MEMO TO THE BANK: TAKE THIS MONEY SUCKING HOUSE AND SHOVE IT!
Go ahead and wreck my credit for years to come. I’m walking away, no matter what says the Washington Post.
There are breaking points where homeowners have a higher default intention:
– Negative equity $50,000 – 20 percent of borrowers don’t feel defaulting is morally wrong.
– Negative equity $100,000 – 40.69 percent of borrowers don’t feel defaulting is morally wrong.
– Negative equity $200,000 – 59.15 percent of borrowers don’t feel defaulting is morally wrong.
– Negative equity $300,000 – 63.29 percent of borrowers don’t feel defaulting is morally wrong.
DEFICIENCY JUDGMENTS IN SHORT SALES
Absent express language in a short sale agreement releasing the lender’s right to a deficiency judgment, the lender has six (6) years to file suit against the homeowner for the difference between the loan balance and the sale price states an article on Deficiency Judgments in Short Sales.
At no point in United States history has a city ever survived negative equity for more than a few years. Las Vegas is not going to be the first U.S. city that sustains underwater homes. Eventually everyone will get rid of their negative equity via short sale, foreclosure or appreciation, thus, Strategic Default is Inevitable.
IT’S NOT OVER YET
There are 2.5m households going through the foreclosure process right now and the number of homes with at least one missed mortgage payment sits at 5.4m, according to Capital Economics.
By the end of 2011, an additional 3m homes will be in the foreclosure process, making the shadow inventory of potential REO properties at 5.5m. Some of these homes will inevitably avoid a foreclosure. But for many, the foreclosure process may be the only option and, eventually, those homes will get sold in the REO process states Housing Wire.
IT HELPS TO BE GOOD AT MATH
As an interesting side note, poor math skills contributed to the housing crises, see The Economist.