More and more people are walking away from their homes when they can afford to pay the monthly payment. The term is called “strategic default” and according to some sources, it accounts for up to 25% of current foreclosures. Basically the borrower usually owes a great deal more than the current value of the home.
“About 25 percent of mortgage defaults across the country are the strategic kind,” says Greg McBride, senior financial analyst for Bankrate.com. “That not a small number.”
“It’s somewhat substantial,” says Bob Walters, chief economist at Quicken Loans. “We are talking about it more in the industry and it’s becoming more accepted among homeowners.”
So what do think???? Is walking away from the mortgage a smart thing to do? Is it ok from a moral and ethical standpoint to “walk away” when you can afford to pay?
What about the business ramifications of the decision to walk away. If you bought the home at the height of the market and now it is worth 40-50% less, what effects will the market have on the value of your home over the next 5, 10 or 20 years???
And once again, we are talking about people who LIVE in their homes. Not those that are investors or speculators….