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E-mail StoryHomeowners walking away from mortgages
| Thursday, Mar 6 2008 11:36 AM
Last Updated: Thursday, Mar 6 2008 11:28 AM
Editor's note: There have been stories across the country of people walking away from homes they can no longer afford. Here's what's happening locally.
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In Bakersfield also, there are tales of the unrepentant homeowner who breezily strolls away from mortgage obligations.
This week, a man facing higher monthly payments when his adjustable rate mortgage resets approached Matt Kennedy, the managing partner of a credit repair company, Innovative Credit Solutions, with an audacious plan.
“He doesn’t have any value in his house,” Kennedy said. “And he’s thinking his best option is just to walk away from it.”
Since his mortgage will not reset until June, the man told Kennedy, he would simply buy a less expensive house now, while his credit is still untarnished, and abandon the first.
“I told him not to do it,” Kennedy said. “I told him to talk to a loss mitigation specialist (with his lender).”
But while Kennedy has met a few others who viewed homeownership in a similar way, most would much prefer to keep their mortgages and their homes, he said.
At Elite Property Management, a Bakersfield property management company specializing in single family home rentals, owner Kristi Smart has seen a number of clients who lost homes to foreclosure.
Some, she said, did make a conscious decision to stop struggling to meet the monthly mortgage payment. But rather than glibly dismissing the concept of homeownership and financial responsibility, most were making a rational financial choice, Smart said.
“What happens when all your tangible cash each month is sucked up by paying your mortgage payment?” Smart asked.
Many worried about emergencies, or buying shoes for their kids. And even those who had bought homes with no money down had made financial investments in their home, such as furniture, landscaped backyards, decorations and other improvements, she said.
“I don’t think there’s a disinterest (in homeownership),” Smart said. “It’s a gigantic decision to walk away from something they made that commitment to.”