Beat the bank, walk away from your house

ORLANDO, Fla. (WOFL FOX 35) - The American dream has for many become an American nightmare, really. So many homeowners are underwater on their mortgages, and now, they're simply walking away from the houses and giving the keys back to the bank. But the hasty decision does have its consequences.

A few years back, Doug Mitchell got caught up in the home buying hoopla. “I was scared that I wouldn't even be able to buy a home here,” says Mitchell.

So he signed a contract with a bank for a home in Orlando he couldn't really afford. “They said you'll have a lot of equity. We'll re-finance you,” remembers Mitchell.

The condo tanked in value. “I didn't expect it to fly off a cliff. It’s an absolute loser,” says Mitchell. So he stopped paying the mortgage, and bought a new house, cheap. He says it's time for his piece of the bailout pie.

So Mitchell's giving his condo keys back to the bank. “They get billions of dollars in bailout money... twice... what about us? We don't get bailed out,” submits Mitchell.

The Kissimmee man contacted YouWalkAway.com and joined the growing number of Americans who are calling it quits. Even if they can afford the payments. The process is called "strategic default."

“It's a financial decision. They don't want to pay on a loan for $400,000 when the home's only worth $200,000,” says Chad Ruyle of YouWalkAway.com.

But there is a risk. “Banks do have the right to go for a deficiency judgement, which would be the difference between the fair market value of the property and the amount owed on the loan,” says John Urban, commercial litigator from the Urban Thier Federer and Jackson Law Firm in Orlando.

And in Florida, banks have 5 years to enter a deficiency judgment. “The bank, rightfully and lawfully, is entitled to get their money back,” submits Urban.

But YouWalkAway.com banks on the chance that banks won't sue the homeowner. “They'd rather settle the lawsuit. Get some money rather than pursue it and possibly having the homeowner file bankruptcy, and they wouldn't get any money,” says Ruyle.

Doug Mitchell's bank has already threatened him with a deficiency judgment to the tune of nearly a quarter million dollars. But he's standing firm, willing to take the hit on his credit, wlling to get sued and willing to brush off the critics that say he's a contract-breaker.

“If the ethical people who thought it was wrong... if it was happening to them, I'd bet you they'd do something different,” says Mitchell.

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On the web:

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