Just Walk Away

I have to admit to a little queasy schaudenfreude at this spectacle:
(from Calculated Risk)

"Part of one of the challenges is, and we've mentioned this before, a lot of this current losses have been coming out of California and it's -- they've been from people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they've lost equity, value in their properties, and so in a way, we may have -- it's hard to know right now, but we may have seen somewhat of an acceleration problem loans as people have reached that conclusion and we're just going to have to see how the patterns unfold here."

This echoes the comments of BofA CEO Kenneth Lewis last month:

"There's been a change in social attitudes toward default," Mr. Lewis says. ... "We're seeing people who are current on their credit cards but are defaulting on their mortgages," Mr. Lewis says. "I'm astonished that people would walk away from their homes."

In a previous post, CR calculated that somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes will be worth, over the next couple of years. (See Homeowners With Negative Equity)

Here's their dirty little secret. The greatest fears for lenders (and investors in mortgage backed securities) is that "it will become socially acceptable for upside down middle class Americans to walk away from their homes. These are homeowners with the 'capacity to pay, but have basically just decided not to'."

As CR notes:

Wachovia is seeing that happen now. Imagine what will happen as house prices fall this year and next.

Couldn't happen to a nicer pack of greed heads. Oh, don't worry. The 'free' market will bail your sorry asses out soon enough....right?

Okay, if somehow, someway, the free market decides to tell you to shove it (which you richly--pun intended--deserve), I'll still pay a little under a 100 bucks (a year) for some whiz-kid CPA to do my tax returns. I mean, you 'high finance' types must be good for something, outside what you truly exceled at for the last half century -- destroying economies with grossly over valued bubbles, and red-lining poverty districts, making it nearly impossible for the poor or lower middle class to 'move on up'.

Nice work if you can get it, right?

But what the hell, just 'cause it's the season, I'll let you cut my fucking firewood

•  Tips for the noveau destitute

  by DelicateMonster on Tue Jan 22, 2008 at 06:20:25 PM PDT

•  Upside down.

  It's an ugly thing, indeed.

  by Bob Johnson on Tue Jan 22, 2008 at 06:22:15 PM PDT

•  I saw this years ago

  when two people of considerable means whom I knew walked away from a recreational condo without hesitation once the price dropped below the mortgage amount. They could easily have paid it off, but knowing the law and wealthy enough to have their credit rating to be of no consequence, they were unconcerned. My middle class upbringing left me amazed by theit worry-free approach to something that would have given me sleepless nights -- a quick phone call between them and it was done and back to deciding where to go for dinner.

  What alarms the bankers is when this attitude long prevalent in their circles might be trickling down to the rest of us.

  by global citizen on Tue Jan 22, 2008 at 06:31:40 PM PDT

  •  Bingo

    as I say, it's a bit of queasy schaudenfreude...queasy, because I don't know enough to know all the ramifications...but, I must admit, it's nice to see these assholes pucker up a bit from being treated to a dose of their own medicine/attitude.

    by DelicateMonster on Tue Jan 22, 2008 at 06:37:21 PM PDT

•  the change in attitude

  toward default may reflect the fact that borrowers now believe that  neither  their banks nor their employers nor their hometown media nor any other institution  in  society, including the phoney baloney mega-churches they go to, actually give a crap about them.  

  So why should they give a crap about what they might once have seen as an obligation?

  by blue guitar on Tue Jan 22, 2008 at 06:40:04 PM PDT

  •  Much more importantly...

    So why should they give a crap about what they might once have seen as an obligation?

    Might I amend this to say:

    what they might once have seen as a stigma.  I think that's as much (or more) important.  And that's what scares the shit out of the money people.

    by Richard Cranium on Tue Jan 22, 2008 at 07:03:39 PM PDT

•  Financial Strike is possible...

  1. Start a Debtors Union, gather members until critical mass is achieved, say 10 million people.

  2. Pick a date to stop mortgage, CC and insurance payments en masse.

  3. Wait one year or until the financial corporations crumble.

  They can't evict millions and the few they do, have huge network to help them.

  Anyhow, just a goofy thought.

  by dj angst on Tue Jan 22, 2008 at 07:41:35 PM PDT

  •  Oh, no, not goofy. I like this...

    this kind of thinking is what makes a revolution possible.

    by DelicateMonster on Tue Jan 22, 2008 at 07:51:32 PM PDT