I should walk away from my house.
It's the smart financial decision. By some accounts, I'm nearly $100,000 underwater on a $242,000 mortgage. House, an asset? Mine's an anchor.
Now a University of Arizona law professor says I shouldn't even feel guilty about cutting ties. Brent T. White writes about how carefully cultivated guilt, shame and fear create a moral double standard. It burdens homeowners, but not banks, with the cost of the Great Housing Crash.
"I think that people should make the decision that's best for them," he told me.
I say that as long as I've still got a choice, I choose my home.
Unlike folks hit by job loss or ballooning loan payments, I'm in no trouble. Not much has changed since my husband and I giddily signed our names to the mortgage. In fact, our payments have dropped along with our property taxes.
Still, the math says I'm stupid.
My home isn't likely to recover its value for nearly 20 years. I could save $400, even $600 a month renting a home just as adorable not far from mine.
By comparison, the financial penalty for handing my house back to the bank would likely be minimal. In Florida lenders rarely come after homeowners for more than their property. Changes to the law mean I wouldn't even owe taxes on the essentially forgiven debt.
I'd lose nothing but my excellent credit score. But assuming I still paid my other bills, White writes that I could re-establish a good rating, meaning above 660, within two years.
So it must be emotion — moral and social concerns — not financial calculation that's keeping folks in their homes, White observes. Otherwise, far more families would have pulled up stakes to rent and reaped the savings, White wrote in his paper, "Underwater and Not Walking Away." Nearly half of Tampa Bay homeowners and one in five nationally now owe more than their homes are worth. But few homeowner defaults are strategic. Most are triggered by job losses, divorce or other trouble. Folks don't seem to leave unless they have to, even when it hurts their financial futures.
Yeah, that emotion part.
My husband, Jeremy, and I moved to St. Petersburg in 2002, when I got my first job out of college. We wanted to pick a community where we could put down roots.
When we could afford a house, we shopped online for months. It took just one day of walking around with a Realtor to choose. We couldn't believe it could be ours: an "airplane" bungalow built in 1922 with a charming half-story on top, set on a tree-lined brick street. Inside, we tried not to look too excited as we pointed at refinished pine floors, a remodeled galley kitchen, a fireplace and a sun room.
I could get comfortable in this house. I could raise kids in this house. I could grow old in this house.
We closed in a month.
It was 2007, past the height of the market, when prices had already started to soften. So we prided ourselves on our great deal. Through an excruciating series of counteroffers, we'd negotiated such a decent price that the bank appraised the house for $13,000 more than we paid. We had instant equity.
The subprime mortgage crisis, the balloon ARMs, the big, poorly built McMansions set in rural sprawl — they had nothing to do with us.
Until the county property appraiser said this year it was worth just $136,000. Until state economists estimated it could take until the 2030s for Florida's housing prices to recover. Until I read White's argument that I should feel perfectly comfortable exercising my contractual option to hand that bad investment back to the bank.
But I didn't buy my house as an investment. I bought a home. I bought a piece of a neighborhood — one with porches, where people walk their dogs and say good morning. Where a Sunday walk to Starbucks may include an impromptu invitation to an afternoon fish-fry. Where Wiffle Ball bases are painted on the street — and one house has the bats, another the balls.
The last thing my neighborhood needs is another empty foreclosure home waiting for a cash buyer.
And I have a choice. Too many homeowners don't these days.
My neighbor lost her house when her business went under, and took her savings with it. She now lives in a rental next door to the old place. She tells friends she's over the trauma.
But when she tells the story, tears well, fresh. Of course she's not over it. Leaving wasn't just a financial decision. She left her home.
White, who's gotten hundreds of e-mails since his paper was published last month, tells me his arguments are academic. He doesn't advise homeowners to walk or not to walk. What he really wants is the government to step in and make banks pay their share.
But if he were in the advice business, well, about that house of mine …
"It sounds absolutely charming, and you clearly love it. And that — rather than guilt, shame, and fear — is a good reason to stay."
Becky Bowers can be reached at email@example.com or (727) 893-8859.