Increasing Foreclosures As Home Values Plunge
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To rescue the economy and encourage consumer spending, the US government is printing more money and increasing federal debt. But the shadow of recession continues to loom large.
Monthly mortgage payments are rising as home values plunge. This double whammy has caused some homeowners to simply abandon their homes and their loans, rather than throw good money after bad.
New tax laws introduced last year have allowed home buyers to walk away from mortgage obligations without a tax consequence. Last time, if bank forgive the shortfall when the house is foreclosed, it is considered as income and hence taxable.
Is it alright for troubled homeowners to walk away when they can no longer afford their homes? I think if you choose to walk away, you have to accept that you’ll pay more for car loans, credit cards and mortgages in the future. At least for a while. I am worried that the hard lessons of greed are not learned if the exit strategy is so easy.
What do you guys think?
