I feel a little sorry for them but they are not missing the money total of "the whole house". They can sell the house, have a shitty $100k debt, a tale of woe, and hopefully a better idea of how to go about spending money they didn't have.
I feel there are too many people who "borrow as much as they can for the best house they can get" rather than being sensible about their money and using a mortgage as a hedge against paying rent and future rent raises. Some of them make it, some of them don't.
this sounds more like a suicide pact than a plan.
But there's two things here:
1. allowing people freedom to make their own choices.
2. the dangers of borrowing large sums of money
Adding those two together in a free(for some notion of free) market means there will be losers. In this case, the outcome sucks but it isn't like they lost their life in a car crash.
If you start guaranteeing outcomes... that way madness lies.
I don’t understand this point. If you’re paying the mortgage, the bank dgaf. Is there some sort of margin call a bank can claim on a house that is worth less than it was when it was purchased?
Don’t you just pay the mortgage you agreed to pay the bank?
That's not how mortgages work (in the US, anyway). If the value drops, nothing happens, you still have the same house and same mortgage.
I've been underwater twice, in the same house, as prices go up and down over the years. As long as you still like the house and want to continue living there (I did), being underwater doesn't mean anything.
When you have to put an "If" in front of "being underwater doesn't mean anything", then that means sometimes it really does mean something.
For the person who ownes multiple houses and buys simply to rent and flip a profit well I have very little sympathy for them. They are the true speculators.