When you’re this far under water, isn’t walking away the only sane choice?
Jones recently convinced her lender to modify her mortgage. But while that deal lowered her interest rate, it didn’t reduce what she owes and it added past-due payments to her total debt.
Jones now owes $227,000 for her home, which Merced County’s assessor says is worth about $70,000. She wonders why she shouldn’t just default and move on.
“It’s going to be 10 to 15 years before I have one cent in equity,” Jones lamented. “To me it doesn’t make sense to keep feeding and watering a dead horse.”
We can lament the ineffectiveness of HAMP and the lack of cram down, but what would cram down do for her? If a bankruptcy judge had cram down authority, presumably they’d cram this loan down to the very edge of what she could pay (which is probably a number pretty far north of $70K). Then, she’d be stuck in Merced County with a house she still can’t sell, and if she did try to sell it, she’d put it on the market for far more than its worth. If she walks away, she’s still going through bankruptcy, but she’s rid of the house and able to make new choices that include more mobility.