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Wednesday, Feb. 6, 2008 | I wanted to respond to the reader who wishes he could have walked away from his home but didn’t because of his sense of honor made him stick it out and try to stand by the contract that he signed. I admire this reader (sorry, I’m assuming the writer is male in this situation) and what he has done, the sacrifices made and the determination he has in the face of his dwindling savings.
However, there is another side. My brother and his wife bought a small two-bedroom condo a few years ago, at or near the peak of the real estate market. They wanted to “get into something” before homeownership got too out of reach. They too financed 100 percent, but as first time buyers. In the following months, my brother was injured on the job and they had a child.
Now, he’s on disability (which allows him to stay home with the kid) and she has to support both of them because disability doesn’t cover much of anything. When the mortgage increased because of the adjustable rate, their house payment more than doubled. They tried to talk to the bank about refinancing, but they owe more on it now than it can be sold for. The bank told them that they weren’t interested in talking and threatened foreclosure.
They went hunting for another bank, family members, anything that could keep them in their house. They were not successful and they finally made the heart wrenching decision to “walk away.” They discovered that they could rent a larger house with a yard for the kid to play in and a garage for less than half of what their monthly mortgage was … before it doubled. They are able to save substantially more than they were before the move.
They did not come about this decision lightly, nor did they want this to be the way it turned out. They truly regret that they were forced to make this decision, but there was no alternative. They tried to “honor their obligations”, as your reader suggests, but it was not possible for them. For him to suggest that people who walk away from their homes are not honorable is insulting. I believe my brother and his wife made the most honorable decision they could for their family.