The social stigma of going into foreclosure seems to have decreased in the last few years as almost three-quarters of U.S. households found themselves underwater with their mortgages, and “walking away” from a home became commonplace. However, two recently released figures suggest that homeowners feel a renewed sense of financial obligation to their homes and are more likely to be paying their bills.
Two years ago, a national debate raged regarding strategic default: Was it wrong to walk away from one’s mortgage? Or, when a homeowner is underwater—owing more than the home was worth—is it a purely business situation in which concepts of right and wrong just don’t apply? Some homeowners dutifully kept up with their mortgage payments. [...]
A just-released study aims to get inside the minds of underwater homeowners and predict who is most likely to default on purpose. Certain owners, the study found, are 110 times more likely to strategically default—i.e., stop paying the mortgage even if they have the money to keep paying. This sort of data has got to [...]
This shouldn’t come as news to anyone, but these statistics show just how bad of a time it is to try to sell a house—and also how difficult it is for many homeowners to afford the ones they have.
Brent White, the University of Arizona law professor who is a leading proponent of strategic default—i.e., walking away from a mortgage when it’s in your financial interest—is leading an online seminar for underwater homeowners next week, after a similar seminar recently sold out.
If you’ve been following the underwater mortgage epidemic and the related debate concerning to default or not to default, here’s an epic must-read that’s nearly 5,000 words long—and that has attracted well over 3,000 reader comments.
If your home is underwater—meaning you owe more on your mortgage than the property is now worth—simply walking away may make the most business sense. Considering the ongoing foreclosure mess, it would seem easier than ever to just stop paying the mortgage and enjoy what amounts to “free rent” until the lenders get their paperwork [...]
