"There's a moral dimension to this as homeowners who simply abandon their homes contribute to the destabilization of their neighborhood and community." says Fannie Mae spokesman Brian Faith.
Who is more likely to walk away from a house and a mortgage - a person with super-prime credit scores or someone with lower scores?
Hint: It's probably not who you think. New research using a sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50 percent more likely to "strategically default" - abruptly and intentionally pull the plug and abandon the mortgage - compared with lower-scoring mortgage borrowers.
You agreed to pay a price for something. Pay it.
Next time I go to dinner, halfway through I'm going to declare it's not worth what's on the menu and try to renegotiate.
I bought the house at a price I agreed to, I promised to pay this much money for it, and I should follow through with that.
You enter contracts with the expectation of fulfilling them. "I am borrowing this money, I should pay it back." You should feel bad when you can't.
Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity... The distribution of negative equity is heavily concentrated in five states: Nevada (65 percent), which had the highest percentage negative equity, followed by Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent).
The bulk of ‘upside down’ borrowers, as a group, share certain characteristics. They:Financed their properties between 2005 and 2008, with 2006 being the peak year where 40 percent of borrowers were in negative equity
Relied on adjustable rate mortgages (ARMs)
Bought less expensive properties... an average value of $210,300 [and are] upside down by an average of nearly $70,000. The aggregate property value for loans in a negative equity position was $2.2 trillion, which represents the total property value at risk of default, against which there was a total of $2.9 trillion of mortgage debt outstanding.[CR adds: "Most homeowners with negative equity will probably not default, but this does show that there could be several hundred billion more in losses coming from residential mortgages."]
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