Walking away is no moral issue

I get a lot if people asking me if I feel moraly wrong walking away from my mortgage. So in this post I will let you decide if I should feel wrong about walking away.

The facts:
Purchased the townhome in 2005 for $252,000.
Down payment: $50,000
Interest paid to date: $12k a year @ 5 years equals $60,000
Total cost to date: $110,000
Current value of Townhome: $90,000 ($112,000 upside down of current mortgage)($162,000 underwater from original purchase price)


At the middle of 2009 I asked the bank for a loan modification and was told twice that they wouldn't do anything until I miss my payments. I have given them over $100,000 in 5 years and they aren't willing to help me out after they recieved a bailout from the government! If this was any other business wouldn't they work with a client that has always paid on time?

When purchasing the house I signed a contract stating if I do not pay, they will get the house. Isn't that fullfillment of contract?

So you tell me, is it wrong to walk away from your underwater home? Sounds more like a business decision, like when the banks decided not to work with me and many others.

Financial Plan = Save, Foreclose, Buy & Save again

Today's real estate market may become the best thing that has happened to me personally. No, I haven't made millions from flipping houses or have a positive cash flow from hundreds of rentals. I am in the same position that 81% of Las Vegas homeowners are in. Underwater, upside-down, S-O-L, whatever you want to call it. I owe more, signifigantly more, than my house is worth. Which leads us to our plan : Save, Foreclose, Buy & Save again.

We are going to let our house go into foreclosure and in the process, save the money we would otherwise be paying toward the mortgage. When the bank finally decides to foreclose on our home, we will take our savings and rent for six months while we look into buying a 2 or 3 bedroom condo with "CASH" with the money we have saved and supplemented with a little from a 401K loan if needed. From that point on we plan to live debt free. We will have no other debt at that time and look forward to being able to actually keep most of what we make without having to give it to the banks.

I know we may recieve a lot of comments/posts below telling us how wrong we are for doing what we are doing, but I also believe we will receive more comments by actual people in the same situation who are sick and tired of throwing money away.

We did not come to this decision lightly. In order for us to go through with this, we have had to completely change our mindset that our credit score is the most important thing. We aren't bad or irresponsible people if we CHOOSE not to pay our home. We have tried several times to work out a loan modification/principal reduction with our bank but have had no positive response. The banks will not work with us until we miss payments and mess up our credit. Once we miss a payment they will be calling to work something out, however by that time, why would they think we would want to work something out if our credit has already been hit? Why would we want to hold on to something so far in the negative after we have already took the hit on our credit.

We started to review our finances, assets, etc., as a business. We believe it would not be "Financially Responsible" to continue throwing money away on an asset that according to FACL findings, the average mortgage borrower in Southern Nevada will break even by 2020. We are continuing to pay all of our other responsibilities and do not plan to file bankruptcy. We no longer feel "bad" or "wrong" for what we are doing. We are giving the bank back the property that they would receive if we didn't pay in the first place. Isn’t that considered a fulfillment of contract. Just as if I do not pay them, they have the right to mess up my credit score.

I have created this blog to record our feelings and the process that many of us are unsure of during this time. I look forward to the feedback that everyone can provide.