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Comment by paxys | Hacker News Reader

If they had $130000 cash the house wouldn't be under in the first place though.

I thought your house being under is only defined by you owing more than it's worth, not by your ability to pay the mortgage or not.

Technically yes. But if you are underwater far enough, the bank could lose confidence in your willingness to repay the loan and could demand immediate repayment. So if your house is worth $15k less than the outstanding balance and you've got a history of paying on time, they're probably going to let things ride. But if your house is worth $50k less than the balance and they think you might walk away from the debt, they might demand you pay in full, immediately.

In most cases, a mortgage lender can’t ask for accelerated repayment no matter how far underwater you are, unless you fall behind on payments or otherwise violate the terms of your loan. If you’re making monthly payments, they can’t ask for a balloon repayment.

Additionally, a borrower who is paying on an underwater mortgage is much better than a foreclosure where the bank gets an asset worth less than you owe. Every month that you make a payment improves the bank’s position, since your payment is going to reduce the deficit between loan amount and home value.

> But if your house is worth $50k less than the balance and they think you might walk away from the debt, they might demand you pay in full, immediately.

Sorry, US banks can't issue margin calls on conforming home loans.

That is absolutely not true. Being underwater is having a Loan to Value ratio > 100%.

In theory I could have done it for them or some other front. It feels scammy but I am just curious.

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