Reply #100: Maybe you should take a class

[anigbrowl]

'Never understood why people would get in a position in which they need to sell their home but if they couldn't get the money they wanted for it, they would let it go back to the bank. Out of spite they wouldn't let some one else get a good deal.'

Because if they give it back to the bank, the whole debt is cancelled and they walk away - minus a home, but also minus any obligation to the bank.

If they sell it for less than the amount they owe on the mortgage, all that money goes back to the bank and they are still in debt.

By letting the bank have it, the bank also accepts the loss in value on the property. They can put the title in the safe and hope that prices improve, or they can sell it straight away, get back some of the money they loaned and accept the loss of the rest...which is exactly what happens a lot of the time.

whenever you see a piece of real estate described as 'bank owned' it means the homeowner walked away, ended their obligation to the bank, and the bank is now selling the house in the hope of partially recouping their loss.

Yes, sometimes the smartest thing to do is to let something go for free and accept that you were unlucky and/or made a bad decision. The whole point of saving is to maintain a buffer against such possibilities. Insurance is one kind of kind saving that only pays out under certain conditions. If you don't have to collect the insurance, then you're letting the premiums go for free but at least you had some economic security in exchange.