It seems in today's market that's all we hear. If you are thinking about just walking away from your house, please read on to find out why you should not. I have watched shows where people insist that the right option is to just walk away. Some people even think this is their only option. It is NOT! You may not be able to afford your house anymore or the value of your home is now worth less what you owe, but there is a better option. Walking away may seem like the best option and it may even be the easiest option, but walking away can cause lots of problems.
If you walk away from your house you don't walk away from your obligations. You took on the responsibility of home ownership. Maybe it is not your fault. Whether you lost your job, divorce, medical problems, etc. the banks and the laws don't always care. The bank took a risk on you. They didn't borrow you the money in hopes to own your property someday. The Bank has obligations also and for that they want their money back. If you walk away the bank will be forced to foreclose on your property. Then the bank will auction off your property. The bank could then issue a judgment against you for the difference. They could even garnish your wages to pay back that judgment. Why should the bank lose all the money?
Banks are in the money business, not the Real Estate Business. The lender doesn't want your property. The bank loses lots of money with a foreclosure. The banks money is tied up in a house that sits vacant and is unable to loan more money out while the properties value continues to fall. A vacant property is subject to vandalism, maintenance cost, etc. A Short Sale can result in the bank receiving more for the property than in an auction or post foreclosure.
The community suffers also. The more foreclosures in the neighborhood, the value of the neighborhood drops. Foreclosures are sold at a discount rate and help to flood the neighborhood with homes for sale. Thus creating a larger supply and in an uncertain market the demand isn't very high so prices fall. If it was your neighbor, would you want people running off leaving a vacant property?
All typical Real Estate Transation fees are paid by the lender. Real Estate Agent commisions, Attorney fees, and closing cost are all paid by the lender