My story,

After a doviorce, I purchased a townhouse in Tampa Fl Jan 1,2006. I hit the very top of the market, paying the most of the whole neighborhood, 171 townhouses, built in 2004. $202K. I put 50k down (25%) and realized very quickly that I was underwater and that bad things were in store for the market. Over the 2007 holidays I made a calculated decision that I was going cold turkey to stop paying my mortgage Jan 1, 2008. Along the way, I paid a lawyer to string out the forclosure process, but I am still just waiting to be booted out. Its now July, 2010 – 2 1/2 years after I stopped paying. I have probably been lucky to be under the radar because the townhouse market is in a shambles.

Please understand, I have NEVER had credit trouble, had the same job with a utility for 15 years and am generally a conservative guy. This was a HUGE risk for me.

This townhouse is probably now worth about $70k. The only way to value them is based on affordable incomes. And even that is too high with all of the available units. Huge numbers are available, many just vacant. HOAs are getting killed without their fees.Why would anyone refinace a townhouse now? Townhouses/Condos are going to be the last things to recover.

The good news is I have stuffed every payment in the bank and have a nice pile of cash to spend once the banks start to open up inventory, take posession of properties like mine, and the market gets somewhere close to market price.

And I have been watching the market like a hawk. I have literally looked at thousands of tax records for homes and seen countless houses that had meteoric appreciation from say 1998 to 2006. One I looked at today sold for 195K in 1999 and rose to over 800K by 2006. Just unbelievable. The aggregate cash that was taken out of these homes is mind boggling. But the market, at least here in Tampa, is no where near close to a market price yet. Until recently I have been scouting waterfront property, waiting for the inventory to hit the market. With the BP disaster in the gulf and the inevitable washing ashore of crude on the beaches, I have put those thoughts on hold. I believe this market has another HUGE shock or two yet to go.

Rents are still very cheap. I hope not to have to sign a lease between now and then but am more than ready to. Half of my things are in storage and I can be out in a day or 2. Its no fun to live like this but there is little choice.

One last thought – To all of the ‘moral hazard’ists… Give me a break! Thats just sour grapes. What business wouldnt walk away from a bad investment? Where were you when the Mozillos and the Barney Franks of the world were screwing the market up? They are who you should focus your anger at. I and many like me WERE doing the right thing, but the game was rigged against us. Now its just survival.