Monday, March 17, 2008

Stop Me If You've Heard This Story Before

by Tanta on 3/17/2008 11:03:00 AM

If you can spare a few minutes from contemplating the Great Bear Stearns Two-Buck Upchuck, an amusing tale from the San Francisco Chronicle, via Atrios.

First, the title: "More in foreclosure choose to walk away."

Second, the examples. There are two. The first one is one Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. For some reason, that name sounded familiar, so I asked Mr. Google about it. It came up with an article I posted on a couple of weeks ago from the Wall Street Journal, published February 29, which also makes the claim that "walkaways" are an increasing trend. The WSJ piece gives exactly one example: Sgt. Skaggs.

Note to reporters: one borrower does not constitute a "trend." Also, the same borrower counted twice does not constitute a "growing trend."

Oh well, the Chronicle also has this guy, who won't use his name for obvious reasons:

A Discovery Bay man who asked not to be identified said he is "upside down" on his house by about $260,000. Instead of bemoaning the situation, he plans to capitalize on it.

"I refinanced a couple of years ago and pulled out $100,000 and put in a fabulous pool," he said. "Now I've got this fabulous pool and fabulous house, but it's not worth anything. Why shouldn't I be building equity over the next four to five years instead of playing catch-up?"

The man said he has not made a mortgage payment for five months.

"I'm playing the bank game," he said. "I'm playing chicken with them. I already got them to agree to put (the unpaid) payments on the tail end of the loan. What I'm really pushing them to do is to (adjust my mortgage) for the current market value and write off the rest. I'd love (to have it) lopped down to a $450,000 basis rather than $710,000."

If the bank won't negotiate, he'll walk away, the man said.
If ever there were a case for which a lender would go to the considerable trouble of pursuing a deficiency judgment, Mr. Discovery Bay would be it. Playing this kind of "chicken" on a recourse loan? That's some chutzpah.