More Articles reporting Walk Aways are rising

David Strietfield of the New York Times recently wrote an article titled "No end or Rebound in Sight, More Homeowners Just Walk Away"

"We're now at the point of maximum vulnerability. People's emotional attachment to their property is melting in mid air", so says Sam Khater of First American Core Logic.

New research suggests that when a home falls below 75% of the amount owed on the mortgage, the owner starts thinking hard about walking away, even though he may be able to make the payments. At this level of negative equity homeowner will not qualify for any loan modification.

In 2006 almost no one in America was underwater as such, but over the last 3 years that number has surged to 4.5 million homeowners who were 75% under water. This negative equity report was also part of the First American report.

Nearly 10.7 million homeowners or 23% of all mortgages were under water by the end of 2009. An additional 2.7 million homes were approaching negative equity in the next few months. All in all over 28% of all mortgages nationwide are at risk. The wave of negative equity is bringing more and more homeowners to leave emotion aside and opt out for just walking away, without any emotion.

Take a homeowner in Fairfield who bought a home for $340,000 in early 2006. By the end of 2009 that homes value was at $100,000. That's a negative equity drop of 71% and likely to fall beyond 75% by mid summer. If the property were to appreciate at 10% per year it would take over a decade just to get back to break even. If the homeowner defaults he could recover in 4 years or less on his credit and have saved thousands of dollars. Moral responsibility is gone, thanks to the arrogant greed of the banks themselves.

Judging from my earlier report (1/26/2010) on walk aways and the amount of attention the national media is giving,(5 Articles in the last 2 months on this topic alone) this problem is for real. Granted there are some potential issues banks can use in certain states, like default judgements, which is when the banks are going after homeowners for the difference between the foreclosure price and the loan. That being said so many upside down homeowners say they're willing to take the chance. In California for instance, if the loan is the original purchase money, meaning the home has never been refinanced, a non recourse law means banks cannot go after the homeowners for the loss. So California and states with these consumer protections could see a disproportionate share of these walk aways. It's about time these banks share in the fear that so many will give back these homes and they could be in real trouble. I for one, won't feel sorry for them.