Financially strapped more likely to accept “walking away”

A majority of Americans say it is “unacceptable” for homeowners to stop making their mortgage payments and abandon their homes, according to a Pew Research Center survey. But more than a third (36%) say the practice of “walking away” from a home mortgage is acceptable, at least under certain circumstances.

Nearly six-in-ten (59%) believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender, according to the survey of 2,967 adults conducted May 11-31.

But two-in-ten (19%) say it’s acceptable and an additional 17% volunteer that it depends on the circumstances.

As the housing market continues to flounder in many parts of the country, more than one-in-five homeowners (21%) say they owe more on their mortgages than their home is worth, the survey finds.

Nearly half of homeowners said the value of their home declined during the recession, but these borrowers are not more tolerant of strategic default than those in positive equity. According to Pew, 18% of underwater homeowners said it’s acceptable to walk away, while 17% of respondents still with equity in their home approved of the practice.

About 12 percent of residential-loan defaults in February were strategic, meaning homeowners decided not to make payments even though they could afford to, New York-based Morgan Stanley said in an April 29 report. The rate was about 4 percent in mid- 2007.

People who said turning a home over to the lender is acceptable climbed to 25 percent among those who suffered recession-related hardships, such as job loss or problems paying bills, the Pew Research survey found.

Published by Stout Law Firm

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