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Meaning Traynor will walk away from her mortgage and let the bank foreclose on her property. Her adjustable-rate mortgage will be reset in June. And although she can afford the $900 increase in payments, she doesn't think it makes financial sense.
"I am not doing anything illegal. I am not scamming anybody," she said.
When real estate was booming, Traynor bought her 2-bedroom condo for $505,000 after it appraised for $520,000. Although she took out a 100 percent loan, she figured she had some equity. Now, she would be lucky to unload her property for $340,000.
That's a $165,000 loss!
"Everything is negotiable in business," Traynor said. "And so this is just another business decision. I just don't see why this is anything different."
Neither, apparently, do dozens of angry e-mailers on the blogosphere. Calling herself "condoblue," Karen Traynor wrote about her personal decision to walk away from her mortgage on the very popular Los Angeles Times real estate blog, L.A. Land.
Moderator Peter Viles couldn't believe the response.
"Tremendous anger against the lenders, remember the lenders made a lot of money off this," Viles said. He expected readers would be angry with Traynor's decision, judging it as unethical and financially short-sighted. But after he created a poll asking whether it was a decision of integrity or business, "more than 60 percent said the smart thing to do was walk away," he said. |
