[CurtEgerer]

I have a friend who is considering letting his house go back to 'the bank'. He is one of the many who got himself in trouble with a refinance. A mortgage company purposely over-appraised the house by at least 25% and gave him a 3 year APR refinance loan. The APR went fixed last year and DOUBLED his house payment. He is barely able to scrape together the payment each month. There is no equity in the house. The house might sell for 70% of the outstanding mortgage on a good day.

But that's not his problem. His problem is making this huge payment on a loan that is far in excess of the value of his home - he'd have to do this for the next 30 years. And for what? Top this off with Michigan's depressive economy where RE values are in free-fall and foreclosure starts looking like a realistic option - i.e. tell the mortgage company, 'you guys screwed me by over-appraising the house and writing this scam loan, you try to sell. Good luck, I'm out of here."

He could rent a nicer house then he has for less than half of his current mort. payment and use the other half to pay down debt. What do you experts think of his plan? One attorney he talked to said he makes too much money to file for bankruptcy. Thanks for any advice I might be able to pass along to him.