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Why not just walk away from an underwater mortgage?

The Los Angeles Times carried an article March 17 entitled "More Homeowners are Opting for 'Strategic Defaults'" documenting the increasing trend of borrowers who stop making mortgage payments, even if they can afford them.   It's been a psychological issue with shame traditionally over-shadowing rational thought.  Brent T. White, a Law Professor at the University of Arizona, published a study that made quite a splash on the internet entitled "Law Professor to Homeowners, Walk Away From Your Mortgage"finding that most homeowners still are not walking away due exaggerated anxiety over foreclosure's percieved consequences in addition to shame and guilt. Since the conduct of financial institutions and government is cold and calucalting, homeowners end up bearing a disproportionate share of the cost of the meltdown.

 

Have you or anyone you know come up against this dilemma?  Certainly it makes no sense to struggle to pay if the bank is going to take the house away anyhow.

Tags: , , California Foreclosure Defense, avoid, away", bankruptcy, crisis, default, foreclosure defense, housing, loan modification, More…sale, short, strategic, walk

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