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LA Times: More 'strategic defaults'

By Anonymous

From Alana Semuels at the LA Times: More homeowners are opting for 'strategic defaults'

Joseph Shull, a 68-year-old marketing professor, said he's planning to walk away from the town house he bought in Moorpark in June 2006.

"I'm angry, and there are a lot of people like me who are angry," he said.

He purchased the home for $410,000 and spent $30,000 renovating. Now the house is worth around $225,000.

Shull admits he overpaid for his property. But he said it fell in value in part because of "regulatory mismanagement."

"The bank stabbed me, but at least I got in a pinprick back," he said. "This is the new economy. The old rules don't apply any more."

This article is similar to David Streitfeld's article in the NY Times last month: No Aid or Rebound in Sight, More Homeowners Just Walk Away

I'm not sure if walking away is becoming more common or if there is a bubble in walking away articles. However there are consequences to walking away - possible tax consequences and some loans are recourse (people walk away from the house, but not the debt!). Perhaps the HAFA short sale program would be a better alternative for many homeowners ...

Full post as published by Calculated Risk on March 17, 2010 (boomark / email).