Jim Cramer's suggestion that people just turn in the keys to their homes with negative equity encourages people to try to skirt their financial liabilities and disregards the fact that a home is more than an investment but that it has intangible value. It also ignores the plain reality that mortgage loans involve personal commitments that allow the banks to sue the mortgage-holder for its losses in a foreclosure. While most Cramer advice is just plain bad, some is very dangerous.

 

Submitted: Aug 11, 2007    Views: 386    Comments: 3    Likes: 22   


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Comments Received:

Robert Unger
(Unregistered)

Every small town in America has a mayor, a post office, a McDonalds and a few people who have lost everything by listening to Jim Cramer.

Posted: Aug 11, 2007

David Walsh
David_Walsh

I don't know, it's one piece of advice. Some people did overbuy and they are faced with an ARM that is only going to go up and sinking values. If they can't hold on then their only choice is to walk away. This is the danger of purchasing a house with no money down; there is no equity to cushion you from falling markets.

Posted: Aug 11, 2007

Richard Mac

You are right - Cramer is out of touch. It is a fiction to think that you just turn in your keys and walk away from a mortgaged home. This article in the New York Times speaks about people trying to sell their houses below the outstanding amount of the mortgage just so that they can pay it down. The personal liability remains.

http://www.nytimes.com/2007/08/13/us/13stockton.html

Posted: Aug 13, 2007



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