The Associated Press has posted an article about mortgage walk-aways. Tishman Speyer Properties in New York City was facing the same problem that many homeowners are…they were paying more on mortgage payments than their property was worth. The real estate group paid $5.4 billion for an 11,232 unit apartment building and the current value has dropped to $1.8 billion. Tishman did what many homeowners are tempted to do and they walked away from the mortgage. Ironically, Tishman Speyer Properties experienced no repercussions.
Tishman said last week that it was turning the property back over to creditors to avoid filing for bankruptcy protection. In recent weeks, Tishman failed to restructure $4.4 billion in debt, and couldn’t find another buyer, according to a statement from the company.
However, homeowners face a very different scenario; namely, there will be consequences, when thinking of walking away from a mortgage. It may be tempting, but doing so can severely damage your credit score for as long as seven years. Also, the effect can be economically devastating if large numbers of people begin to do it. Home prices will go even lower and banks will give fewer loans and have more bad loans to contend with.
Walking away from your mortgage is never a good plan and we certainly don’t recommend it. If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.
If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447.