It is becoming more apparent that some of the largest defaulters on mortgage loans are people with loans that are more than one million dollars. According to the real estate analytics firm Core Logic, more than 1 out of 7 people with loans that are in excess of one million dollars are delinquent on their loans.
So one may ask, what is it that the wealthy know that many of the “Average Joe’s” don’t? Our opinion is that they really don’t know anything more than the rest of us. We are all well aware of the crisis in the housing market and in the economy. This news is everywhere. So if the wealthy don’t know more than the rest of us, what gives? It is simple…… It seems that those with wealth are making a simple business decision in regards their mortgage loans. They are not going to continue throwing good money after bad. It’s not a matter of ethics or moral boundaries with the wealthy. It’s a simple dollars and cents calculation. It simply DOES NOT make sense to continue investing money in something that is worth far less than what is owed, and that will probably never come back in value to a point to where it makes sense to keep paying. Maybe the wealthy are better at tuning out all of the garbage we here and see about how we should pay our mortgage at all costs, or that it is ethically wrong to default on a promissory note we signed and by signing we agreed to pay back.
I think that most people can agree that if we were to lay our ethical and moral standings to the side and simply analyze the dollars and cents situation of being extremely underwater on our homes then 100% of the time the answer would be to liquidate. When it is nothing more than a business decision it really isn’t a decisions at all, the answer is to walk away.
Does it make more sense to walk away or to continue to throw good money after bad, knowing that the value of the home will likely not ever come back and that we are potentially hurting ourselves and our loved ones by spending every last penny we have to save a house that is worthless?
If you think walking away may be an option for you or you would like information about options and possibly liabilities, please contact us today.