The moving truck pulled away from the curb, loaded with Wallace Farmer's possessions. He locked the front door for the last time and left town — clutched by a long-simmering anger that finally gave way to relief.
Farmer didn't sell his Baltimore house, worth far less than the $180,000 he paid in 2006. And he didn't lose it to foreclosure. He walked away from the rowhouse and the mortgage. It's the bank's problem now.
"These lenders, they don't care about the community. They care about their shareholders," said Farmer, 42. "I'm my only shareholder, and I have to look out for myself."
Hundreds of thousands of Americans — perhaps as many as one in eight borrowers behind on payments in recent months — have done the same, researchers estimate. Criticized by some as immoral, hailed by others as righteously logical, these "strategic defaulters" have launched a national debate about the right and wrong of personal finance in the wake of the worst housing slump since the Depression.
The homeowners walking away are trying to cut their losses, financial and emotional. But their decision also ripples outward, critics say, undermining neighborhoods, hurting banks and putting the struggling economy at risk.
Farmer, who is emblematic of the boom and bust, has walked away from three Baltimore homes.
While working as a program specialist for the federal government, he noticed the home prices in Baltimore in 2005 — rapidly increasing, but much lower than in the District of Columbia — and wanted in. He was so sold on the idea that Baltimore was destined to gentrify that he moved to a rough neighborhood to be an urban pioneer and bought another city home as an investment.
A year later, unsettled by crime, he rented his place out and bought another city property to live in — no money down — with his loan officer's encouragement.
Then the market turned. One problem after another with his rentals drained his savings, and he couldn't sell them — a bind many other starry-eyed new investors found themselves in. He tapped his retirement account and borrowed from a relative to pay the mortgages, he said, but could no longer afford the payments and sent the keys to the lenders in 2008. At all costs, he thought, he would hang on to his beautifully rehabbed rowhouse.
Farmer changed his mind by degrees. After one break-in and another attempted burglary, he didn't feel safe on his new street in Harlem Park. And he was shocked when an appraiser told him last year that the property he'd bought for $180,000 — and had appraised for more than $200,000 at the time — had sunk in value to $70,000.
It's almost certainly worth less now. Nothing sold in his neighborhood for more than $28,000 in the first half of this year. And at least five other rowhouses on his block are vacant.
Farmer, who grew up poor in Detroit, fell into bankruptcy in his 20s and then scrabbled his way into the middle class. Now, he felt the weight of the mortgage debt dragging him back toward square one.
With his $68,500 salary, he could manage the monthly payments. But he brooded. What sort of retirement could he expect now? How much money would his home gobble up in unforeseen maintenance and repairs? Would it ever be worth what he paid for it again?
"I couldn't sleep at night," he said. "I thought I was about to have a nervous breakdown."
He asked his lender, Chase, for a loan modification and got a trial offer for lower monthly payments this year after a lot of negotiating. He also got scary legal notices and thousands of dollars in late fees because, he says, he was instructed by representatives to stop paying for two months if he wanted to qualify for the modification.
He says that experience made him feel like even more of a sucker. And he was sick of it. So he started packing. When he looked at his original loan documents and saw he was on the hook for $360,000, interest included, that cemented his decision.
"That's when I said, 'Yeah, I gotta go,'" he recalled. "It's not even about me being able to afford the mortgage at this point. It's just not good business sense for me to stay."
A Chase spokesman said the company approves modifications "whenever possible to avoid the damage that occurs to a neighborhood when a borrower walks away or loses a home."
"The bottom line for us is that we offered him a modification to help him with his payments, and we're disappointed that he didn't accept it," said Tom Kelly, the spokesman.