A million Americans who could afford to pay their mortgages on homes `underwater` walked away instead. Morley Safer reports.
(CBS) Despite some indications that the economy is recovering, the housing market remains a disaster area. Currently, about seven million homeowners are behind on their mortgages and that number is only getting worse.
But there’s a growing number of homeowner’s who can pay but are simply walking away from houses that are now worth as little as half of what they paid for them.
It’s called “strategic default.” People have done the math and decided making those monthly payments is just throwing money away, leaving the mortgage holders – the banks – as zookeepers of an ever-growing parade of white elephants.
In the past year it is estimated that at least a million Americans who can afford to stay in their homes simply walked away.
This 60 minutes interview is consistent with our local Tampa Real Estate market conditions here in Florida where almost 50% of homeowners are delinquent on their mortgages.
What was once considered immoral is now becoming commonplace, and creating a domino effect throughout the U.S. Homeowner’s think paying on a home that is worth half of what they originally purchased it for is throwing money away.
I read an article that compared a mortgage promissory note to a cell phone contract. I’m not sure this is a fair comparison, however it is an interesting point.
People break contracts all the time. When you first sign up with a cell phone company you agree to pay a price for the service you sign up for. Then another company comes out with the same plan for half as much as what you are paying.
How many people do you know that have switched cell phone companies? What is the morally responsible thing to do?
See also: The Short Sale Process