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The New Face of Foreclosure: Strategic Defaults By Laura Rowley Published September 19, 2011 Gene Kessler, 67, may be the new face of mortgage default. The tech industry retiree is in the process of walking away from the home he purchased for $166,000 in 2004 in a small town 75 miles southwest of Minneapolis. Its value has plummeted to $111,000, wiping out Kessler's $45,000 down payment and leaving him with a mortgage that's more than the home is worth. He stopped paying the loan six months ago, and estimates he'll have to vacate by March 2012.

"Home prices are expected to drop another 20% before hitting bottom, according to economists at A. Gary Shilling & Co., raising the risk that 40% of borrowers will walk away from their home in a strategic default." Homeowners have the RIGHT to not make payments on their home and the banks have the RIGHT to take the home back in that case. If it takes the Banks 1 year to kick the homeowners out of the house, who's fault is that????

The national faulty foreclosure crisis that could extend the real estate turmoil for years, has been traced back to a modest Denmark, Maine home with a $474 monthly mortgage payment. The house was purchased for $75,000 seven years ago by Nicolle Bradbury. But when she lost her job about two years ago she was unable to continue making her payments. But unlike millions of others who just closed their eyes and waited until the lender foreclosed and evicted them, Bradbury contacted a legal assistance center when her foreclosure notification came, the New York Times’s David Streitfeld reported. And at the...

President Barack Obama has rejected a bill that the White House fears could worsen the mounting problems caused by flawed or misleading documents used by banks in home foreclosures. White House press secretary Robert Gibbs said Thursday that Obama is sending a newly passed bill back to Congress to be fixed because the current version has "unintended consequences on consumer protections." The bill would loosen the process for providing a notary's seal to documents and allow them to be done electronically. It would also foreclosure and other documents to be accepted among multiple states. Consumer advocates and state officials had...

The mortgage foreclosure crisis has claimed an unlikely victim: Carl R. Greene, executive director of the Philadelphia Housing Authority (PHA). Wells Fargo Bank has foreclosed on Greene's $615,035 condominium in the upscale Naval Square development in the city's Schuylkill section. In a lawsuit filed July 27, Wells Fargo said the amount in dispute was $386,685.22. Greene, 53, runs the nation's fourth-largest public housing agency and is one of the highest-paid public officials in the city. His salary is $306,370, and last year he got a $44,188 bonus. Kirk Dorn, a spokesman for Greene, confirmed Thursday that the housing chief was...

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of. Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino. “Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.” A growing number of the people whose homes are in foreclosure are...

In areas hardest hit by plunging real-estate values - including the San Joaquin Valley - some people who can afford their mortgage are opting to walk away from their loan and let their bank repossess the house. "It's very stressful to get to that point," said James Graham, a 48-year-old power-plant worker who walked away from his home in Bakersfield last fall. "You're raised up to do the right thing and pay your mortgage, pay your bills." "But when you get to that point where it's time to walk, it's time." It's called "strategic default," and experts say it stems...

"Responding to those who argue that homeowners who strategically default on their mortgages are immoral and socially irresponsible, this article argues that breaching a mortgage contract is not only morally acceptable, it may be the most responsible course of action when necessary to fulfill more important obligations to one’s family." "If we are to go down this collective path, however, why is it that only homeowners and not financial Institutions are called to sacrifice their own economic well-being for the common good?" AMEN!!!

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...

Luigi Zingales The Menace of Strategic Default Homeowners who walk away from their mortgages undermine our financial system. Eighteen years ago, when I bought my first apartment in Chicago, I asked my broker whether, if I defaulted on my mortgage, the lender could come after my income after repossessing the house. I had heard that some states didn’t allow that, and I wondered if Illinois was among them. To my surprise, the broker didn’t know, either, but she promised to find out. It clearly wasn’t a burning question for her, since she still wasn’t able to answer it the next...