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The way I see it the buyer and the bank made a bet on the value of the house and the buyer's ability to pay. Sometimes bets don't pan out. We're trained to be
by Consultant32452 7y ago
The way I see it the buyer and the bank made a bet on the value of the house and the buyer's ability to pay. Sometimes bets don't pan out. We're trained to be emotional about it, but the bank certainly isn't. To them it's "just business" when they foreclose on a struggling family. Similarly, it should be "just business" if you bail on bad debt.
- jacurtis 7y agoI actually really like that analogy. I can't tell you how many times I have seen comments on Personal Finance subreddit and other places that always criticize banks for being ready to foreclose on a home with no concern for the people that live there. Of course they do, you are just a blip on the bank's radar. The decision to foreclose is a matter of business to them. So why can't borrowers do the same thing and essentially "foreclose" on the bank? Foreclosure is literally just cutting your losses. That's what the banks do all the time, so if they can do it, then why can't borrowers do it too? It is an excellent perspective.
- rhexs 7y agoDoes the bank not come after individuals years later for owed debt via lawsuit? If not, walking away seems like a good idea.
- Consultant32452 7y agoYour asset (home) is sold, and you owe the difference. The bankruptcy court decides a payment plan for you to pay back that difference. Usually you pay back pennies on the dollar. Sometimes you walk away clean.
- sagarm 7y agoIf you have a non-recourse mortgage, the bank is entitled only to the collateral (the house). Several states allow only non-recourse mortgages. https://www.quickenloans.com/learn/the-difference-between-recourse-and-nonrecourse-loans https://www.quickenloans.com/learn/the-difference-between-re...