The Church advises walking away from your house if you're underwater

[Jarid in Cedar]

I find it very strange that someone would feel the need to hear something from a church leader before they made a move like this. Sure, I understand that these are spiritual leaders but it strikes me as very immature both spiritually and ethically.

SB, I don't think anyone has said it better. Unfortunately is a side effect of teaching "follow, follow, follow". Some people just end up paralyzed into indecision when it comes to matters that are in the gray area of ethics, etc. They waiting for someone to lead them out of the dark instead of working it out for themselves.

[SloanHater]

Really it boils down to 2 questions...

Ethics vs. Reality

Fortunately we aren't in this situation, as we bought our house in 2001. The builder actually gave us money to be able to qualify.

But look at this scenario...

Let's say you buy a house for 300k in 2007. You have a 30 year loan and a payment right around 2k. You make good money.

3 years later...

Your house is now worth probably 160k. You still owe 296k. (Just grabbing numbers out of the backside folks.)

In 7 more years, you are still going to owe 20 years on the house. You will probably owe 220k at least still on the principle. If you are fortunate, the house may be work 170-180k. 10 years into it and you are still 50k in the hole.

The house may never be worth the purchase price. The house will never be worth the 500k you are going to pay with interest involved.

The bank wont work with you because you make good money. Regardless if you make good money, you are involved in a bad investment. Yes...you signed a contract, but people walk away from contracts all of the time.

What do you do?

I can respect someone that wants to stick it out. I really do.

I also don't begrudge the person for walking away. They weren't very smart in purchasing the house for 300k in the first place. But neither were the other 50 million people who are losing their houses. So this isn't an isolated event.

If you file for bankruptcy, and you let the house take your bank back, you have to ride out 7 years of bad credit. But after those 7 years you owe 0.00. The system rewards you for hitting the reset button.

I know multiple people in this exact situation. The Obama housing plan was an epic failure and hasn't helped a single person I know. I talk with my friends, and I tell them that if I was in their situation I would be walking. No questions asked and with no guilt. Just simply doing the math.

Wow. I'm not sure I've met one person who went through this who feels that they scammed the system. Perhaps some did before the change in bankruptcy law.

I guess it is a reward to live in a country that gives you a second chance.

I can see why Elder Cook had to reassure some folks that this is a viable option even if a segment of society places a stigma on you.

[falafel]

I can see why Elder Cook had to reassure some folks that this is a viable option even if a segment of society places a stigma on you.

Just to clarify, I do not believe it was Elder Cook that gave this counsel, but rather the Stake President. Elder Cook also spoke, but I'm not certain of his topic. I don't want to give the impression that any of this came directly from Salt Lake.

[The_Tick]

Wow. I'm not sure I've met one person who went through this who feels that they scammed the system. Perhaps some did before the change in bankruptcy law.

I guess it is a reward to live in a country that gives you a second chance.

I can see why Elder Cook had to reassure some folks that this is a viable option even if a segment of society places a stigma on you.

My oldest brother did this, and he felt like he won the lottery. But I would agree, most folks don't take a great level of pride in it.

I am the idiot who moved my loan from a 30 to a 15 about 3 years ago. Sounded like a good idea at the time, and it will sound like a good idea in 12 years but goodness....it "adjusted" the payment a little. heh.

[myboynoah]

SB, I don't think anyone has said it better. Unfortunately is a side effect of teaching "follow, follow, follow". Some people just end up paralyzed into indecision when it comes to matters that are in the gray area of ethics, etc. They waiting for someone to lead them out of indecision instead of working it out for themselves.

I must be some type of crazy Mormon. I'm with SB (and you, JIC). I don't understand why people need a church leader to help them with such a personal decision. Study it out, examine your motives, pray, and then do what you think is best.

Nevada Mormons sound like a bunch of sheep.

[Jarid in Cedar]

I must be some type of crazy Mormon. I'm with SB (and you, JIC). I don't understand why people need a church leader to help them with such a personal decision. Study it out, examine your motives, pray, and then do what you think is best.

Nevada Mormons sound like a bunch of sheep.

[falafel]

Nevada Mormons sound like a bunch of sheep.

Bighorns, to be precise.

[Jarid in Cedar]

Bighorns, to be precise.

Desert or Rocky Mtn?

[falafel]

Desert or Rocky Mtn?

Desert, of course!

[Indy Coug]

that was my impression too. Food, rent payments, bills, and maybe clothing, but no mortgage payments and all of this help is after the member has gone to their family first.

I know of mortgage payments that have been made with fast offerings. They had to be cleared by the stake president first.

[Moliere]

At least that was the message in my stake this past Sunday.

We had a "special stake meeting" (not stake conference, but essentially the exact same format) this past week. Elder Cook was the visiting authority at the meeting. Our Stake President, a local "foreclosure" attorney, also spoke. I actually didn't attend, but apparently many people came away from the meeting with the specific counsel from the Stake President that it was okay, and even prudent, to walk away from their homes if they were underwater. Apparently this was said and explained while Elder Cook was on the stand.

I have no idea what a "foreclosure attorney" is (thats the term my wife used after talking with friends who attended). I doubt he works for the banks. I get the feeling he's a bankruptcy/loan mod guy.

I know we've had this discussion previously on the board in some format. My wife and I are split on this issue, but thankfully we're not in the position right now where we have to seriously consider it. Two of my wife's friends were "overjoyed" at the news, saying they had really been struggling with whether they could honestly walk away from their homes. One of them is in a real difficult financial situation and has been trying unsucessfully to short sell the house. She felt comforted by this new counsel and felt like a burden had been lifted. The other woman, however, has no problem making her mortgage payments. She just wants a bigger house. She also feels peace about it, I guess.

I really wish I had gone to my special stake meeting now.

Did he address whether or not it is okay to see the Sherlock Holmes movie? I had heard from some people in EQ that the church was advising against it due to the black magic elements.

[Fiyero]

Do you know why i haven't brushed my teeth for 12 years? I've never heard a church leader discuss it.

[byu71]

I have mixed emotions on this, walking away from a mortgage that is. My own personal opinion is that giving general advice like this in church, especially in a church where many people take something a SP says as coming straight from God, is inappropriate. People will take great latitude on eithical behavior and feel they have God's blessing.

What about buying a car and deciding you don't want to make payments anymore. What about borrowed money from a friend or family member. What about a business loan? I know the SP wasn't saying this, but it could be taken as, your committment is only valid as long as it doesn't cause you hardship.

I think advice in these areas are best handled on a case by case basis, based on advice from knowledgeable people, not a general statement from the pulpit.

[Sleeping in EQ]

Do you know why i haven't brushed my teeth for 12 years? I've never heard a church leader discuss it.

16 years ago my mission president was banging this drum, but maybe the teaching is out of style now.

[Indy Coug]

I have mixed emotions on this, walking away from a mortgage that is. My own personal opinion is that giving general advice like this in church, especially in a church where many people take something a SP says as coming straight from God, is inappropriate. People will take great latitude on eithical behavior and feel they have God's blessing.

What about buying a car and deciding you don't want to make payments anymore. What about borrowed money from a friend or family member. What about a business loan? I know the SP wasn't saying this, but it could be taken as, your committment is only valid as long as it doesn't cause you hardship.

I think advice in these areas are best handled on a case by case basis, based on advice from knowledgeable people, not a general statement from the pulpit.

Agreed.