Jill Soli from Atlanta, GA 

Posted on Wednesday, January 5, 2011

You wrote about homeowner walkaway morals and I'm stuck wondering. Maybe finding you is my answer. I got into my loan responsibly in 2001 - fixed 30 I can afford. House repair issues plus market puts me upside down at $50k... I have $25k rainy day cash. My father just passed... and since age 7 always said I would live/retire in his family home. I can't conceive of cleaning out that house and walking away from it. Its condition is bad too, but equal to mortgage or slightly better. His home is in estate ownership right now. I cannot handle both mortgages. I WANT to do the moral thing not be motivated by purely selfish thoughts. I cannot legally state that I cannot meet my primary mortgage. I cannot stomach losing his home. I feel like doing what I want to choose (walkaway upside to go where I want without equity) is equal to moral fraud or breach of contract... I'm sure I'm not unusual. What say you as a disinterested, educated party?

Shari's Response

Dear Jill - First let me validate everything you are feeling. Every thought you've expressed is entirely legitimate, intelligent and honest.

Clearly this dissonance between what your heart tells you ir right and your head tells you may be smart. Its often easier to re-convince your head than your heart. That given, perhaps digging down a bit into the logic, the numbers, will give you a picture of what your heart is telling you - hang in there - and that your head can more readlily accept. Given that I don't have all of the numbers and background information, here are some broadstroke suggestions:

Assign a dollar value to what it miught cost you to walk away; would you be responsible for a deficiency judgement, attorney fees, etc? Would it impact your credit and eventually cost you more the next time you borrowed, etc.

Also guesstimate a dollar value for the revenue you can potentially drum up to cover the costs for your current home via rent should you elect to move into you childhood homes (or rental for you childhood home should that make more sense as a temporary solution).

Take a half hour to look at the indicators in the areas of both these homes; pending sales, existing sales, home prices, foreclosures, and guesstimate when and where you think prices are headed - what your possible return on investment will be.

My guess is you will come pretty close to eliminating what you now perceive as a $50k 'wealth' loss without too much effort. But its your own head youve got to convince. And if you can't, take a look at doing a short sale. If you can reduce your exposure and recover as much as possible for the bank, its the next best honorable alternative. Let us know how it works out.

Good luck!