lasvegasmtg.com Report: Walking Away from your mortgage in Las Vegas, Nevada might make sense based on a recent article that was written by ROGER LOWENSTEIN for the New York Times titled "Walking Away from your Mortgage". I had previously written a blog on the "Foreclosure now being socially acceptable" and in the article I pointed out that the large numbers of foreclosures is expected to reach 12 million by 2011 and this factor alone will change how the stigma will be lost like a grain of sand on a desolate beach. New York Times points out that more and more people are walking away from their mortgage not out of rising interest rate Arm's but because the home is just upside down! This is a new phenomenon that frankly starting to worry some bankers and was discussed by John Courson, president and C.E.O. of the Mortgage Bankers Association with Wall Street Journal that there was a moral obligation to pay your mortgage.
First American Corelogic currently shows that 65% of all home in Las Vegas, Nevada are underwater as of November 2009. The reason the remaining 35% of the homes that are not underwater were either paid off before the foreclosures started in 2006 or are the 46% of the current homes bought with cash!
The decision to walk away from a mortgage is now a economic decision and it is routinely being done by large banks. The article pointed out that Morgan Stanley stopped making payments on 5 office buildings in San Fransisco. Morgan Stanley bought these properties when the value was at its highest point. Now that the values have dropped, they made the business decision that it did not make sense to pay on a property that will take 20 to 30 years to recover the properties previous high. No one has stated that Morgan Stanley is "IMMORAL" but the consumer is "IMMORAL" if they make the same business decision.
While it assumed that there is a moral obligation for the community and their neighbors for the actions taken when you walk away from your mortgage, the reality is, this is not a "immoral" action, but is a economic decisions and the same decision that banks do every day. In a economic model, a bond trader, stock investor, or commodity trader, are speculating on either the price is going up or down and their actions have an effect on others that had no vested interest in this speculation. Companies being closed because they are seen as insolvent because the bond ratings declined, or stocks fall due to a rumor, or gold or oil rising in price due to the speculator and not on actual market conditions.
The article points out that the borrower walking away from the mortgage has a moral obligation to the bank to pay back the loan. This was based on past relationship with the banks when they held the loan for the 30 years and did not trade it like a baseball card from one servicer to another. A borrower signs a promissory note to pay back the loan, the penalty if you did not pay back the loan is you surrender the property. Banks wants to maximize their profits, while they try to shame homeowners from walking away from mortgages in Las Vegas, Nevada. If the banks owned the the same properties they would have already walked away! This is a must read for everyone and has created a large debate on television and radio.