Years ago I made this suggestion to my wife in regards to her family who were in properties worth far less than they owed. Not a good idea to talk voluntary and unnecessary foreclosure with a CPA. For some reason my wife considered that to be unethical and fraudulent. :?

But, if I were in situation where I owed far more on my home than it would ever be worth, I would walk away from the house and let Obama cover my debt to the bank then go get more Obama bucks to guy another house.

Fortunately, we have always been very conservative in our house purchases and have never been upside down. We shop for months, look at countless listings so that when we find the right house at the right price in the right location we can move quickly. We have never purchased a home at more than ~1/3 of what we were qualified to borrow. So far that has resulted in us living in increasingly nicer homes and neighborhoods, making a little money each time we have sold (not more than %30% more than we paid), and allowed us to sell fairly quickly even in down markets. We have never made a killing on a house but we have also never lost money.

We sold our last house in 2008 to a family that really could not afford it. They used an FHA zero down loan and paid us more than asking which we then turned around and gave them for their down payment and closing costs. 9mos later they were foreclosed. It was very sad. The couple that purchased the house out of HUD auction called us to ask us what was wrong with the house. Nothing was wrong with the house. They bought it for $30K less than we paid for it when we had it built and $60K less than we sold it for.

For people who have managed their debt and credit wisely there are some screaming deals out there. IMHO this will continue for 3-5 more years since the foreclosures are just now starting to show up at the high level that is predicted will be the case for many years to come.

My ILs lost their farm to foreclosure due to multiple mortgages and my BIL1 lost his home to foreclosure. He and his wife only qualified with high risk programs that were designed to deliver the American dream of home ownership even to people who have no business owning a home.

My SIL and her DH purchased a home on a low income qualifying program and took the $8K in Obama bucks to pay off some of their consumer debt. She just called my wife last night to complain that her auto loan company was charging her 30% interest because of her low credit score and to ask my wife if they could do that. Um .... SHE SIGNED THE PAPERS of course they can do that. Idiot.

It is only a matter of time before SIL’s house joins the millions already in foreclosure.

If someone is truly and comfortably qualified to own a home they should be able to buy one. However, lowering the reasonable qualifications for a loan is in large part responsible for our current economic situation. IMHO.

We rented for 5yrs in PA and DE and only purchased again when we relo'd back to TX because it was cheaper to buy than rent here.

I have no problem with renting or with buying depending on the situation. As you stated, it really is a business and financial decision.

When I think things are beginning to turn for a long upturn in the housing market, I will take advantage of the foreclosure market to pick up some deals and either flip them or lease them.

I have no problem taking advantage of the financial mismanagement of the banks or other people.

Evil? }:) Maybe, but this is capitalism 101.

Best regards,

DH did this when he divorced.

BM had refused to work at that point, and had convinced him to cash in his entire 401K for downpayment on a very nice 5 BR house, even though they were almost finished paying for the decent 3 Br they lived in. House value plummeted, and the mortgage was way more than it was worth.

If he kept the house, BM & kids would most likely have been living in it, and he would have been stuck with the full payments and no place to live, plus CS to pay. So he walked away. His credit took a serious hit. He had to start over with a $300 secured Credit Card. The only thing that's kept his credit alive is making his car payments. But our discussions with a real estate agent have confirmed that, due to soooo many foreclosures, DH will be able to buy another house 3 yrs after the foreclosure date, as long as he does what's necessary to keep his credit rating good - pay bills on time, minimize use of credit, pay off loans. And we're hoping that the housing market still has low prices at that time. For the moment, we're soon to be 4 in a 2-br apartment (6 on the weekends), but I certainly think it's one of the best financial decisions DH ever made.