

    The bank would screw him in a second given the opportunity.

  100. zibby says:

    @iMike: Excellent point, but not likely to be taken to heart.

  101. swalve says:

    @teapartys_over: Exactly right. Legal and moral are two different things.

  102. consumeristlegs says:


    I like how Hambriq hasn’t responded to darkened’s evisceration of their metaphor of the Hummer :) Internet thread debates are funny because it is so easy to just ignore the good points made against you, and just focus on the poorly made ones!

  103. pastabatman says:


    This is the system we’ve created. Morality seems irrelevant. He breaks the contract and he suffers as much as the contract and law will allow.

    You see, many a day I’ve come to Consumerist and have read all this baloney about “He should have read the contract…” etc and so forth in regards to just about every consumer product or service under the sun. SO many people have NO problem with corporate/business entities’ behavior as long as they wrote it down.

    This is behavior that we would NEVER accept from another person. All this shifty eyed, sneaky “Gotcha” fine print BS designed to catch you off guard.

    It cuts both ways though. If he’s willing to ‘pay the price’ then none of it is ‘immoral’ as it’s what everyone agreed to. It’s “just business”, yeah?

    Don’t worry so much about the impact that broke individuals will have on “us”. It’s a drop in the bucket compared to what we’re gonna pay out for the big boys in the economy that screw around with billions of dollars in the name of “it’s just business”.

  104. Spiny Norman says:

    I have to wonder if this is another case of someone not looking outside of the box. I’m not going to argue morality, but I sure wouldn’t do anything to ding my credit in a measurably tighter market. Nothing quite like dumping a 9% mortgage to go out and pay 21% on your new washer and dryer…

    My thought is this: It’s situations like this that have made people in my generation into very happy landlords and property moguls. Is the rental market upside down as well? He would have to look at sustaining the negative cash flow, but a good tax strategy can ameliorate the impact substantially.

  105. Awesome blog/article!

  106. econobiker says:


    Ethical (business)

    These are all completely different items. If Donald Trump can use strategic bancruptcy (both business and personal) then why not the common man. I often wonder if it would be better to have everything I own in trusts and businesses to both shield myself from financial and lawsuit liability. There are so many goobers selling these type of deals that I have not yet taken time to really find out if it is possible.

  107. Sudonum says:

    IN California, they can get a judgment against him for their loss. I know because it’s happened to me. If he thinks he’s just going to walk away from this thing he’s sorely mistaken. They can also place a lien against any other personal property he has, as well as garnishing his wages. They can’t force a sale of those assets but that judgment and lien will stay there for 7 years, and then can be renewed by the creditor for another 7 years if they so desire. He needs to consult an attorney ASAP, and probably should have done so earlier. Like I said, this has happened to me in CA.

  108. kromelizard says:

    @savvy999: I think it’s foolish to blame systemic flaws on the individual moral failings of people who have no particular control over the system. ‘Caveat Emptor’ is not a justification. If it’s to greater advantage to ditch this deal how can you espouse a moral obligation to an institution that displayed no understanding of it’s own ethical obligation when it started issuing reams of bad paper? If “You knew the risks coming in” is good enough to lash him to a sinking ship then why isn’t it good enough for them?

  109. cabalist says:

    I think that that is the point some have made: “you just have to suffer the consequences envisioned in the contract”. The house is collateral used to secure the loan. Unless the mortgage was drawn in a jurisdiction that recognizes nonrecourse mortgages there will be a balance left after the bank sells the house, a deficiency judgment, that can be sought from the debtor. Keep in mind that sometimes a jurisdiction will recognize nonrecourse loans in commercial realty situations but not residential.

  110. BustedWheel says:

    There is a special place in hell for you.
    Thanks for the recession you a$$.

  111. SadSam says:

    If you lose money on a stock or similar investment it only hurts you. If you walk away from real estate and let the bank foreclose you are hurting your neighbors (lowering their values) and the neighborhood.

  112. savvy999 says:

    @kromelizard: Again, if you or anyone is making this a case that he was defrauded from the start, there’s no argument left. He wasn’t.

    He made an investment that may or may not go up. It didn’t, he should pay. That’s how investment works. If I make a futures call on Orange Juice hoping that the price goes up, and instead it goes down, that OJ still exists and is delivered, but now I owe $ to someone for the difference. Should I be off the hook just because I don’t like the outcome of my gamble?

    It’s about avoiding paying debt when one has the ability and means to do so. Per Sudonum’s post, I hope this clown gets nailed to the wall in civil court.

  113. MeOhMy says:

    What I can’t figure out is how it could possibly be better to eat the foreclosure than to just sell it at a loss…

  114. ExGC says:

    Long and the short of it:

    This likely isn’t a non-recourse loan. Most residential mortgages aren’t. This means the bank can sue him for the difference between the amount it makes on the sale and the outstanding debt and they will. Since he now owns another residence, the first thing they’ll do is notify the new lender of the situation which in most cases will be an event of default under his new mortgage. Even if lender 2 doesn’t enforce the default, if lender 1 gets a judgment – they’ll slap a lien on the new residence and try to force a sale for the proceeds.

    Even if he gets a settlement, he’ll have debt forgiveness income and the IRS isn’t nearly so likely to settle.

    And the guy is a scumbag. He agreed to pay off the mortgage. He isn’t even making an attempt to do so. Argue about it all you want. People who welch on their debts are lower than the whale shit at the bottom of the ocean, irrespective of who the lender is.

  115. Jean-Baptiste Emanuel Zorg says:

    @JollyJumJuck: Almost as if the corporation has all the rights of a human, but none of the responsibilities.

    Excellent point. One of the larger problems with our economy is that there are a bunch of utterly amoral (to the point of sociopathy), extremely wealthy “persons” who can contribute ENORMOUS sums of money to politicians.

    So much money that when it comes time for the voices of the people to be heard, their voices stand out head and shoulders above yours and mine.

    So much money that they can commit crimes with impunity. If I killed 4000 people through my negligence, I would be denounced as one of the greatest mass murderers of the last 50 years, and put in prison for the rest of my life. Union Carbide, on the other hand, simply reached into their very deep pockets to pay their settlement.

    Making corporations into “persons” was an enormous blunder.

  116. thedanza says:

    All of you that keep arguing that the IRS will come after him for debt forgiveness income must have missed the “Debt Forgiveness Tax Bill” that President Bush signed into law recently. His debt tax will be forgiven as well as his debt if the servicer/back so chooses.

    Also, many argue that the bank loses money on this. I’m not sure his case, but his bank is likely an intermediary and only services the loans as few banks keep all of the loans given on their balance sheets currently for risk management purposes (just enough to duration match). The people who will lose money are the end investors in CDO products, hedge funds, SIVs, and underwriters/originators.

    The argument that his neighbors will lose value in their homes is a legitimate argument, but does that also make the large stakeholder in a company at fault when he decides to sell his stock to gain liquidity (not because of insider information), all in the process pushing asset values down further? I hope not, because then we have larger fish to fry.

    Also, the servicer/bank/investor’s loss on this is somebody else’s gain. There a number of people/companies now buying foreclosed homes to turn around and sell them for a profit. Wherever there is money lost, there is money gained. It’s not a moral dilemma. That’s why loan originators secure the loan with collateral and repackage the loans at premiums, because there is risk associated. If there was no risk, then everything would earn LIBOR/Treasuries, there would be no subprime market or any other market for that matter.

  117. artki says:

    I don’t see where he is “screwing everybody else”. He walks away, the bank forecloses and then sells the condo to somebody else. THAT somebody else got a good deal. The bank got screwed over to the amount they lost (the diff between what they lent the first man, the money they got back and the money they got for the 2nd sale). The original guy got screwed over for the amount of money he put into the condo purchase less the value of the time he spent living in it. But he didn’t hurt -ME- a bit.

    It’s a problem between him and the bank.

  118. cabalist says:

    Yeah, right, he exists in a vacuum…

    That is part of the problem…people do not understand the interconnectedness of things.

    A vacuum, just him and the bank…

  119. Erwos says:

    It seems to me like this guy is underestimating the consequences of defaulting.

    I think that the key point people are missing here is that the foreclosure is not like an option in the contract. It’s a method of enforcing the contract. At the end of the day, you’ve broken your word for your own personal gain, which is immoral (according to my religion) and dishonorable.

  120. zekezarski says:

    I am a consumer bankruptcy lawyer located in Texas. To clarify, credit reporting agencies can report bad debt on your credit report for seven years from the date of default. They can report a bankruptcy for ten years. You can only file a Chapter 7 every eight years. (Filing date to filing date.) You can file a Chapter 13 any time after a Chapter 7, but you cannot get a discharge in a Chapter 13 filed within four years of a prior Chapter 7.
    On the 1099 issue, the lender should only file a 1099 on a foreclosure if they have forgiven the debt. A “charge off” on your credit report only means that the lender has taken a tax deduction for the loan, but they can still try to collect the debt and would report what they recover as income in the year it was recovered. If the debt was truly “forgiven”, the borrwer no longer owes the balance. Mortgage lenders rarely dend 1099’s after foreclosure because they do not forgive the debt. They may not pursue collection, but the debt never goes “poof.”
    Assuming the lender does send a 1099, forgiveness of debt in a year when the debtor is insolvent (on a strict balance shjeet basis) results in a loss of beneficial tax attributes, but does not give rise to a tax liability. See IRC 108(c).

  121. artki says:

    And another thing. The only reason people feel that CAN walk away from these houses/condos is because they have no equity. Why don’t they have equity? Becase there’s been a sharp drop in the value of the house. But there’s always been ups and downs in the value of real estate? BUT! This time we have something new. The lenders saw fit to make gigantic loans with little or no DOWN PAYMENT. Back in the olden days you had to put up some serious money to buy a house. 10% 20%. That meant you had some equity in the house even before you made your first mortgage payment. And it would take a incredible drop in value to leave you with no equity in your house. But the banks thought it would be clever to have little or no down payment. That way, they could sell more mortgages – and they had to sell more mortgages because they wanted to repackgage them into more CDOs*. Well they got what they wanted. And now they get to deal with the consequences.

    *See the post yesterday about the interview with the Hedge Fund Manager.

  122. Morgan says:

    @SadSam: His neighbors values need to go down. Houses became vastly overpriced during the bubble; people getting foreclosed on is helping return the values of homes to sane amounts that people can actually afford. Besides, this is a great opportunity for the neighbors to get their houses reappraised and save some money on property taxes.

  123. snoop-blog says:

    just because people make bad decisions (which ARE THEIRS TO MAKE) doesn’t mean they are all scumbags. i love it how people sit on their high horse and start name calling. the op might be a better person (most likely is) than all of you who do pay your bills on time. do you think if fucking matters if you paid you bills where we are all going. funny because it probably will matter if all you did was point your finger and judge other people. how do you know he is not a great father, or the kind of friend you could always trust and rely on? oh because he mad a bad decision (once again his to make) so he’s automatically a scumbag. i love it.

  124. stinkingbob says:

    First off, Hambriq, you are an idiot.
    Good, got that off my chest. Why are we in this housing mess in the first place??? Because of corporate greed.
    You see, banks and financial institutions were giving loans to people who they knew could not afford to pay it back. So what happened? Well, the economy tanked, jobs got shipped overseas, gas prices went up, prices went up. Wages stayed the same. Regular Joes like me and you had to make tough decisions on how to spend what little money we have. For many, food and warmth took precedence over mortgage payments. Now, the banks and financial institutions screwed not only the homeowners but the rest of the country as well. SO, if this guy walks away, power to him. I believe Hambriq that you work for a bank. Either that or you have lots of money.
    You see, banks charge fees for everything. Teller fee, atm fee, not-enough-money-in -the-account fee, safety deposit box fee, check-fee, etc. AND, they are using our money while paying us a paltry 1% interest!!!!!
    I don’t have sympathy for the banks. THey screwed us over big time.

  125. edwu says:

    @vdestro: your idea of renting his first condo out seems like a great option

  126. cabalist says:

    I agree as to the name calling. Scumbag? A–h—? Maybe too far. Greedy bastard with no regard for others, now that is more apt.

    This is not a “victimless crime” as some have claimed. People like this should buck-up and take it like a good citizen. A good citizen should honor their responsibilities and be a good example for others. A good citizen would never do something that hurts others that remain guiltless.

    Indeed a good citizen should be ‘as a city upon a hill…[with T]he eyes of all people…upon [them]’ in the words of the good John Winthrop.

  127. ihateauditions says:

    Jingle mail is not a moral lapse.

    It’s absurd to think that an individual has some sort of moral obligation to a large corporation, beyond what is written in the contracts.

    Anybody who advocates staying in the house is, at best, a kind-hearted fool. But they’re lousy at business.

  128. ihateauditions says:

    @cabalist: It’s absurd to say that a person should take a $100-200k+ obligation upon themselves when there is a legal agreement allowing a way out.

    Both the bank and the man were speculating, and if they’re both competent, they’ll recognize that people generally act in their best interest and protected themselves accordingly.

  129. snoop-blog says:

    @cabalist: read stinking bob’s statement just a couple above yours. greedy bastard? yeah the banks no nothing about greed. loaning money you know people can’t pay so you can profit certainly doesn’t count as greed. banks are full of saints. not one greedy bastard has ever worked for owned or operated a bank. in fact i think all those corporate big wigs are related to the pope.

  130. JustAGuy2 says:


    In CA, where this guy lives, residential owner-occupied first mortgages are non-recourse. He can just walk away.

  131. snoop-blog says:

    @JustAGuy2: god how i love CA!

  132. Me - now with more humidity says:

    California is a non-recourse state, and foreclosures are not judicial foreclosures as in other states. Bush signed a law last month that eliminates the tax penalty on forgiven mortgage debt in loan modifications, which is basically what this is. And foreclosure costs a lender at least $25,000 in legal and other costs, not including the holding costs — and it reduces their ability to lend by the value of the asset or more.

    As for those of you swimming in your moral indignation, shut up. It’s a matter of contract law, and he is within his contractual rights to give the property back to the bank. The bank would take it back in a second if he stopped paying anyway. He said he’s willing to pay the consequences.

    And by the way, the bank loaned on a value they approved — no one made them accept the loan value at gun point.

  133. fbank says:

    Boy is this not controversial.

    The bank issued a contract for a secured loan: pay us this principal plus interest or we’ll take the collateral. He stops paying, they get the collateral. The terms of the contract are met. His credit will be wrecked for a period, they have to go into the real estate business. Caveat emptor, caveat venditor.

    Had he perpetrated fraud, as so many mortgage brokers were actively encouraging people to do with NINJA loans, I’d be more disgusted. Here, both sides just took dumb risks – he by committing himself to a mortgage whose lousy terms he didn’t understand, the bank by issuing a loan any fourth-rate actuary could see was at high risk of not being fulfilled. (But then incredibly risky loans made in the name of huge short-term gain are practically our national pastime: the savings and loan scandal, sky-high credit card defaults, the subprime meltdown, blah blah blah.)

    He is now acting rationally to minimize the damage, just as the bank could have by agreeing to restructure the loan (and if he’d owed them tens of millions of dollars instead of a few hundred thousand, they would have). In fact, that’s what the Bankruptcy Reform Act was: legislation pushed through by the banking industry to minimize the damage to themselves from their own inane lending decisions.

    As for as the effect of his decision on “everybody else,” sometimes the market won’t bear what some consumers bet it would. That’s capitalism. He should sleep like a baby.

  134. Me - now with more humidity says:

    sudonum: you’re either lying or you’re talking about a second TD, a HELOC, private money or an investment property. First mortgages are non-recourse in CA.

  135. Phantom_Photon says:

    The issue here is not that it is OK for a home owner to just walk away from a debt.

    The issue is that corporations should be held to the same standards.

  136. drrictus says:

    morality : real estate :: bicycle : fish

  137. Curiosity says:

    There seems so be a double standard here considering previous articles.

    Do people realize that there is very little difference at times between the situation above and paying $200 to get out of your phone contract?

    It is ironic that no one debates their contractual right to terminate payments in an installment contract with a phone company (which is what most people have), when there is more of a chance that an individual would actually profit (outside of the contract).

    Here there is basically an installment contract for a house and property – and obviously the contract or “promise” is nuanced, complex, and not as simple as I am going to buy the house for X amount but mitigated by terms and conditions. The question is really if the circumstances were foreseeable and if the parties planned and agreed to the actions linked to the circumstances. If I was drafting the contract I would plan it so I “won” either way or at least would be made whole irrespective if I was a business or a person.

    A person is not breaching a contract if there is an option within a contract that deals with the circumstance. Moreover there is not an ethical violation either in that case since the individual would be adhering to the promise he gave.

    It may not be the desirable course of action for the bank but they did agree to it presumably. Realize that businesses are not the end all be all to the economy, that there is a contract for a reason, and it is not unethical to abide by that contract.

    It is just like giving $200 to terminate your phone contract.

  138. thedanza says:

    Corporations sign contracts as well. They can hold true to the contract or they can default on them. If they default, then the lenders have rights to recoup their money in order of lien. They can’t just “walk away” from debt. Lenders have herds of legal teams setup and ready to recoup everything that company has in it. As for stockholders, they take more risk as residual holders, more upside/downside. They are buying future cashflows. If there are no future cashflows, then so be it. Either the investor should have done his/her homework or the company lied and cooked the books.. Kinda like when a home buyer lies about his/her income on a mortgage app, I guess, which is why many of these loans are not payable. Don’t you think something’s just a little fishy when you make $20k a year and get an $800k loan. Nobody is that stupid, I hope….

  139. bearymore says:

    @darkened: By the same logic, buying a huge HDTV on the day before the Superbowl and returning it on the day after the game is ok, since it is within the terms of the contract if the TV was purchased from a store with a no questions asked return policy. It may be legal, but it sure isn’t moral.

    Let’s face it, both parties in this transaction are in the wrong and due to the same reasons – excessive greed and stupidity. The buyer was both greedy and stupid — he bought a condo at the absolute peak of the bubble here in L.A. and expected that the good times would continue to roll. I owned an L.A. rental and sold it the same month our erstwhile buyer bought his condo. Seemed like a pretty obvious move to me at the time. The bank wasn’t stupid — it issued an unrealistic loan, repackaged it, and sold it on the secondary market to investors who thought they were a lot smarter than they actually were. The bank took its profit before the loan, which was obviously not worth the paper it was written on, could go bad.

    In a moral universe, the bank and the customer would renegotiate the terms of the loan, sharing the losses that came from their mutual greed. Unfortunately, we don’t live in a moral universe. The bigger the moral lapse (the bank), the more likely the perpetrator is to get away with it. Nonetheless, two wrongs don’t make a right and walking away from an obligation you took on freely is just wrong, wrong, wrong.

  140. snoop-blog says:

    i use to sell kirby vaccuums, and used cars, and i can personally talk someone into buying something they didn’t want/need. have you seen the tricks they are using today to sell homes? if you are an impulse buyer that got a hard sell from someone like me, i KNOW it wasn’t your fault you didn’t pay for it, because i knew you COULDN’T afford it. did i care? NO! i needed to eat just like everyone else so blame people like me, not the poor guy i talked into getting way over his head because i wanted a commission.

    if you are a first time home buyer, especially with damaged credit, you realize how excited you get when you get approved? its easy to get taken advantage of by these sub-prime scum.

  141. highpitch_83 says:

    I’m trying to understand why the bank won’t re-fi him to a 30 year fixed? That would increase the rate (giving them more profit) and keep him making payments so they don’t have to deal with having to sell the forclosed condo themselves…

    I wouldn’t be surprised if the bank DID offer to re-fi but he would rather go this route?

  142. Lilac says:

    Banks will and do screw people at every opportunity, 3 years ago just before the market went into the toilet, I lost my home due to job loss and illness. I guess that makes me immoral and that I should be forced to live under a bridge for the rest of my life right? Anyway, I owed a bit over 75 thousand on it. Every attempt I made to sell my home failed (the neighborhood was good when I bought my house but then slid downhill. WAMU forclosed and sold it for a more than I owed them – so much for the bank not making any kind of a profit. My credit is now screwed and they got to have a hell of a christmas party that year. The banks have loopholes galore that enable them to literally steal from people yet some people want to be angry at this guy for using a loophole that the banks know is there? Give me a break.

  143. darkened says:

    @bearymore: Why is that immoral? And according to who’s morals? Your morals? Or what moral guideline did you deicde this from?

  144. sirwired says:

    What this guy appears to not know is that after the bank forecloses, and loses money, they are not just going to automatically write off the rest. Yes, the house is collateral, but if the collateral isn’t sufficient to pay off the loan, it doesn’t make that debt disappear.

    Instead, they are going to sue him for the difference. When he can’t pay it, he is going to have to declare bankruptcy.

  145. swalve says:

    @kromelizard: The bank did not issue bad paper to him, they loaned him money. He made a bad real estate purchase. The bank acted in good faith, we don’t know if he did.

    @JustAGuy2: Except that he has another house, so it’s not owner occupied.

  146. JustAGuy2 says:


    The mortgage was issued as an owner-occupied first mortgage, so those rules apply. If he were renting it out, there might be an issue there, but he’s not.

  147. MonkeyMonk says:

    @Indecision: Thanks for the selective quoting of my original message. Since he only mentions that his original bank won’t refinance my point stands.

    Why doesn’t he just refinance with another bank if he original bank won’t refinance?

  148. mantari says:

    Actually, I’m surprised the bank doesn’t foreclose once they determine that the house is no longer a sufficient asset to back the loan!

  149. cortana says:

    I could care less if my neighbor gets foreclosed on… Actually, the neighbor across the street had that happen about a year ago. I’m as happy as can be if my home’s value goes down. I’m not planning to move anytime soon. I love it here. My property taxes might go down. That’d be wonderful.

  150. niteflytes says:

    To those who lament that the OP is “just thinking of himself”…of course he’s thinking of himself, just as I would do. When I make a financial decision I do what is best for myself and my family, not what’s best for the company or the economy. If we don’t take care of our own needs who else will?

  151. lalala1956 says:

    He’s going to get one hell of a tax bill for the amount of principal that the bank lost on the deal. The IRS views this as taxable income so he should expect a tax bill for something like $45,000 assuming an average tax rate of 25%

  152. Me - now with more humidity says:

    LALALA: NO HE’S NOT. Did you not read the other posts before you post your blather? DO you keep up with the news? Bush signed a law last month that eliminates the tax on forgiven mortgage debt. Get a clue, then come back and apologize.

  153. pattymc says:

    We complain about corruption in Washington but those folks come from the same pool we all swim in.

    America is riddled with Me Firsters. We’ve seemingly lost a sense of honor and responsiblity and citizenship, trading it all in for cheap and shiny toys.

    The lenders and this borrower are cut from the same cloth. And to top it off they all cry victim as if they had no part whatsoever in creating this mess.

  154. bdslack says:

    Here’s why the hardworking Americans can’t buy houses they should be able to afford:

    “I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

    Because this asshole that bought a place that he can’t afford is making you clean up his financial mess. And on top of it he goes out and buys ANOTHER place.

    Moral or not, you are going to pay for it and many more.

  155. duffbeer703 says:

    @noquarter: Foreclosures are bad for banks because it’s a hard asset — banks depend on liquidity to stay in business. So they need to sell the property fast.

    When you abandon your home, you’re unlikely to leave it in the best selling condition, so even in the best market, the bank is not getting a great price .

  156. Hambriq says:

    I’m going to let Fat Tire do the talking:

    There are all kinds of shades of gray. Sometimes lying is acceptable. Sometimes being a self-serving asshole is acceptable. After all, somebody before said, “When I make a financial decision I do what is best for myself and my family, not what’s best for the company or the economy.”

    This is true. But where do we draw the line? By this logic, it’s acceptable to steal a loaf of bread because, after all, it benefits yourself and your family. So why not? Probably because we have morals. Most people can agree that, in most cases, stealing is wrong.

    But somehow, in the course of this argument, we have somehow accepted the notion that just because you are willing to accept the consequences of your actions, it renders them free from moral judgment. I don’t get that. If I murder someone in cold blood, knowing full well I will be sentenced to death for doing so, does that mean that I simply took a “calculated risk”?

    Of course not. Why? Because, in most cases, we can agree that killing someone in cold blood is wrong. This, again, is where morals come in to play. Obviously, what this guy did is nowhere close to murder. Many more shades of gray come into effect here. But when we break it down to its most basic parts, we have the following situation:

    The man entered into a contract, that is, he gave his word to do a certain set of actions. He then broke his word because it would be financially beneficial to do so. Let me repeat for emphasis:

    He broke his word for financial gain at the expense of others.

    Regardless of any ‘calculated risk’, regardless of any ‘financial decision’, it all boils down to one basic fact.

    Sure, there are all kinds of shades of gray. Was there great need involved? Stealing a loaf of bread for your family is far better than stealing a loaf of bread just because. True, except the man obviously has enough money to float two mortgage payments at once. Okay, well, what about the entity that he’s screwing over. He’s screwing over a heartless, soulless bank, not another person. That has to count for something, right? Except when you take into account the fact that the bank is going to make the rest of its customers pay for its loss.

    So make all the justifications you want. Again, it just boils down to the fact that the man broke his word for the sake of pure financial gain at the expense of others. Legally, he was within his rights to do so (I assume, but I am no lawyer). Business-wise, he made the right decision (again, I assume, but I am no businessman, and there may be hidden perils here).

    But morally? The guy is a douchebag.

  157. pastabatman says:


    Just about the ENTIRE banking system bought a bunch of CRAP they can’t afford.

    Clean up a financial mess? Watch what kind of clean up goes on with the bond insurers. Why am I pulling this out of nowhere? They are defaulting on the very worthless crap that the banks created out of the mortgages.

    If the US government – for real government because it’s THAT much money on the line – doesn’t bail them out, literally, we go all the way down for serious. You see WE have to straight out pay for this nonsense.

    It seems like you ‘hate’ this guy because he has a face and because he’s a regular person like you and me, you therefore say “well I would never do that and it is wrong”. I hear you, but:

    The faceless amorphous idiots (banks) that are tanking our economy are the big fish I personally focus on.

    Yeah I get it, he bought above his means. Well, he’s a person with flaws etc. These morons ‘running’ the financial world claim to know better. They claim they work in smart, responsible, ethical and profitable manner.

    yeah, right.

  158. cabalist says:

    “But morally? The guy is a douchebag.”

    Here. Here.

  159. cabalist says:

    and. “LALALA: NO HE’S NOT. Did you not read the other posts before you post your blather? DO you keep up with the news? Bush signed a law last month that eliminates the tax on forgiven mortgage debt. Get a clue, then come back and apologize.”

    Jesus tap-dancing christ! I’d hate to see what you would type if LALALA insulted your mother!

  160. Curiosity says:

    @Hambriq: Actually no he is not. You are assuming that the promise was simply that he was going to buy the house. If that was it, the contract could have been formulated in a few pages (at most) and you would be in a limited sense right.

    However, I certainly wouldn’t assume you are a douchebag if you returned a dvd to Bestbuy to exchange for another, and morally this is the same thing.

    Moreover it is equally likely that the promise was that he would act in a certain way not simply that he would buy the house but that he would buy the house under certain conditions, continue paying under certain conditions and if the conditions changed so that he did not pay, then he would abide by alternate conditions. If this is the case, then he certainly is keeping to his promise – not breaking it.

  161. Sudonum says:


    There are “carve outs” in Non Recourse loans where the lender can come after the borrower after he walks away from the home. From this [pre-foreclosure-real-estate.blogspot.com] posting:

    “Most institutional lenders expressly include the non-payment of taxes in their list of ‘carve-out’ liabilities. Other typical ‘carve-outs’ under non-recourse loans include liability for: * Damages suffered by the lender on account of waste, fraud, or willful misrepresentation by the borrower;*”

    And the legal definition of “waste” can include property taxes, home owners association fees, lack of maintenance…….. Insert whatever the lender wants to try to hit him for. Then he will need to get a lawyer and go to court to defend himself against these charges.

    In my case I was found liable for property taxes and association fees, but not liable for lack of maintenance. During the run up to trial they also tried to allege fraud.

    The point of my earlier comment was that this is not as cut and dried as the person who posted this seems to believe. The bank may not just shrug their shoulders and say “ok, you got us”, especially since he indicated that he does have the means to continue to make the payments, but chose not to.

  162. Sudonum says:

    Here’s a few more notes regarding “non-recourse” in CA home loans [findarticles.com]

    “Some state legislatures appear to believe that private foreclosure sales, which often involve the foreclosure of a deed of trust rather than a mortgage, encourage underbidding and lead to larger and more frequent deficiency judgments. In California, for example, lenders are permitted to seek deficiency judgments only if they foreclose judicially. See CAL. CIv. PROC. CODE 580(b), (d) (West 1976 & Supp.1998). See generally Cornelison v. Kornbluth, 542 P.2d 981,991 (Cal.1975) (en banc) (discussing options available to foreclosing lender in California).”

    “An antideficiency statute is designed to make all loans to which it applies nonrecourse or partially nonrecourse, although the statute or the courts may allow for some exceptions. See Westinghouse Credit Corp. v. Barton, 789 F. Supp. 1043, 1045-46 (C.D. Cal. 1992) (holding that California’s antideficiency statute prohibits enforcement, following nonjudicial foreclosure, of guaranty given by general partner of borrower); Manson v. Reed, 231 Cal. Rptr. 446, 451 (Ct. App.1986) (allowing recovery by lender, in face of California’s antideficiency statute, after borrower was found to have engaged in fraud). Compare Osuna v. Albertson, 184 Cal. Rptr. 338, 340 (Ct. App. 1982) (concluding that while failure to pay real estate taxes may constitute waste under California law, state’s antideficiency legislation “may take away the remedy”) with Micuda v. McDonald (In re Evergreen Ventures), 147 B.R. 751, 755 (Bankr. D. Ariz. 1992) (stating that deed of trust beneficiary may sue for waste, physical abuse, or destruction of trust”

    Like I said, Non Recourse is not cut and dried. YMMV.

  163. wasexton says:

    How about this part that he is forgetting. The bank will take the property and sell it…say for 300K. Then, they will pursue him for the balance of the loan, 220K. They can, and should, attach all property. Thus, once he has paid for his new property, he would never be able to see it until the 220K lein is paid. There are other ways than just a stain on his credit to make his life miserable as well. Were it my money that he had wasted on his bad investment, I would do everything possible to ensure that he paid.

    Just my 2 cents.

  164. Fist-o™ says:


    The “extra” money went to the entity which was paid $520k for the condo when he bought it.

  165. Eomiel says:

    Im gonna lose my home due to foreclosure. I have had a steady increase in my house payment over the last 13 years not due to an ARM but because of taxes and insurance rates. Its a long story but I have fought to keep my home and now Ill have to let it go. My credit is bad due to divorce and me paying off everything my husband and I owed. I saved my house from foreclosure when my husband refused to refinance in his name only and was 4 months behind in payments. I have tried to get a lower insurance rate but cant because no one else will insure it due to the poor condition it is in. I am not yet behind in payments but starting this month I will no longer send any payments into the mortgage company (Saving for the move and new home). Im looking into investors buying my home before forclosure is started but not sure due to neighborhood decline if anyone will buy it. So I understand why you wanted out, just know that some of us didnt purchase our homes as investments, but as a place to raise our families. Not everyone has choices when it comes to keeping or just knowing when to quit.

  166. mndrew12000 says:

    Im one of those people considering this. I lost my job in 2006. Laid off after 23 damn years. I had an ARM that was going to go up in March 2007. I refinanced in January for the best loan I could get (my FICO was ruined when I was off work). It was a 9.5% fixed. The values started to drop. I now have a loan worth $30,000 more than my house. I can make payments, but nothing else. I have asked my mortgage company for help……they refuse. I have tried to refinance……no luck. Im now in a debt management program but still falling behind. I screwed up, but did so with help. I’m not a dead beat, but when the financial community won’t listen to crys for help……why should I care about them?