Posts Tagged ‘underwater mortgage’

Should A Borrower With An Underwater Mortgage Strategically Default?

Thursday, September 20th, 2012


By Evan Nemeroff at mortgageservicingnews.com

Does a borrower whose mortgage is underwater have an obligation to continue paying their monthly loans if they have the ability to do so? The answer to this question is different whether you speak to an economist or a homeowner.

According to a Zillow home price expectations survey in which 114 responses were compiled by Pulsenomics LLC from a group of economists, real estate experts and investment and market strategists, 71% said they would not strategically default on their mortgage that is at least 40% more than the current value of their home.

In a separate national survey conducted by Ipsos on behalf of Zillow where 2,009 adults where asked if they would pursue a strategic default, 59% of homeowners said they would not utilize this strategy if they were underwater on their home by 40%.

Currently, out of the 31% (15.3 million) of U.S. homeowners who have a mortgage underwater—paying a mortgage that is higher than the value of their home—nearly three-quarters have properties that are 40% below their buying cost, Zillow’s second quarter negative equity report said. Regionally, high rates of negative equity have accumulated in states such as California, Florida, Nevada, Arizona, and Georgia, Zillow reported. On average, homeowners across the country owe $75,235, approximately 44%, more than what their house is worth.

When homeowners were asked in the survey why they would not choose to strategically default, 37% cited moral reasons, while 35% indicated it didn’t make sense since they intend to live in that house for an extended period of time.

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Who’s Giving Out Snorkel Masks ? More on the influence of underwater mortgages.

Saturday, February 6th, 2010

Results of a recent consumer survey conducted by Thomas Reuters and the University of Michigan indicated approximately 75 percent of homeowners who participated in the survey viewed current home buying conditions as favorable because of attractive home prices and low interest rates.

However, nine out of ten of those home owners viewed the conditions for the sale of their own home as unfavorable, not because of lack of buyers, but because of price declines.

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