Sadly less than 20% of all homeowners facing a foreclosure situation choose to list their house for sale.
The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.
Stephanie Armour at USA Today says that nationally, median prices have fallen about 25% from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter — $170,000 — was at roughly the level it was in autumn 2003.
In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more. A Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50% more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.
“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ ”
Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default and will help salvage your credit and your financial future.
- The Bank Slayer
Great post! I think it has helped me a lot in applying for a loan modification. I believe thought that a mortgage loan modification adviser can greatly lower monthly payments to an affordable level.
In many instances a loan modification lawyer can contribute to your modificaton success to a great extent. However, if you have low income it might not be the case.
According to the most recent statistics the unemployment rate is over 10%. People face difficult situations financially right now.
A lot of guys blog about this issue but you said some true words.
There’s too misinformation out there that people don’t really know what is and is not. It’s refreshing to see that many of us know what they’re talking about. You have an informed commentary seems to be a rare commodity these days. Keep up the good work!
I have learned a lot. Thank you .
Great thoughts about the topic.