A recent New York Times article reported succinctly on the growing trend of homeowners who are “underwater” on their mortgages simply packing it in and walking away. Called “a situation without precedent in the modern era,” abandoned homes are becoming more prevalent as “people’s emotional attachment to their property is melting into thin air.”
An Arizona mortgage broker admitted that he has advised many of his clients to walk away. He even defaulted on a rental property he owns.
By June, the number of homeowners who owe more than their home is worth is projected to be over 5 million – which is approximately 10 percent of all American mortgage holders.
And with some big commercial property owners walking away from their financial obligations –like Tishman Speyer BlackRock, one of the country’s largest commercial property owners, that sent their $5.3 billion investment in 11,000 apartments in New York back to their bankers – homeowners are often left thinking, “why not?”
Pile on the bank bailout outrage and headlines about the reinstatement of big bonuses for bankers, and the “why not?” can quickly turn into a “hell yes”.
So are “strategic defaults” a good thing for a borrower? In many cases – you’re darn right they are. So why so few of them? Read more here.