Today's Wall Street Journal has a piece entitled "Borrowers Abandon
Mortgages as Prices Drop," which details the same trend your Federal Reserve researchers were writing about:
"Typically borrowers who turn in their keys are those who have run into financial trouble or need to relocate but can't sell their homes. But mortgage-industry executives and consumer counselors say they are starting to see people who aren't in dire financial straits defaulting on their mortgages because they don't want to pay for properties that have negative equity."
Not that I would do it, but what rational person wouldn't walk away if they can't sell and the value of their house just keeps going down and down?
Obviously, no one wants the blemish of a foreclosure on their credit report. But which would you rather have, a credit blemish or a house that's worth $100,000 less than you paid for it?
Marge Inovera of CA @ Feb 29, 2008 14:08:06 PM
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