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A Quarter of Defaulters Are Doing It on Purpose

By Kevin Spak,  Newser Staff

Posted Jul 8, 2009 9:36 AM CDT
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(Newser) – As many as 26% of mortgage defaults are deliberate moves by homeowners who owe more than their house is worth, finds a new study that asked 1000 people if they knew anyone who had defaulted even though they could still make payments. Researchers caution that the study isn’t precise, but the findings point to a flaw in the Obama administration’s approach to the housing problem, which has focused on whether mortgage holders can afford their monthly payments—not whether they want to.

“They can still afford to pay, but they decide not to,” says one of the authors, and get away with it because of the high cost of going after borrowers in default. “It’s very easy to do this in the US.”

In this March 24, 2009 file photo, a sign lies on the ground in front of a foreclosed home in Homestead, Fla.
In this March 24, 2009 file photo, a sign lies on the ground in front of a foreclosed home in Homestead, Fla.   (AP Photo/J Pat Carter, File)
In this Feb. 17, 2009 file photo, a foreclosure sign sits outside a home for sale in Phoenix.
In this Feb. 17, 2009 file photo, a foreclosure sign sits outside a home for sale in Phoenix.   (AP Photo/Ross D. Franklin, File)
In this file photograph taken Feb. 23, 3009, a foreclosure sign blows in the wind in front of a home under foreclosure in Antioch, Calif.
In this file photograph taken Feb. 23, 3009, a foreclosure sign blows in the wind in front of a home under foreclosure in Antioch, Calif.   (AP Photo/Paul Sakuma, File)
In this March 15, 2008 file photo, a realtor's sign is seen on the lawn of a foreclosed home in Egg Harbor Township, N.J.
In this March 15, 2008 file photo, a realtor's sign is seen on the lawn of a foreclosed home in Egg Harbor Township, N.J.   (AP Photo/Mel Evans, file)
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COMMENTS
Showing 3 of 12 comments
Toon
Jul 8, 2009 7:32 AM CDT
Do you realize how flawed this study is? They surveyed people on their OPINION about their acquaintances' financial details. Most people are either very reticent about talking finances or will put up a false front to hide how much trouble they are in. so all we know is that a lot of people THINK others are deliberately foreclosing.
freethemall
Jul 8, 2009 6:55 AM CDT
What got us all into this mess, is people buying houses as an investment, instead of just to live in. This really got out of hand when people started speculating with housing, hoping to make a bundle of money. Houses should be built for people to live in, not for people to make money off of.
Fondue
Jul 8, 2009 6:21 AM CDT
Reader6506, what Obama policy was put in place on a national level before he was even President. Cart - horse. The problem is supply.

 
study • mortgage • mortgage defaults • Obama administration • foreclosures

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