(Source: Wall Street Journal)

One in four Americans is underwater on a mortgage.

Count me among them.

There’s been some debate in academic circles lately about why more financially distraught homeowners don’t just pack up their belongings and walk away. The short list of reasons: moral shame, fear of credit repercussions, and social and governmental pressure, according to Brent T. White, an associate law professor at the University of Arizona and the author of “Underwater and Not Walking Away.” These reasons don’t sway Mr. White. Homeowners should be walking away in droves, he writes.

We never considered purposefully defaulting, but then again we’re not falling down a catastrophic, high six-figure equity hole. After reading Mr. White’s paper, though, we decided to run some numbers, pulling together basic info on our loan, tax bracket and rental prices for comparable homes in our area, and plugged them into this calculator at PayorGo.com. This was by no means a scientific appraisal. I had to enter how long we expected to be in our home, and I really couldn’t answer “as long as it makes financial sense.” So I said seven years. I don’t know how realistic that is — my kids will be about 12 years old then. Apparently, if my home doesn’t rise 1.94% in value over the next seven years, we should call it quits.

We wouldn’t. Although, if I were laid off and unemployed for more than a few months we might have to.

Read Brian R. Fitzgerald’s full account, in “Confessions of an Underwater Homeowner” (Wall Street Journal, December 11 2009).

Developments featured in this article

More Like This

Facebook Chatter