"I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

"Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I'm not a 'hardship' case they'd apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won't even talk to me until I miss a couple of payments.

"I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

"I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

"I don't really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal."

A tipping point? "Foreclose me ... I'll save money"


If you would have asked me 6 months ago who the fault the 'subprime fiasco' should be on I would have told you 50/50, 50% with the person who bought beyond their means, and 50% with the person who lent them the money. The more and more I read, the more and more I think that banks have always had in mind that they could write down something like this in the end (and away the bigwigs fall with their parachutes), to the point where now I think it is more the banks fault than the homeowners.

I was talking with a friend who works at a VC firm a few years ago and was asking him his opinion on when a startup should start to look for 1st Round/Round A funding vs looking for an angel investor (yeah, I know he was slightly biased but I wanted to know his opinion anyways) and he said one of the best quotes I have ever heard:


"If you owe the bank $100k then you are in trouble, but if you owe the bank $10 million then the bank is in trouble."