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Okay, but no new info
on March 18, 2011
First off, for the price, I was expecting way more information than what is in the book. At first glance, it just seems like a high school student trying to meet a word quantity requirement for an essay: overly large font, even larger margins, etc.
Anyway, for the title's question of "what should you do if you owe more on your home than it's worth?" the author has two solutions: strategic default or keep the house. While somewhat informative, I felt that the author never really came to any specific conclusion or made any statement...other than the legal statement at the beginning saying that the book is not meant to give advice, just offer possible courses of action. Fine. He's clearing himself of legal liability, but then the rest of the book is pretty much non-committal as well. White does a great job in explaining why guilt and shame have no place in the decision about what to do in the underwater situation, and even goes on to tell how the industry uses those tactics to keep people paying their mortgages.
But where the book fails, for me, is that White seems to be pushing the strategic default concept a little too hard. I'm open to trying strategic default, but his explanation of the consequences of doing so is sparse. He has some anecdotal material from people whose credit scores weren't too affected by defaulting and purportedly bounced back in a matter of months, but there is no clear connection between how a default affects one's credit scores specifically. Defaulting on a mortgage could free up money to pay off credit card debt which, in turn, would help your credit score increase again, but what if you're not in credit card debt? Then what happens if you default on your mortgage? How low does your score go? It would have been nice to have more expanation and investigation into this aspect. He seems to not have a clear understand of how the credit reporting agencies tally up your FICO score, and brushes it off to say that it's a closely guarded secret.
White also claims that credit scores aren't as important as the agencies would like us to believe. Great, but there is no real evidence to back it up. The author says that it shouldn't hurt your chances of being offered a job (unless you're in a specific job that requires you to handle financial matters) sinceyou can just be honest at the interview and explain why they'd see a default on your credit report, but if I'm going up against other interviewers (and in this job market, that's a given), then all other things being equal, my credit score could hurt my chances of getting that job.
He also explains in some detail what repercussions there could be to defaulting in terms of the banks coming after you for money that is owed. I would have like a more concise compilation of state laws and the options the banks have for recourse. He didn't mention much about one-action statutes.
All in all, if you're looking for a book explaining what a strategic default is or if you're feeling anxious about defaulting as an option, this book does a great job of explaining what a default is and helping to put emotions in perspective. However, if you already know about dafaulting as an option, then this is more of a lightweight read.