Don't let them scare you into making that mortgage payment!
Don't let them scare you into making that mortgage payment!
The media, politicians and corporations are trying to frighten underwater homeowners. Their goal is to scare underwater homeowners into continuing to make mortgage payments when it is against the financial interest of the home owners in many circumstances.
Think about it, more than 25% of homes are currently underwater. If you live in Florida, Arizona, California or Nevada there is a more than 50% chance that your home mortgage is underwater. California alone has more than 2 million underwater homes and there are more than 11 million nationwide. Additionally, home prices are now predicted to fall another 8% over the next year. Just the decrease in home values will increase the number of underwater homes.
You have seen the scare tactics used in the media:
The Dangers of Strategic Default
Walk Away At Your Own Risk
Walk Away the Moral Dilemma
The news media touts so called financial experts who provide consumers all the financial and moral reasons that you should pay your mortgage and meet your obligations. They are doing this for a reason and that reason is not to provide the average American with sound financial advice.
In almost every one of these mortgages the underwater homeowner is paying more in mortgage payments than the renter next door. The banks are making more money from the mortgage holder than if they rented that same house to a tenant, with no added expenses including property taxes, insurance or maintenance. Our politicians and corporations are extremely scared that Americans are going to figure out that it is in their best financial interest to walk away from their no equity mortgages.
What many people don't know is that Arizona, California and Florida are three states that make it very easy to walk away from your mortgage and put thousands of dollars of cash into your pocket in the process. Rather than being in financial turmoil you can change that situation to having thousands of dollars in your pocket and your mortgage gone forever. You would never learn this fact from your politicians or the media.
The media uses the fact that the average American is too busy trying to make ends meet that you will not research the laws for yourself. They also hope that you will feel morally obligated to pay more for your house than it is worth.
The words foreclosure and bankruptcy are always used as negative terms. Corporations and businesses are walking away from their mortgages every day. If they can find that same building for a lower monthly payment and there is no threat at a deficiency judgment they walk away. It is their shareholder obligation to maximize profits to walk away. Not only do they rent less expensive space, but they removed a very large debt from their balance sheet. So why shouldn't consumers make the same decision, to lower their monthly expense and get rid of a large debt? Why is it when a corporation uses the laws of foreclosure or bankruptcy it is considered a good business decision? If consumers use these same laws they have committed a morally reprehensible offense?
Contract law is contract law and it is no different if you are a corporation or if you are an individual. There are no morality clauses in the mortgage contract. The contract does contain specific provisions regarding the banks rights to foreclosure if a mortgage payer defaults, period. The only recourse the bank has is to foreclosure upon the house. In some states the bank can seek a deficiency judgment, but to date that has been rare.
So why aren't more Americans walking away from their mortgages? Americans are famous for our can do attitude. We will try every trick under the sun before we give up or admit failure. Because of the media onslaught many people actually think that if they do what is right by paying their mortgage they will be rewarded. The fact is exactly the opposite; you are literally throwing your money down the drain.