It's official: We're in a recession.

[AGDee]

Not really. It does destroy your credit score for about 7 years but I've known people to get credit after they foreclose. The only thing the mortgage company gets is the house that is mortgaged. It's not like a bankruptcy where they can seize/sell off your assets to pay your creditors. Part of the weirdness of things up here is that people are openly saying "We're walking away from our house". There's no longer a stigma to it. Once upon a time, going through a foreclosure was an embarrassment, but not these days. People just move and sign over the deed to the mortgage company.

There was a 2000 sq. ft. brick Cape Cod with 4 bedrooms/2.5 baths, built in pool and jacuzzi that sold on the next street over for $43K. So you take your $75K buy out and pay cash for something like that. Sure it needs a little work because it was abandoned so you have to re-finish the basement and make sure there's no mold, but you have time since you have no job, right?

ETA: This has a devastating effect locally. People with valid home sales can't sell a house when those other kinds of deals are out there. Property values are dropping so property taxes are dropping. Localities have less money. There have already been reports on the news that most cities and the counties are cutting back on how much salt they are buying for winter and have announced that some streets will not be salted this winter. That's going to mean more car accidents which is going to increase insurance rates.. a real domino effect. Additionally, it's not good for a neighborhood to have numerous abandoned houses sitting there.