All types of homeowners are thinking about walking away - in this case, the builders of the seven new homes on Newland Ct. in Carlsbad formed an LLC so they'll probably dodge the ruining-of-credit problem. 

Too bad they didn't sharpen their pencil a little sooner on their prices.  When they started selling these in the summer of 2006, they were looking for $1.4 to $1.5 million, and when the first set of listings expired at the end of 2007, they were down to $1.2 million.  But buyer expectations were either dropping faster, or close to non-existent for 3,500 sf homes that back to Carlsbad Village Drive.

The current listings on the Newland Seven are on the range $895,000 to $995,000, but too little, too late.

The lender, United Commercial Bank, is foreclosing on their $6.4 million loan, and had their trustee sale scheduled for today - but it postponed to next month.  The profit was too tight - so their business decision became obvious - they decided to walk too.

The walkaway option will occur to many, and there's not much to stop people.  I think the LLC will be obligated to pay tax on the loss endured by the lender - wasn't the tax relief offered only to those who owner-occupied?

Should the government reverse the decision on not taxing the money lost by the banks by owner-occupiers?  That decision really opened the floodgates, and it's probably too late to turn back now.