Posted on 05/04/2010 2:12:30 AM PDT by jerry557
The number of homeowners deciding to throw in the towel even though they can afford to pay their mortgage is growing, according to two new industry studies. Still-falling property values are pushing more homeowners underwater, and the social stigma attached to foreclosure is steadily eroding as delinquencies become almost commonplace – such factors are giving rise to so-called strategic defaults.
Researchers at the University of Chicago and Northwestern University found that the number of homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage, has dramatically increased compared to just a year ago. The percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, compared to 22 percent in March 2009.
According to their study, one likely reason for this growing trend is the increasing perception that lenders are not going after borrowers who walk away. In March 2010, homeowners surveyed said there was just a 54 percent chance that a lender would pursue them if they default on their mortgage.
The results also indicate that the likelihood of strategic default increases by 23 percent when homeowners learn that their neighbor with negative equity has received a partial loan for forgiveness. Additionally, strategic default increases by 29 percent if homeowners are able to find an alternate way to finance a new home.
(Excerpt) Read more at dsnews.com ...
Well, why pay for the cow when your neighbor gets the milk for free?
This is a predictable outcome of socialism, repeated time and again.
Is this some kind of joke?? This must be a mistake! We are in the midst of a full economic recovery!! Everything is coming up roses, look at the stock market life is good is it not!? Look at the unemployment numbers — oppps scratch that!!
How foolish we were for paying off our mortgage.
I know the feeling. I'm debt-free as well. On the bright side, not having a house payment provides a strong advantage in case unemployment strikes.
Next time a leftist says this is a “recovery,” tell them to go check their house value and explain how that is recovering.
But here is the thing...before you paid off your mortgage, was it ever underwater?
If you have a house that you bought at $350,000. And it is now worth near $200,000. Would you continue to pay on that negative equity?
That’s the question that is leading to these strategic defaults.
I know people letting the house go to foreclosure and then buying it back later either at the sale or from the bank for about what its actually worth.
When you buy a car it drops in value about 20% the first year. Do you keep paying on it? If so, why?
These people ought to be punished in some way. If it was up to me, I’d have a “no credit forever” list with their SSNs firmly at the top. Thanks to them, there will be a huge uptick in the number of houses on the market, and that excess supply will continue to drive down the value of housing for those of us who actually pay our bills.
Lemme guess. There is probably some government program that allows for people like this to get a home loan even though they are shown to be willing deadbeats.
Americans have been told over and over that big banks are screwing them and that they aren’t responsible for their choices. There is no more stigma to not paying your debts. Run up loans and credit cards and then simply refuse to pay. Just like a little kid. We are a nation of irresponsible children. The days of people working years to pay off debts is over.
Old post here from several yrs ago talked of the housing crisis and the system collapse..all of come true. People need to pay attention.
Here in my area, Broward cunty Florida, there is no such thing as the “value” of real estate. Condos can go from as low as 10k, snow birds from the north arent coming here for the season as they did in the past, folks with money are moving out, and people are just walking away from mortgages.
HOA..nazis in training....still dont have a clue and dues/fees are rising fast from all the vacancies. Latin America is more stable in a lot of cases LOL
Pay attention folks and do not believe a word any realtor from Florida says! LOL
Here in S Florida a condo that sold for 200,000 5 yrs ago can be worth as little as 50k today. This will take yrs to overcome I think. S Florida could become the next Detroit.
You would if you put the 70k (20%) down payment on it. Or even a 10 percent down payment. The problem is a lot of these dimwits not only put nothing down they actually got a check at closing that they promptly spent on big screen TVs and other stuff.
South Florida was always a place you went with money you made somewhere else. There was never any real opportunity down there. But nice beaches and sunshine can hide a lot.
My sister falls in this category. According to her, a (mortgage broker?) “advised” her to stop paying her mortgage rather than refinance. The thought was that the current lender would then offer her a deal. This didn’t quite make sense to me, as a mortgage broker only gets paid for issuing new mortgages, but.....its what she said.
It depends on the consequences. If there aren't any and everybody else is doing it, hell yes.
Since I live in a recourse state, that scenario is unlikely..
If that oil slick starts fouling the florida gulf coast beaches, those $1M condos that are now $500K will be $200K..
One problem is that the banks arnt helping...
Someone that lived near my mother’s place was way upside down on the mortgage and was behind in payments. I think he was like $70,000 upside down. Anyway he offered the bank $50,000 to remodify or refinance the loan. They said no way. So he said the hell with it...and defaulted. He split the money to his kids and also a little to move into a rental place and live off of for awhile.
So now...instead of the bank biting the bullet and writing off $20,000.. they are now stuck with a vacant condo they can’t sell and will end up writing off $70,000+.
Stupid, stupid banks!!
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