Walk Away Renée

March 1, 2008

If Renée is the name of an house-value-less-than-whats-owed or can’t-flat-make-the-payments mortgage holder:

http://www.nytimes.com/2008/02/29/us/29walks.html?_r=2&hp&oref=slogin&oref=slogin  

 “I think I could make a case that some borrowers were ‘renting’ (with risk), rather than owning,” Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University, said in an e-mail message.

For some people, then, foreclosure becomes something akin to eviction — a traumatic event, and a blow to one’s credit record, but not one that involves loss of life savings or of years spent scrimping to buy the home.

IOW There’s no real risk to walking away, just a little embarrassment, having to explain to the kids why you’re moving into an apartment.

“There certainly appears to be more willingness on the part of borrowers to walk away from mortgages,” said John Mechem, spokesman for the Mortgage Bankers Association, who noted that in the past, many would try to save their homes.

In recent months top executives from Bank of America, JPMorgan Chase and Wachovia have all described a new willingness by borrowers to walk away from mortgages.

 http://www.npr.org/templates/story/story.php?storyId=18958049


The banks can’t slap too many of the defaulters and walkawayers, because they would reduce the pool of potential and future borrowers too much. After all, there was nothing wrong in the first place with offering these loans. Who could predict the housing bubble, the falling dollar, the effect of the Iraq War on the economy, oil prices, blah blah blah.

Most homeowners avoid foreclosure for selfish, and not necessarily moral, reasons. Foreclosure leaves a large black mark on a homeowner’s credit rating. It might be as long as 10 years before they can qualify for another mortgage.

But Gelinas — a financial analyst and contributing editor of City Journal — argues that if enough people walk away from their homes, then banks won’t blacklist all of them.


The banks can’t slap too many of the defaulters and walkawayers, because they would reduce the pool of potential and future borrowers too much. After all, there was nothing wrong in the first place with offering these loans. Who could predict the housing bubble, the falling dollar, the effect of the Iraq War on the economy, oil prices, blah blah blah.

http://youwalkaway.com

For a fee of $995, the company offers services such as a “protection kit.” For instance, they’ll send a letter that “stops lenders from harassing the homeowner.” They’ll also put distressed homeowners in touch with a lawyer and an accountant to discuss their options. They’ll advise people in the midst of foreclosure how long they can legally live in their homes, tempting people with the prospect that, “You WILL be able to stay in your home for up to 8 months or more without having to pay anything to your lender!”

“Many walkers are going to want to buy houses again some day; and when they do, lenders are going to want to make money lending them money to do so (hopefully requiring a good down payment),” she says.

Note: I’m not old enough to remember when the song when it was new, I wasn’t even born yet.

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