Can You Just Walk Away?

With approximately one in five homeowners “underwater” – owing more on the home than than it is currently worth – some homeowners are deciding to walk away from the house and mortgage, often resulting in the lender foreclosing on the property. A foreclosure is considered one the most serious defaults on a credit history, in the same category as a bankruptcy or a tax lien. According to a spokesman for Fair Isaac Corp., which developed FICO, the nation’s most widely used credit scoring system, for a borrower with pristine credit, a foreclosure could mean an immediate drop of 200 points. With an unfavorable credit score, a borrower may find it difficult to rent an apartment, secure certain jobs, obtain lines of credit, and purchase a house for years to come.