From the New York Times this weekend, an article on the Phoenix real estate market and professional investors snapping up properties on the cheap.
Read the last few paragraphs:
As Mr. Jarvis [professional real estate investor] scouts for houses, he sometimes finds a familiar one. In February, he saw a home that one of his brothers bought from a builder in 2005, camping out overnight for the opportunity. With its value now shrunk, the brother was letting it go to foreclosure.
Mr. Jarvis’s daughter Jade also bought a house at the market’s peak — in her case to live in. The other day she asked for advice: should she keep paying the mortgage on something that had declined in value by 60 percent? His conclusion: “probably not.”
“Am I teaching my kids right by letting them walk away from something they made a commitment to?” Mr. Jarvis wonders.
Of course he’s not teaching his kids right to walk away from their mortgage. That is simply insane. People who have to ask themselves these questions aloud already know the answer.
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{ 2 comments… read them below or add one }
How is he “letting” her walk away from anything. I am assuming she is an adult and doesn’t need his permission for anything. Plus, she will suffer the consequences of foreclosing. It isn’t as though she is getting off easy.
I really don’t get this walking away from the mortgage just because the house fell in value when you still have the money to pay. By that logic everyone would default on any consumer product they bought on credit which is instantly worth less than the loan… How did US states end up enacting laws that are so detrimental for lenders? Here in Australia you’d have to declare bankruptcy to avoid paying the mortgage and that is really bad news.