Good Advice: Don’t look a gift horse in the mouth, and don’t get an adjustable-rate cash-out mortgage on a house that was given to you as an act of charity. Yeah, the Extreme Makeover house is now going up at auction. Thousands of people volunteered to help build and furnish that house for the deserving family, and they’ve squandered it. Now, I guess, it’s time to go on a TV show about how being on reality TV ruined their lives.
Meanwhile, the BBC has increasing numbers of anecdotes about people just walking away from their mortgages. I’d say it’s unethical, but it’s all in the contract. Maybe it’s a bit of bad faith, but that’s business. And I guess if banks didn’t bother to require down payments, they were willingly taking on the risk that their borrowers wouldn’t have any skin in the game when push came to shove.
So, just walk away. It beats being underwater.