| > Balloon mortgages I remember seeing those. As far as I was concerned, I thought they were an absolute scam and I can't believe anybody chose one. > It wasn't a matter of holding the property. Most simply couldn't make payments. I know that was the case for most people, but I certainly heard about people that still could, but chose not to, simply because they were underwater. I was trying to understand those people. > Walkaways worked because real estate debt (in most of the US) is non-recourse debt. You leave the mortgage, the bank (or present mortgage holder) gets the property. Debt is settled. Wait, really? This is actually news to me. I had assumed that you would still owe the bank the difference between the remaining balance and the value of the home. ie, if you bought the house for $500K, made payments for a few years, then walked away when the house dropped to $400K value, but you still owed $450K, then if the bank foreclosed, you'd still owe $50K to the bank. |