"Jingle mail:" The Awful Sound Of "Voluntary" Foreclosure
(LATimes.com)
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.
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
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.....