Financially speaking, Dan and Lori Wann are perfect candidates for a strategic mortgage default.
In 2006, they purchased their first home, a relatively small three-bedroom house in an older Modesto neighborhood, for $305,000. They still owe about $300,000, but the house is worth just $140,000.
"The issue of 'strategic default' has been on my mind a lot lately," Dan Wann said. "It has been said walking away from your home is the most wise decision for homeowners who are upside down on their mortgage, and I am sure that is true."
But Wann won't do it.
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"I find it morally wrong, let alone nothing more than theft, to break an agreement made to pay for a home because it is the best financial decision," he said.
Unfortunately, he said, there are few repercussions for homeowners who default, while those who want to stay get no help and find it difficult to refinance.
Wann has no respect for families who buy a second discount-priced home, then default on their existing home's mortgage.
"Those who opt for the easy road of buying another home on the cheap and then walking away from their first commitment should be ashamed," Wann said. "They are also aiding and abetting the current real estate problem. Sure, they're buying houses, but they're also leaving another empty one behind."
Such defaults hurt Wann's family.
"Every home that is abandoned to foreclosure costs me more money by lowering my home's value, which makes it increasingly difficult to refinance a home that continues to decline in value," he explained.
Nevertheless, the Wanns will stay.
"The question I must ask myself now is this: What is my integrity worth? I don't know the answer in dollars exactly, but it is more than $160,000 at least," Wann said. "I want to be able to say I am a man who stands by my commitments, even when it's the least appealing situation."
Wann said he wants "to be able to tell my children that when you make a promise, you must keep it, even if it means sacrifice."