Sinking Home Values Lead to 'Walkaways'

Owners grappling with negative equity can afford to pay but choose not to
By Jim O'Neill,  Newser User
Posted Feb 29, 2008 11:47 AM CST
Signs point the way to homes for sale in Portland, Ore., Tuesday, Feb. 26, 2008. U.S. home prices dropped 8.9 percent in the final quarter of 2007 compared with a year ago, Standard & Poor's said Tuesday,...   (Associated Press)
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(Newser) – Freefalling home values may be creating yet another crisis in the mortgage industry. The new phenomenon: homeowners capable of paying their mortgages who walk away, unwilling to pour money into a property that’s worth less than they originally paid. "It may not be a big thing yet, and hopefully it won't be," an economist tells the Wall Street Journal.

In the grip of the credit crunch, with unsold properties clogging the market, some borrowers see little choice. Experts say 30% of US mortgages could be "upside down" by the end of the year, potentially prompting more walkaways. YouWalkAway.com, a website that charges about $1,000 to counsel owners on foreclosure, has received 190,000 visits since launching in January. (Read more home prices stories.)