# House worth less than I paid for it? Why, I might just stop paying my loan! **URL:** \ **Category:** The BBQ Pit\ **Created:** [October 28, 2010, 1:01pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649 "2010-10-28T13:01:53Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [October 29, 2010, 2:56am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/101 "2010-10-29T02:56:29Z")
> [@RTFirefly](#): > > That makes no sense at all to me. It’s a bizarre double standard: you shouldn’t do that if you’re a real person, but IOKIYA corporation. Who says that’s true, though? I don’t think so, and I don’t think most people think that. The banks got a lot of criticism for their role in this mortgage mess, and more recently, BP got a lot of criticism for their actions before, during, and after the disaster in the gulf. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 29, 2010, 6:10am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/102 "2010-10-29T06:10:36Z")
> [@Fear\_Itself](#): > > I agreed that if I did not pay he debt, the lender can repossess the collateral. Why is one part of the same agreement subject to morality, but not another? Is it immoral for the lender to evict my family? In my opinion, it’s the difference between a price and a penalty. If you do something that’s wrong, paying the penalty doesn’t cancel out the fact that it was wrong. To use an extreme example, the law says it’s wrong to commit murder and the penalty for committing murder is being sent to prison. It doesn’t say it’s okay to commit murder as long as you’re willing to go to prison afterwards. When somebody borrows money from a bank they agree to pay the money back with interest. And that’s what they’re supposed to do. The fact that penalties for not following the agreement exist, doesn’t mean those are alternative methods of fulfilling the agreement. And let’s face facts. Chen and Orphanou wouldn’t be thinking about walking away from the house if it’s worth $800,000 and they still owed $600,000. They obviously must owe the bank more money than the house’s current market value. If they owe the bank $1,000,000 and they walk away from the debt and leave the bank with an $800,000 house, then they essentially stole $200,000 from the bank. ---
**Author:** ![Baboonanza](https://avatars.discourse-cdn.com/v4/letter/b/f475e1/32.png) [@Baboonanza](https://boards.straightdope.com/u/Baboonanza)\ **Post date:** [October 29, 2010, 8:33am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/103 "2010-10-29T08:33:37Z")
They can do it if they want to, do you have any doubt that the bank would shaft them or any one of us if they stood to make $200,000? What I find questionable is not that they are considering doing it, but that the reasoning they have put forward just makes them sounds like spoiled brats. I’m also not sure it would actually benefit them. Surely they can’t have a got a mortgage for a $1 million house without some kind of deposit, so they are already down $50,000 to $100,000 + 3 years of payments even if they walk away now. Then how are they expecting to get their next mortgage? Nobody is going to be giving small deposit, low rate mortgages to people who appear to have walked away from their last mortgage at the drop of a hat. At best they would end up paying very, very high rates and at worst not be a ble to get any comparably sized mortgage at all. So basically, they can do it if they want to but I’m pretty certain they’d actually end up worse off for doing it. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [October 29, 2010, 8:33am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/104 "2010-10-29T08:33:45Z")
> [@Paul\_in\_Qatar](#): > > Just by the way, did you see the article in the New York Times about Spanish mortgages? It seems that under local law, [bankruptcy will not protect a borrower!](http://www.nytimes.com/2010/10/28/world/europe/28spain.html?_r=1&ref=world) > > That is the bank gets the house and can garnish your wages for the rest of your life. Makes you realize why we have bankruptcy! Those are the same rules as in Denmark. I never imagined it could be otherwise, and was actually rather surprised when I heard than in the USA you can just walk away from your house, if you find that it has fallen in price and you no longer want to pay the mortgage. ---
**Author:** ![Paul\_in\_Qatar](https://avatars.discourse-cdn.com/v4/letter/p/ccd318/32.png) [@Paul\_in\_Qatar](https://boards.straightdope.com/u/Paul_in_Qatar)\ **Post date:** [October 29, 2010, 8:49am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/105 "2010-10-29T08:49:38Z")
The alternative to bankruptcy is debt slavery. That is why bankruptcy is (oddly OTFOI) a federal, nationwide thing. Bankruptcy gives Americans a chance to start again. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [October 29, 2010, 8:52am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/106 "2010-10-29T08:52:13Z")
> [@Little\_Nemo](#): > > In my opinion, it’s the difference between a price and a penalty. Then we disagree on what a penalty is. Foreclosure and repossession are legal remedies, not penalties. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [October 29, 2010, 9:01am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/107 "2010-10-29T09:01:24Z")
> [@Paul\_in\_Qatar](#): > > The alternative to bankruptcy is debt slavery. That is why bankruptcy is (oddly OTFOI) a federal, nationwide thing. Bankruptcy gives Americans a chance to start again. I think bankruptcy is for people who can’t possible repay their debt. Not for people who just don’t think they feel like it or see it as a financial opportune decision not to. On the other hand, the rules in Denmark has made it so quite a lot of people (about 20% of all home owners) have become [tied](http://en.wikipedia.org/wiki/Stavnsb%C3%A5nd) to their house unable to move (because they’d have to raise money through conventional, higher priced, loans to cover the loss of selling their house), which I suppose helps to make the labour market less flexible. On the other hand, the rules you have in the USA must lead to higher priced mortgage loans (or should have, had not the government stepped in a short circuited the whole capitalist process) since the extra insecurity and cost for the banks have to be covered somewhere – which can only be on the mortgage takers. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [October 29, 2010, 9:15am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/108 "2010-10-29T09:15:12Z")
> [@boytyperanma](#): > > So a person takes a job making 10 bucks and hour with a 20 mile commute. They’ve made an agreement to work for that company. The agreement being they show up for work and do the job and in return they get a paycheck. > > A few years later gas prices have doubled and changes in traffic make it an even longer commute. That person looks at the math and says wow this job isn’t worth it to me anymore I’d be better off somewhere else. I’m going to stop working there. > > Do you think that they have a moral obligation to keep working there? Nope, unless they have a contract [and I have really not seen an employment contract for anybody who isn’t high end management or union] in decades. The only way they would have any moral requirement to continue working is if they were paid for time in advance, and then are responsible for wither working the balance of the time they were paid for, or pay back the prorated amount left so they are then free of obligation. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [October 29, 2010, 9:51am UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/109 "2010-10-29T09:51:21Z")
> [@Captain\_Amazing](#): > > Who says that’s true, though? I don’t think so, and I don’t think most people think that. The banks got a lot of criticism for their role in this mortgage mess, and more recently, BP got a lot of criticism for their actions before, during, and after the disaster in the gulf. But the situations where they face criticism from people who aren’t wild-eyed radicals are extremely rare among those situations where businesses do things that normal people ‘shouldn’t’ but they do anyway. Case in point: it’s been mentioned in this thread that it’s hardly uncommon for businesses - even banks - to walk away from a loan if it serves their overall business interests. Maybe you and others think they shouldn’t do that, but they hardly see one percent of the criticism for it that homeowners like the subjects of the OP in this thread do. There’s something gut-level going on where people - not just you, but people in general - apply different interior rules to businesses than they do to human beings, without any thought whatsoever. And for some reason, those rules are much harder on the human beings. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [October 29, 2010, 2:49pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/110 "2010-10-29T14:49:31Z")
> [@RTFirefly](#): > > There’s something gut-level going on where people - not just you, but people in general - apply different interior rules to businesses than they do to human beings, without any thought whatsoever. And for some reason, those rules are much harder on the human beings. I don’t think it’s that they’re applying different rules to humans versus businesses. It’s a) an apples-to-oranges comparison. a commercial real estate tenant walking out on a 20-year lease of property because a new power center opened up next door offering a better deal isn’t something that is comprehensible to someone like your neighbor stopping paying his mortgage while you’re out slaving away at your nine-to-fiver to pay your bills. they’re just not on the same plane of existence for most people. just like the same way that you have more concern for a neighbor who was a mugging victim than some random person you read about in the news. it’s not that you care any less for the random person, but there’s a proximity there that changes the dynamic. b) the gloat factor. commercial real estate companies reneging on their deals don’t go and brag about it to their local news reporter. sadly, the news media has villified the banks far too much in this crisis, while holding these greedy, materialistic, over-extended keeping-up-with-the-joneses homeowners out as some poor sheep like victim of the predatory wolves, and these homeowners are running with it. it’s bothersome to those who were responsible about their housing choices in a way that a business defaulting on a loan isn’t. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 29, 2010, 3:08pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/111 "2010-10-29T15:08:07Z")
> [@Baboonanza](#): > > They can do it if they want to, do you have any doubt that the bank would shaft them or any one of us if they stood to make $200,000? So? If it’s wrong for the lender to do it, how is it right for the borrower to do it? Saying that the other guy would do the same thing is a weak justification for doing something that’s wrong. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [October 29, 2010, 3:21pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/112 "2010-10-29T15:21:59Z")
> [@Eonwe](#): > > I guess I can see what she means. I’ve never owned property, but I own a car. And, frankly, I think my car has lost more value than I had expected it to. I don’t think it’s fair that I’m still paying a loan on the value of my car _when I bought it_, when its current value is much lower. I’ll just stop paying. > > Or some other things, like the keyboard and music equipment I use for work. They’re all worth significantly less used than they were when I bought them. I guess I should have payed with credit so that I could just stop paying my credit card bills because I’ve already lost $1,000s on the initial value of those loans. Yes, depreciation is normal. That’s not what this woman is talking about. The whole market was in a bubble, everybody was overcharged, for several years. Ten years? About that. She has a right to walk away if she chooses. It’s not a crime, & a good thing it’s not. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [October 29, 2010, 3:23pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/113 "2010-10-29T15:23:52Z")
> [@foolsguinea](#): > > Yes, depreciation is normal. That’s not what this woman is talking about. The whole market was in a bubble, everybody was overcharged, for several years. Ten years? About that. She has a right to walk away if she chooses. It’s not a crime, & a good thing it’s not. absolutely no one was overcharged for housing. what the fuck are you talking about? not only are these things sold in an arms-length transaction, the buyer is the one making the goddamn purchasing decision! how TF can you be overcharged in that case? ---
**Author:** ![Lust4Life](https://avatars.discourse-cdn.com/v4/letter/l/ecc23a/32.png) [@Lust4Life](https://boards.straightdope.com/u/Lust4Life)\ **Post date:** [October 29, 2010, 3:35pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/114 "2010-10-29T15:35:24Z")
There are two reasons for buying a house, to live in as a home or as an investment. If you’ve bought the house as a home then it doesn’t matter what its value is now, its still the same place that you thought worth paying that price for when you bought it. If you bought it as an investmant and the value has gone down then its like any other investment or gamble. You don’t play poker with someone who asks for their bet money back when they find that they’ve held the losing hand. ---
**Author:** ![amarinth](https://avatars.discourse-cdn.com/v4/letter/a/3be4f8/32.png) [@amarinth](https://boards.straightdope.com/u/amarinth)\ **Post date:** [October 29, 2010, 3:44pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/115 "2010-10-29T15:44:00Z")
> [@Lust4Life](#): > > You don’t play poker with someone who asks for their bet money back when they find that they’ve held the losing hand. But when you are playing poker, you got to know when to hold 'em and know when to fold 'em. You are not required to keep betting once it’s clear that you’ve got nothing in your hand. This isn’t the equivalent of asking for money back, it’s the equivalent of saying “I’m out,” dropping the cards and walking away from the table. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [October 29, 2010, 3:45pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/116 "2010-10-29T15:45:38Z")
> [@amarinth](#): > > But when you are playing poker, you got to know when to hold 'em and know when to fold 'em. You are not required to keep betting once it’s clear that you’ve got nothing in your hand. This isn’t the equivalent of asking for money back, it’s the equivalent of saying “I’m out,” dropping the cards and walking away from the table. well they aren’t exactly walking away from the table now, are they? ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [October 29, 2010, 3:48pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/117 "2010-10-29T15:48:11Z")
The bank gambled and they lost. ---
**Author:** ![StusBlues](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@StusBlues](https://boards.straightdope.com/u/StusBlues)\ **Post date:** [October 29, 2010, 3:50pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/118 "2010-10-29T15:50:29Z")
> [@Gangster\_Octopus](#): > > The bank gambled and they lost. In one of [these states](http://boards.straightdope.com/sdmb/showpost.php?p=13078385&postcount=91), absolutely. ---
**Author:** ![Baboonanza](https://avatars.discourse-cdn.com/v4/letter/b/f475e1/32.png) [@Baboonanza](https://boards.straightdope.com/u/Baboonanza)\ **Post date:** [October 29, 2010, 3:56pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/119 "2010-10-29T15:56:32Z")
> [@Little\_Nemo](#): > > So? If it’s wrong for the lender to do it, how is it right for the borrower to do it? Saying that the other guy would do the same thing is a weak justification for doing something that’s wrong. Generally, yes. On the other hand sometimes it’s necessary for self-preservation. Actual physical self-defence being an obvious example, but the world is filled with bastards and so sometimes you have to be the bastard first. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [October 29, 2010, 3:58pm UTC](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649/120 "2010-10-29T15:58:52Z")
> [@Baboonanza](#): > > Generally, yes. On the other hand sometimes it’s necessary for self-preservation. Actual physical self-defence being an obvious example, but the world is filled with bastards and so sometimes you have to be the bastard first. I’m not really up on the threads that have preceded this one, but in a case where a homeowner willfully stops paying a mortgage just because they have negative equity in their house, who else is being the bastard which would justify you being the bastard first? surely not your creditor? all they want is the deal that you willfully agreed to. [Previous page](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649.md?page=5) [Next page](https://boards.straightdope.com/t/house-worth-less-than-i-paid-for-it-why-i-might-just-stop-paying-my-loan/558649.md?page=7)