Andrea, surprising information on homeowners that are walking away. Thank you Andrea for allowing the re-post
A bad rap, that's what I came away from this study thinking. I read a very interesting post by Liz Miller of Lake Havasu Real Estate in Arizona called "Those Who Have Chosen to Walk Away from Home Mortgages". If you haven't read it, you really should. Liz talks about a report from the LA Times concerning "Strategic Defaults", people walking away from their homes.
The surprising data that came out of a study done by Experian and Oliver Wyman showed that people with good credit were 50% more likely to walk away from their homes than people who were struggling to make those payments or who had less than stellar credit. What also surprised me that these "strategic defaulters" go from making payments on time to walking away. No struggling to make those payments, no late payments, etc.
I had two very strong and immediate thoughts to this information.
- I have heard it said over and over again that it was the people who had bad credit that obtained mortgages that were the problem. Guess that is not true at all. The study shows more of these people apparently are trying to pay, trying to make deals with the banks, and are going to be suffering the most with this latest development.They really have gotten a bad rap.
- How do you just walk away from a home? Does this include those who refinanced and already spent the money? In my humble opinion if indeed the home was refinanced and money was spent to pay credit card debts, etc., to purchase that new vehicle or to get bigger and better toys, how is that different than racking up huge credit card debt and just not paying? You have the items you purchased and yet refuse to pay the bill?
Bottom line, I think it is very important that the general public understand the continued problems are not the fault of those who may not have stellar credit ratings and big fancy homes, those who are struggling to hang on to what they have. What really worries me about this is that the banks are often NOT willing to work with them to help them out on loan modification programs. And yet these are the folks that are really trying to stay in their homes!
I'm just sayin....
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