Michael Keigans is "underwater" on his mortgage, owing $80,000 more than his Deerfield Beach house is worth.http://www.miamiherald.com/2010/03/09/1519672/underwater-homeowners-consider.html
Keigans figures it could take a decade or two to recover the lost equity, so he's tempted to walk away, even though he has the money to pay. "Why keep putting money into a house that's going down in value?" he asks.
It's a question being debated in many households nationwide as the housing crunch continues. Some borrowers feel they have a moral obligation to pay the mortgage, but a growing number of homeowners and consumer advocates say walking away could be a smart business decision.
Borrowers have to weigh several practical considerations of so-called strategic default. They risk being sued by the lender for the unpaid mortgage balance for up to 20 years. Their credit will take a huge hit, making it difficult to get a credit card or a car loan. And the poor credit rating could affect future employment and mean higher auto insurance rates.
Some homeowners, unable to strike deals with their lenders, are willing to face those consequences for the opportunity to shed burdensome mortgages.
In Broward County, Florida, where I live, more than half of all residential mortgage holders are "underwater".
Where's our bailout?