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

[Moliere]

Reread. Return. Report.

Dang it, must be the new contacts.

Here's my revised post: That's your fault for making a business transaction with someone in your stake. This is why I never do business deals with Mormons, because they can turn on you in a second when instructed to by higher ups.

[byu71]

Well, if that happened then you would be the proud owner of his old house. Sure you would be out some money, but some of that would be your fault for allowing him to borrow 100% of the equity of his home. This is part of the reason why banks used to require at least a 20% downpayment, to make sure they cover their butts in case there is a default and the house has gone down in value.

Also, they guy would have just destroyed his credit. Sure 7 years later it will all be wiped clean, but good credit is a huge issue for certain things such as background checks for new jobs, getting a credit card, getting a cell phone, etc.

House appraised for $$300,000. Originally bought for $150,000. Had a bank loan of $210,000. I loaned him $30,000, so he has 20% down. House now won't sell for over $180,000. So he is going to walk away with $90,000 he took out of the house with his SP's blessing.

Yes, it was stupid for me to deal with people who have those kind of values.

[Color Me Badd Fan]

A couple that is in serious financial duress during the worst economic crisis of our lifetime is relieved that someone at a fireside advised them that walking away is a viable option?

What was their alternate plan? Exhaust all their liquidity and savings and then get kicked out of the home?

Thank heavens for that fireside, I guess.

Reminds me of the Church's counsel to stay out of debt. Gee, you think so?

Exactly, and I think the reason for the counsel was that the stress on marriages is outweighing the consideration of paying a mortgage on a house that you're underwater on by a couple hundred k. It could literally take another 5 years for people to not be underwater in a place like Vegas and the toll that will take on families is large

[statman]

I can tell you what was done in our stake - and from what I've heard - what's now being done throughout northern Utah County - where there have been a heckuva lot of foreclosures and evictions.

If someone comes to the Bishop for assistance, a needs assessment is done. If there is no apparent way for the family to get their finances to a point of sustainability, instead of throwing good money after bad, they are denying anything but the most basic assitance for those who are clearly in over their heads. They are telling people that the Church will not be supporting them. If you live in Alpine in a $650K house that's now only worth $425K, walk away from the house and move to a 3 BR apartment in Lehi. You can probably afford that.

It is better to walk away from an unsustainable situation than to continue to be dependant upon others/the Church for your survival in an area that you can't afford.

In our ward, we had so many needs assessments to do, that the Bishop assigned them to the High Priests Group. And if we saw no financial alternative, he told us to break the bad news to them immediately. The church is currenly not in a situation to support people who have obviously over-extended, or who are in the unfortunate situation where they lost jobs and thereby lost houses. The solution is for people to start living in conditions where their economic situations ARE sustainable. If that means walking away from a mortgage or a lease, and destroying your credit, then so be it.

I find it very difficult to believe that the Church is condoning 'strategic foreclosures' - where those who can afford to keep paying the mortgages they agreed to pay, choose to simply walk away.

But for those where economic disaster has already hit, regardless of cause, you do what you need to do. They are being told that unless family can bail them out, they need to move on...

[Art Vandelay]

I fortunately live in an area where housing prices have stayed stable and we have one of the best unemployment rates in the nation. With that said, Mormons, and likely all Americans, are notorious for living just at the edge of their debt capcity so I have had to make decisions regarding what assitance to provide. I will sometimes pay for a mortgage bill one or rarely two times if I feel that it will help the person through a rough patch. I tell everyone in advance the Church is to help sustain life not lifestyle. I do try and be very generous and even offer food from the Bishop's Storehouse and I will always pay for counseling through LDS Family Services if asked.

Taking off the bishop's hat and stating my personal opinion. I would have trouble walking away from any debt that I owed. I can count on one hand the number of times in 18 years of marriage we have ever carried a credit card balance (generally when in school and had unexpected car costs). My father was raised in the depression and always preached using prudence and being conservative in all financial dealings. So I can't imagine myself counseling others to do what I wouldn't feel comfortable with myself.

[pellegrino]

I find it very difficult to believe that the Church is condoning 'strategic foreclosures' - where those who can afford to keep paying the mortgages they agreed to pay, choose to simply walk away.

I doubt that the church is counseling them to do this either, but from an economic standpoint it's the right thing to do. People and businesses break contracts all the time because circumstances have changed and no longer favor them. I wouldn't judge anyone who walked for strategic reasons. They have nothing to gain by staying.

[TripletDaddy]

another thing that puzzles me about not walking away.....the creditor retains the underlying asset, the home. So if the buyer walks away, the buyer destroys his or her own credit, the creditor retains the home plus any money paid until that point, and can then re-sell or rent the home.

[Viking]

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.

Did he tell you his Mick Jagger story? I heard it firsthand from him in 1985 in mexico city.

[Viking]

I am in this very situation. Bought our home in Nov. 07 for 290,000 with $30k down. We still owe 255,000 and my mortgage payment is $2045 which I can afford to pay. A house identical to mine is for sale at $150,000 right across the street, and my neighbors house is now a forclosure and is signifigantly less, even though it is a larger home.

I have had people tell me to walk away, and others tell me you havnt lost any money until you sell the house.

I could seriously rent twice the house with a pool, for the same price as my mortgage. But I choose to stay where I am.

Am I stupid for doing this? Possibly. It is very doubtful I could ever get out of this house, and it is definatly not the home of our dreams, but its the bed I made, so I'll lay in it.

You are honest. Keep paying as long as you can. I understand that if hardship comes, the situation changes but for you shitheads who walk away from your homes and you are able to pay, do us all a favor and get the hell out of the US-of-A.

[statman]

another thing that puzzles me about not walking away.....the creditor retains the underlying asset, the home. So if the buyer walks away, the buyer destroys his or her own credit, the creditor retains the home plus any money paid until that point, and can then re-sell or rent the home.

But if the house is dramatically underwater, the bank could potentially lose a lot. Our home originally sold for $650K. An investment group offered a short sale at 50%. They bought it for ~53% ($355K). The bank ate almost $300K on the deal. We offered $407K the day they closed on the short-sale and closed with them 10 days later...

[statman]

You are honest. Keep paying as long as you can. I understand that if hardship comes, the situation changes but for you shitheads who walk away from your homes and you are able to pay, do us all a favor and get the hell out of the US-of-A.

My wife and I seriously considered a strategic foreclosure. We rented a home in Lehi for just over 2 years, as we made payments on a $525K home in the Chicago area. It sucked. With the ridiculous taxes of the area, it amounted to almost $4000 a month. After tax. For 26 months. Before we sold it at a $100K+ loss.

It sucked. But we were able to make the payments, so we kept on doing so.

We paid a lot less in tithing for those years though...

[clackamascoug]

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

Our Stake/Ward helps with 4 payments. If the members can't get control of the situation within 4 months, they're on their own. Single Sisters over 50 have a lot more room, but not a blank check.

[SloanHater]

You are honest. Keep paying as long as you can. I understand that if hardship comes, the situation changes but for you shitheads who walk away from your homes and you are able to pay, do us all a favor and get the hell out of the US-of-A.

Wow.

I don't understand this type of logic? If someone is willing to take the consequences of walking away from a home, how does that make them dishonest, a 'shithead', or less-American?

Your flawed logic should also be applied to healthcare. Suffer for as long as possible before seeking treatment. It is the 'honorable' thing to do.

[old_gregg]

abuses of chapter seven regulation make it significantly harder for those who actually need/deserve to file.

[Donuthole]

My wife and I seriously considered a strategic foreclosure. We rented a home in Lehi for just over 2 years, as we made payments on a $525K home in the Chicago area. It sucked. With the ridiculous taxes of the area, it amounted to almost $4000 a month. After tax. For 26 months. Before we sold it at a $100K+ loss.

It sucked. But we were able to make the payments, so we kept on doing so.

We paid a lot less in tithing for those years though...