Has anyone ever gone through a "strategic default" on their home?

[AlmiraGulch]

 

 

 

Yes, ma'am. It sure does. And the kids are watching.

 

First of all, I don't discuss whether or what I am paying for my mortgage with my children on a regular basis. In reality, if I were to decide to do this, they would never know or care to know. They would know we were moving, and that's all. Who talks about that sort of thing with their kids?

 

If I were to discuss it however, I think it would be a very teachable moment for them. I could show my teenager at least, on paper, how it would be a strong financial decision to do so (because it would have to be if I were to do it). I could teach her that many people make very poor decisions with regard to their own finances because they make emotional decisions rather than logical ones, and I could show her in black and white why this one would be the better route for all of us in the long run.

 

I would never teach my children that it's morally wrong to drown yourself in a bad debt and a bad business deal because of others trying to push their own moral code if there is a legal way to not do so.

[Night Elf]

This has been interesting reading so far. We're doing okay in our house but our neighborhood is shot to heck. We are a one street neighborhood so having several houses empty is a decent percentage. One house stood on the market for over 2 years before selling. The owner tried to hold onto the $170 asking price but reduced it as time went by. It finally sold at $110. I'm not even sure what is going on with the other 3 houses. Driveways are kind of long but I see green tape holding the mailboxes shut and the yards are overgrown. On one house, I can see a large neon green sticker on the garage window. A storm knocked a tree onto the roof, creating a huge hole. DH called the number on the sticker and the hole was fixed within a week. But we have no idea what the status is of these houses. However, we feel stuck here and we weren't originally planning on being in this house for as long as we're going to have to stay in it now. At least it's affordable and we're not upside down.

 

As far as the ethical question of contracts, I just don't see it. Contracts always have a legal out written in, so therefore there is a legal way to end the contract early. It results in penalties, the risk a buyer makes should the contract end early. The contract itself is a business transaction for both parties. Neither do I see the banks as a collection of individuals who are going to suffer from the bank's decisions. When someone opens a bank account, they are putting their money into the hands of a business and are taking the risk that is involved with that. This is why some people don't like banks. I don't think banks look at the little guys as important to their financial decisions in business. People who do business with banks are truly making business contracts with the bank, not the small account holders.

 

I do understand that too many foreclosures bring/keep the market down but I do not believe any families should sacrifice their financial integrity for the sake of the industry. In these times, families have to protect themselves. Goodness knows people are going through some rough times. But I don't think the concept of morality should be placed on anyone at all in this specific business. I really don't like how the concept is applied to specific people either. I hate seeing a person down on their luck, obvously. And therefore, there are people who would encourage the unlucky family to get out and try to save themselves. But to expect a person who is not down on their luck to ride out a bad situation just because they can get by seems rather two-faced. It's like saying that the family should stay put until they become poor and then they can ethically leave. And yet they will then get the social stigma of the sellout because people will judge them unfairly and assume they were in over their heads all the time and shame on them for doing so. It's a no-win situation.

 

OP: I hope it all sorts out. DH and I have talked about selling and buying what could amount to a better deal since some people are selling their houses so low. Of course, we would have to sell low as well. But we have decided to stay and hope that values will reverse and go back up. DH doesn't believe this neighborhood will ever be at the same value as when we bought here in 2005, but they might go up enough to make the profit of a sale be somewhat decent. Well, that's our hope. We need the equity in this home to help us get into a home that will be safer, design wise, as we get older. DH is 55 and there is no way we are going to have any house paid off by retirement. We will always have a mortgage payment so we have to consider that into our financial decisions.

[edelweiss]

It depresses me that this even being debated.

 

Laura

 

 

:iagree: So sad.

[Night Elf]

Morally, what it teaches your children is that honoring obligations and taking full responsibility for the decisions you make is optional, and completely relative to your comfort factor.

 

Well, perhaps morality is in the eyes of the beholder. The very situation you are going to teach your children is immoral is the same situation I would use to teach my kids good financial business. I do not see morals come into play at all into this situation. But this isn't a new concept of differing views in a group of people. We've seen subjects on this board that end up dividing the group into people who apply a moral code to the subject and people who don't. I'm fairly certain that each group walks away carrying some type of judgment about the other group. This subject seems to fall into that category. Basically, our children will really be influenced by our thoughts on the matter.

[Parrothead]

Wow. I've read this whole thread and it certainly had reinforced our decision to homestead and build with the pay as we go model. I'm glad we have this opportunity. I wish many more could also.