More than one in three say it's OK to walk away from mortgage

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The majority of Americans, say it's "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, but more than a third, 36 percent, say "walking away" is OK.

by Broderick Perkins
© 2010 DeadlineNews.Com


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Deadline Newsroom - The majority of Americans, say it's "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, but more than a third, 36 percent, say "walking away" is OK.

A Pew Research Center study found that 59 percent believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender.

Among those who said walking away is OK, 19 percent said it's acceptable outright and an additional 17 percent volunteered that it depends on the circumstances.

Either way, walking away can sink your credit score and come with an extra tax burden, not to mention the potential of a court suit.

The survey, conducted May 11 to May 31, queried 2,967 adults and found more than one-in-five homeowners (21 percent) say they owe more on their mortgages than their home is worth.

The "underwater" situation compels some homeowners to stop making their mortgage payments and let the bank foreclose on their homes.

Many homeowners, who can afford a mortgage payment, have nevertheless stopped making payments in what's called a "strategic default" and that's caused mortgage finance giant Fannie Mae, reeling from mounting losses, to sue them.

Alternatives to walking away, say a short sale, mortgage modification, a refinance (if possible), even an outright sale for less then the home is worth, are probably better ideas.

According to RealtyTrac.com, in August, lenders foreclosed on 95,364 U.S. properties in August, the highest monthly total in the half-decade history of the report.

Nearly half (48 percent) of all homeowners say the value of their home declined during the recession, and as a group they were more likely than those whose home did not lose value to say it's acceptable to bail out on a mortgage (20 percent vs. 14 percent).

The study also found:

• Twenty-five percent of renters said it was okay to walk away.

• Nearly one-in-four adults (24 percent) who say their families are just able to pay their monthly bills or can't meet expenses said it's okay to stop paying a mortgage, compared with 14 percent of those who say they "live comfortably."

• Eighteen percent of homeowners who say their homes are worth less than what they owe, vs. 17 percent those who would break even or make money on a sale said it's okay to stop mortgage payments.

• Among ethnic groups, 24 percent of all Hispanics say it's acceptable to abandon a mortgage, compared with 17 percent of whites and 21 percent of blacks. However, roughly similar majorities of Hispanics (58 percent), blacks (56 percent) and whites (61 percent) say abandoning a mortgage is wrong.

• More liberal Democrats were about twice as likely as more conservative Republicans to say it is acceptable to walk away (23 percent vs. 11 percent).

• Black homeowners vs. whites (35 percent vs. 18 percent); lower-income homeowners vs. upper-income homeowners (33 percent vs. 15 percent) and middle-aged homeowners vs. younger or older homeowners were more likely to be underwater.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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