Would Jesus Walk Away from a Mortgage?
My husband and I have joked that our 2006 purchase of a townhome in a blue-collar suburb of Chicago must have been the single transaction that popped the housing price bubble in America. Within weeks after we signed the papers, the housing market began a historic slide that hasn't yet hit bottom.
We paid $193,000 for our property. Today, it is worth $101,000 - if we could find a buyer for it. We are now so underwater on our mortgage, I see coral reefs every time I write a mortgage check. If housing prices stopped declining today and prices began to appreciate 5 percent a year, it would take more than 13 years for the price of our house to climb back to the price we paid for it. Those calculations are far rosier than the cold reality that at middle age, we probably won't live long enough to see the prices return to the numbers we paid in the good old bubble days of 2006.
Eighty percent of the homes on the market in our town are foreclosures. We find ourselves wondering if we could simply walk away from this bad investment. If only it were as easy as dumping a bum stock and writing off the loss.
More and more people have decided that it is. Earlier this year, CBS's 60 Minutes highlighted the growing trend toward strategic default. Last year, nearly 11 million Americans were underwater on their mortgages. That's a whole lot of potential walkaways.
We've already refinanced once, a nightmare that took nearly a year. Even so, we couldn't rent the place for what our costs are each month. We are grateful that we've been able to write that mortgage check each month, which puts us in a better position than many in this economy. But we are aware that a couple of corporate bottom-line decisions could change our financial status overnight.
A strategic default will wreck our carefully cultivated high credit score for at least seven years, but those in the strategic default camp insist that the financial benefits usually outweigh the negatives. It isn't hard to embrace the logic. Freedom from the obligation of home ownership would allow us to rent a property at a far more reasonable monthly outlay than our current mortgage permits. We don't want to sink our money into another house. Not after our current experience. We can't afford it anyway.
I've heard a few in the strategic default camp who have cited Jesus' parable of the ten minas as their rationale for walking away from a bad investment. But the context of the passage has far more to do with kingdom faithfulness and courage than it does with a 30-year fixed FHA mortgage.
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