More Than a Quarter of Mortgage Defaults Strategic

A new survey conducted by the Kellogg School of Management in Chicago suggests that more than a quarter of mortgage defaults are strategic, especially when negative equity exceeds 15 percent... ...researchers believe 17 percent of current homeowners would voluntarily walk away (even if they could afford the mortgage) if negative equity exceeded 50 percent of the home value.

“Housing policy under the current administration has focused on reducing households’ cash flow problems in response to the housing crisis, but no one has addressed the negative equity issue as part of public policy regarding housing,” said researcher Paola Sapienza

“We’re in a completely different economic environment today, where for the first time since the Great Depression millions of Americans have mortgage loans that exceed the value of their home...”

TTAM: More Than a Quarter of Mortgage Defaults Strategic