HuffPost Readers: Have You Walked Away From Your Underwater Mortgage?

01/13/2011 11:47 am ET | Updated May 25, 2011
  • Ryan Grim Washington Bureau Chief, The Huffington Post

Between 11 and 15 million mortgages are currently underwater, meaning the home is worth less than the amount owed on it. For many people in that situation, the smart thing to do might be to walk away from the home. Both the New York Times and Washington Post have recently highlighted the trend of increasing numbers of people making that conscious though difficult choice.

The uptick in coverage follows a decision by Morgan Stanley to walk away from its own properties in San Francisco. Don't call it a foreclosure, though: the firm says it was a "a negotiated transfer to our lenders."

Millions of homeowners are now thinking about negotiating similar transfers.

As Roger Lowenstein writes in the Times: "No one says defaulting on a contract is pretty or that, in a perfectly functioning society, defaults would be the rule. But to put the onus for restraint on ordinary homeowners seems rather strange. If the Mortgage Bankers Association is against defaults, its members, presumably the experts in such matters, might take better care not to lend people more than their homes are worth."

Reducing the principal that people owe on their homes is fundamentally unfair to folks who didn't buy or who aren't underwater. But it may be the only way out of the crisis. And walking away might be the only way to show the banks that the American people mean business.

"If more people default -- out of desperation or through calculated strategy -- this crisis could go on for years, dragging down the chance of real economic recovery. The administration has taken some steps, but they are insufficient," writes Kevin Huffman in the Post.

"We need a way, through the courts or government agencies, to force banks to write down mortgage principal balances. The government and banks could share the burden of ensuring that that banks have every incentive to negotiate independently, but the process must be designed to reduce homeowners' negative equity."

HuffPost readers: Are you considering walking away? Have you already walked away from an underwater mortgage? Write Ryan or e-mail submissions+underwater@huffingtonpost.com.