"Jingle mail:" The Awful Sound Of "Voluntary" Foreclosure

By: Christine Lagorio
Topics: Guest Blogs

(LATimes.com)

Guest blogger Peter Viles is a senior producer for LATimes.com and author of the real estate and housing blog LA Land.

As the foreclosure crisis deepens, banks and lenders are talking openly about one of their worst fears: "jingle mail" – the phrase that describes what happens when a borrower gives up on a house and a mortgage, and simply mails the keys back to the lender and walks away from the mortgage.

Why would a homeowner do such a thing? Because they overpaid for their home, now owe way more than their house is worth, and can't see the point in stretching their finances any longer. The consequences are serious for the borrower: a foreclosure, even if it's voluntary, damages your credit rating for years to come.

But some homeowners are just that desperate.

One of them, writing under the blog name "condoblue," caused controversy on my blog when she wrote to say she was thinking of walking way from a $520,000 mortgage: "I realize I agreed to the deal when I signed the mortgage papers," she wrote, "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."

Surprisingly, most of my readers agreed with her. When I posted a poll asking whether walking away from a bad mortgage is "irresponsible" or "the smart thing to do," 63 percent agreed with "condoblue" – that walking away is the smart choice. And that's a scary trend for banks and lenders.

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by 2lasi February 22, 2011 3:51 PM EST: All the rules have changed in the last couple of months. Lending banks are now being held accountable for the trap they set, borrowing money they didn't themselves have, while using loose and illegal practices in the process. The massive lawsuit against Wells Fargo / Wachovia, Indymac / OneWest bank, Citibank, Bank of America, JP Morgan Chase, GMAC..............can actually, not only put a stop to your foreclosure, but also pause your house payments with no loss to you............
https://sites.google.com/site/sueyourlendernow/home; Reply to this comment


by squeekers123 November 12, 2009 11:01 AM EST: It has become a way of life lately for me to read these comments and articles. We live in a presently-value $360k home - down from $660k at last appraisal in 2006. I sold homes for builders in the Chicagoland area, and made 150K/year for ten years. Husband owns contracting business. Problem - husband took bad fall, racked up tons of med bills. We used equity to stay ahead of hospitals and doctors and a surgery and convalescence on an annual basis for nine years. We paid everyone (or, our house paid everyone). Now, we are upside down $240k. Countrywide was nice enough to lend us $600k back in 2006 to get through another surgery. Boy, do I wish they had said NO WAY! Now we have a 240k debt on a unsecured HELOC! And no chance of ever selling this house in our lifetime for what we now owe (we are in our late forties). Funny, we tried to do it right. Should have just filed BK and told the medical world to buzz off. Ethics? Hmmm, interesting point? Should you stay with an abusive spouse just because you said "I do?" Should I keep paying for "air", with no potential of a decent future just because I signed the note? Or, should I say "my bad - but your bad too Countrywide", call it a day and move on - hoping to recapture the potential college education my kids hope for and expect? Unfortunately, both my husband and I made careers in collapsed industries, paid $1800/month for COBRA, and kept our kids sheltered at great expense. I just don't feel guilty if I do walk away. I feel exasperrated at the little choices we really have. If we could file BK now and cram down that HELOC, that could save us. But, only chapter 13 allows that, and we would not qualify for a repay in our current circumstances. Tell me everyone, what should we do?; Reply to this comment


by dinobo2 June 21, 2009 2:10 AM EDT: Jemler:
accountability on the front end to do their homework and make good decisions?

Me:
You tell me who bought a home knowing the Banks were playing games with or loans.
Where was this home work out there telling people the housing market was about to collapse so hey "Don't buy a home".

Jemler:
Just because your home is going down in value doesn''t mean that it''s not the same home you agreed to purchase. Do they not value their own integrity? They signed the papers. They should stand behind their own commitment.

Me:
This is a very ridiculous remark. "Just because their home is going down." Exactly why to walk away. We are not talking 10-20 thousand dollars get real were talking 30-50% in some states.
Most people buy homes as investments, in hopes to retire in one day or sell and use the money to buy a lesser home when the kids are grown, so that they can retire comfortably. Where is the desire to own a home you will never be able to sell because you owe more then your neighbor. Why own? Why not just rent if your not going to receive any equity.

Jemler:
This whole idea of "it''s just business" is the slimy approach to "you can''t hold me accountable". This mentality is what caused us to lose faith in a man''s handshake, turn to contracts, and now what? How can we ever do business if each party doesn''t uphold its end of the deal. Voluntarily foreclosing is selfish and irresponsible. It''s these types of people- who think it''s just business and only affects them- that are ruining our American economy. I think there should be more severe repercussions against those who simply walk away- such as NEVER being able to obtain credit ever again.

Me:
Accountable? Who is accountable for causing this mess? Who is going to give me back my retirement I lost when the housing price's dropped?
Accountable? Tell it to the banks.
As for credit who cares. You don't get it these people's lives are so damaged the last thing they care about is credit.
They can get there credit again, but where can they go to get their hopes, desire, and ability to try again.

Until you walk in the shoe's of others you should not judge. There are many reasons why people are walking away.

Don't forget the effects of the economy, Job loss's, Business's closings, Loss of retirements, Paycuts etc.....; Reply to this comment

by lassociates February 14, 2008 8:18 PM EST

Disgusts? Accountability? Surely you would be referring to the lenders that provided mortgage loans to people who can not even finance a piece of bubble gum, what about the mortgage brokers who consistently committed fraud to individuals with 5th grade reading levels. How about the real estate appraisers who "fudged" the numbers so the prospective buyer was unaware of the homes true value. How is it that you expect these homeowners to be accountable for actions far beyond their control. Most every real estate law and regulation has been written to fend off brokers who charge 5% in a yield spread, and investors who have "dirty" appraisals performed. Most of these people are simply victims of what the Clinton Administration passed allowing non-conforming mortgage loans, as well as simply being victimized in the fiercely growing loosely regulated mortgage industry. You want disgust? Just think about who is footing the bill for all of these foreclosures after the lending institutions made billions of dollars and are just now realizing why nobody else would loan most of these people money. Accountability? My opinion of accountability is the lending institutions are now being forced to account for the billions of dollars in profit by victimizing prospective homebuyers, and the government failing to stop these criminals from doing so.

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by dinobo2 June 21, 2009 2:28 AM EDT: I agree. After trying to short sale my home and the bank denying every offer a few up to $200,000. I tried to keep my home and told the bank since the home was still in my name, I would be willing to take the home for $225,000,(market value of $175,000)(I owed 225,00 on the first and $120,000 on the second) they (the bank) were trying to sell it for $175,000 while still in my name. They quickly took the home out of my name and sold it to a bank for $150,000 who sold the house for $175,000. If you do the math the bank took a $75,000 loss just to spite me or they made money somewhere on the deal that people aren't aware of.


by lukemullhous February 13, 2008 8:46 PM EST: Everyone knew the rules beforehand. The lenders when the downturn came that the borrowers could walkaway, but, hey, while the bonuses are rolling in, who cares, right? people want to regulate during a bust but never when the cash is rolling in

now that financial institutions are busy with their writedowns, is it any wonder ordinary people aren''t following the same path.

as to never being able to get credit again, that mightn''t be such a bad thing, as its credit that brought us all here in the first place; Reply to this comment


by jemler February 13, 2008 4:23 PM EST: It disgusts me to know that people are voluntarily foreclosing on their property. Where is the accountability on the front end to do their homework and make good decisions? Just because your home is going down in value doesn''t mean that it''s not the same home you agreed to purchase. Do they not value their own integrity? They signed the papers. They should stand behind their own commitment. This whole idea of "it''s just business" is the slimy approach to "you can''t hold me accountable". This mentality is what caused us to lose faith in a man''s handshake, turn to contracts, and now what? How can we ever do business if each party doesn''t uphold its end of the deal. Voluntarily foreclosing is selfish and irresponsible. It''s these types of people- who think it''s just business and only affects them- that are ruining our American economy. I think there should be more severe repercussions against those who simply walk away- such as NEVER being able to obtain credit ever again.; Reply to this comment