Should We Walk Out on Our Mortgage?

Mortgages & Refinancing

Should We Walk Out on Our Mortgage?

Surrendering a home in foreclosure should be the last resort for truly desperate homeowners. Plus, how should you handle politics in the workplace?

The value of our family's home, bought at the peak of housing prices two years ago, has declined so much that we've lost all our equity, and it's now worth less than the mortgage. But the fixed-rate monthly payment hasn't changed, and we can comfortably afford it.

My husband says it would be smart to default on the loan, give the lender our house and buy a similar house for much less. "Everyone's doing it," he says. I think this is unethical. What do you think?

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I agree with you. Your mortgage agreement is a binding contract that you and your husband should honor, especially because you were not tricked by an unscrupulous mortgage broker (as many subprime borrowers were) and you can still afford your monthly payments. Surrendering a home in foreclosure should be the last resort for truly desperate homeowners.

Consider two other things: First, you won't easily get another mortgage if you walk out on this one. Second, the value of your home will eventually resume its ascent.


Politics in the workplace

Our industry has a political action committee that supports candidates who are hospitable to its interests. But I disagree with these politicians on many other issues. My boss is leaning on me and other executives to donate the maximum amount and I'm afraid to turn her down. What do you suggest?

It is unethical for your boss to pressure anyone to contribute to a PAC (or any other of her pet causes, for that matter). Try to put her off with a noncommittal response, such as "I'll give it close consideration," and if she persists, courteously explain your reservations. Or, you might consider making a token contribution to keep the peace.

In any event, tell your company's human-resources staff about the pressure, and they should make it clear to all that PAC donations are totally voluntary.