Report Sheds Light on Why Homeowners Walk Away

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Anonymous_IHB

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<a href="http://blogs.wsj.com/developments/2009/10/23/report-sheds-light-on-why-homeowners-walk-away">http://blogs.wsj.com/developments/2009/10/23/report-sheds-light-on-why-homeowners-walk-away</a>
 
Thanks for the link. I had read the Reserve Bank of Boston report previously, that concluded negative equity was immaterial as a factor in default, and always found it unconvincing. With the recent uptick in strategic defaults in prime space I was waiting for a good academic paper to explain the phenomenon.
 
There has been considerable chatter on this message board about people walking away from their homes, stopped paying on their mortgage even when they can afford the payments, etc.



Several here have voiced their opinion that it's not right, morally, ethically, for a homeowner to do that.



At the end of the day, it's business. No different than a bank choosing not to actually foreclose on a property (article was posted on here recently) as they'll have to spend too much $$, or a business closing it's doors, laying off it's workers, not paying any of it's outstanding bills.



Provided the homeowner isn't breaking any laws, they have to protect their best interest. In the same way any business does the same thing.
 
Watch out the next time the stock market tanks. I'm sure there are lots of people not walking away because they believe the media that we're in a v-shaped recovery and the landscape is covered in green shoots. Any inkling that people get about just how big our economic problems are will cause a jump is strategic defaults.
 
Actually, the last of the comments on the WSJ site is trenchant:



Does the incidence of walk-aways drop in non-recourse states for those that have refi'd versus those with purchase money loans.



I bet that it doesn't, and it is more a factor of the prevailing culture (of default/overspending) seen in CA and AZ
 
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