Negative House/Condo Equity? Just Walk Away!

[Catoneinutica]

Real estate blogs in the US and UK in these post-bubble times are chock-full of opinions on what to do if your house or condo has lost value since you bought and your now holding a negative equity bag. The most popular solution seems to be to simply walk away: stop making your loan payments and sit back until the bank comes to foreclose, whereupon you give them the key and say, here's your collateral - have fun with it.

Negative equity is pretty unusual in the generally upward-trending US and UK housing mkts, but it seems to be very common here in Japan, where banks typically depreciate the value of a house to zero after twenty years and condos are considered old and in need of rebuilding after thirty. Yet Japanese folks seem to not question the logic of making the mortgage payments on the condo they bought in 2003 for 65 million yen that's now worth 40 million. Even the owners of Huser/Aneha Disease-infected condos seem to be paying their mortgages.

Hey guys! Just walk away! Let the lenders have their worthless collateral.

[Charles]

Hey guys! Just walk away! Let the lenders have their worthless collateral.

They call this "jingle mail," you walk away and mail the house keys to your mortgage holder.

But that is so 2007. There is a new trend, walk away and drop a match on the house.

[prolly]

actually dropping a match is pretty damn retro in itself - although from a different cause, the bronx did it in the 1970s: http://www.demographia.com/db-sbrx-txt.htm

the Bronx began to burn in about 1970. Some of the fires were accidents, the inevitable result of decaying electrical systems. Many were set by landlords who would then collect the insurance money. Often they would sell the building--whether it was still inhabited or not--to "finishers" who would strip out the electrical wiring, plumbing fixtures, and anything else that could be sold for a profit before torching it. "Sometimes there'd be a note delivered telling you the place would burn that night," one man who lived through the period told me. "Sometimes not." People got used to sleeping with their shoes on, so that they could escape if the building began to burn.