An increasing number of homeowners would consider walking away from an underwater mortgage as the nation's lenders and banks face growing criticism over their home loan and foreclosure practices.
A survey released Tuesday by real estate analysts at Trulia and RealtyTrac found 48 percent of homeowners with a mortgage said a strategic default is an option they would consider if they owed more on their home loan than the house is worth, sometimes referred to as being "underwater."
In the previous survey, conducted in May, 41 percent of homeowners said they would consider a strategic default, which is when a homeowner who can afford to make his or her monthly mortgage payment chooses not to.
Rick Sharga, senior vice president of the Irvine, Calif.-based RealtyTrac, said recent disclosures that foreclosure documents may not have been handled properly has increased homeowner anger and their willingness to "just mail in the keys" and be done with it, especially if they are underwater.
About 42 percent of South Florida homes with mortgages were underwater during the third quarter of this year, according to Zillow, a Seattle-based real estate and research company. Nationally, 23 percent of homes were considered underwater during the same time period, as well as 52 percent in the Treasure Coast.
"I think there is just less and less faith in the lending institutions," Sharga said. "People are saying, 'If they aren't going to play fairly, I don't need to play that game either.'"
Gender is also a factor when a homeowner considers a strategic default. The survey found 57 percent of men would consider walking away compared to 41 percent of women.
"One is thinking of it more as a home, and one is thinking of it more as a financial decision," said Pete Flint, co-founder and CEO of Trulia, which is based in San Francisco.
The survey, taken in November of 1,329 homeowners and 652 renters, also found that 44 percent of respondents said they have lost faith in the nation's banks.
Several lenders and home loan servicers halted foreclosures earlier this fall after acknowledging that bank and court documents were being signed in the thousands by employees swearing to personal knowledge of each case when they in fact did not know the details of the foreclosures.
But Anthony DiMarco, executive vice president for government affairs for the Florida Bankers Association, said the so-called "robo-signing" issue has not caused widespread foreclosures and shouldn't be an excuse for people to strategically default.
"It's not the robo-signing that led to the foreclosure, it's the lack of payment," DiMarco said. "Most people understand if you lose your job, you're not paying, but they don't understand people just walking away."
Tuesday's survey did not include any statistics on strategic defaults, something analysts said is hard to measure because homeowner intent must be determined.
But they did say the embarrassment attached to a foreclosure is less than in the early days of the real estate bust.
"The stigma is definitely gone," Flint said. "And it could be very much perceived as a smart financial decision."
http://www.palmbeachpost.com/money/real-estate/survey-shows-more-homeowners-would-walk-away-if-1104861.html
A survey released Tuesday by real estate analysts at Trulia and RealtyTrac found 48 percent of homeowners with a mortgage said a strategic default is an option they would consider if they owed more on their home loan than the house is worth, sometimes referred to as being "underwater."
In the previous survey, conducted in May, 41 percent of homeowners said they would consider a strategic default, which is when a homeowner who can afford to make his or her monthly mortgage payment chooses not to.
Rick Sharga, senior vice president of the Irvine, Calif.-based RealtyTrac, said recent disclosures that foreclosure documents may not have been handled properly has increased homeowner anger and their willingness to "just mail in the keys" and be done with it, especially if they are underwater.
About 42 percent of South Florida homes with mortgages were underwater during the third quarter of this year, according to Zillow, a Seattle-based real estate and research company. Nationally, 23 percent of homes were considered underwater during the same time period, as well as 52 percent in the Treasure Coast.
"I think there is just less and less faith in the lending institutions," Sharga said. "People are saying, 'If they aren't going to play fairly, I don't need to play that game either.'"
Gender is also a factor when a homeowner considers a strategic default. The survey found 57 percent of men would consider walking away compared to 41 percent of women.
"One is thinking of it more as a home, and one is thinking of it more as a financial decision," said Pete Flint, co-founder and CEO of Trulia, which is based in San Francisco.
The survey, taken in November of 1,329 homeowners and 652 renters, also found that 44 percent of respondents said they have lost faith in the nation's banks.
Several lenders and home loan servicers halted foreclosures earlier this fall after acknowledging that bank and court documents were being signed in the thousands by employees swearing to personal knowledge of each case when they in fact did not know the details of the foreclosures.
But Anthony DiMarco, executive vice president for government affairs for the Florida Bankers Association, said the so-called "robo-signing" issue has not caused widespread foreclosures and shouldn't be an excuse for people to strategically default.
"It's not the robo-signing that led to the foreclosure, it's the lack of payment," DiMarco said. "Most people understand if you lose your job, you're not paying, but they don't understand people just walking away."
Tuesday's survey did not include any statistics on strategic defaults, something analysts said is hard to measure because homeowner intent must be determined.
But they did say the embarrassment attached to a foreclosure is less than in the early days of the real estate bust.
"The stigma is definitely gone," Flint said. "And it could be very much perceived as a smart financial decision."
http://www.palmbeachpost.com/money/real-estate/survey-shows-more-homeowners-would-walk-away-if-1104861.html
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