Banks may decide to flood Culver City since that area has little upside over the short or long term. Its a cut-your-losses city. But Beverly Hills, SM, MB are still desirable places to live by most people in LA. Holding & slowly leaking shadow inventory will give the banks the most profit in these areas.

Dr HB, any thoughts on the banks handling shadow inventory differently based on the city, its desirability, inventory levels & the banks ability to boost their bottom line over the next few years by not flooding certain desirable areas?

I don’t know how old you are but I remember a time when a good credit rating meant something. It was an asset that had great value and gave you a chance to move up the economic latter.

Starting in the late 80′s credit standards have declined to the point that working hard to have a good credit report means a lot less than it did. Sure, anyone would prefer 800 FICO to 650 but what that difference meant was far greater 30 years ago. In addition, if you did screw up you were REALLY punished credit wise for 10 years. Today, it is more like “Oh, you have a foreclosure? No worries, it is happening to everyone, we can over look it.”

Today I would toss my 800 FICO score in the garbage in a heartbeat if it meant helping out #1.

The law of diminishing returns applies to everything, including FICO scores.

Good for you and I would do the same, especially since it is crystal clear that is what our Government is encouraging everyone to do.

I agree completely with Tbag. I was underwater on my house by ~ $250k in Aug of 08 and tried to modify or convert to a fixed rate on the loan. I was given the runaround (as I’m sure everyone else who has tried to talk to their mortgage company has) and eventually decided enough was enough. I stopped paying on Sept 1 of 2008 and the house sold at auction on June 12 of 2009. We have been renting a house about a half mile from the old one since mid-May and could not be happier with our decision. We pay less than half of our previous mortgage on rent and have paid off all credit card debt. We now have ~ $4000 a month in savings after paying all necessary living expenses. Honestly, I think that I could buy a home on our old street for cash in about 4-5 years if we wanted to, but we are so happy watching our checking account increase each month I feel confident that we will remain renters for the unforeseeable future. It is truly amazing to live a cash-only lifestyle and not have any debt hanging over your head. I know that our credit is trashed for a while, but who cares? It’s like losing your driver’s license when you have no need whatsoever for a car. Does it really matter? Follow your heart but don’t let it interfere with your head. Best of luck in your decision.