A report from Fannie Mae found 27% of homeowners would consider walking away. The previous year only 15% would think of defaulting on a mortgage they could still afford.
Morgan Stanley estimated 200,000 strategic defaults in 2009 or 12% of the total. (Please see the full story at “Walk away from your mortgage? Time to get ‘ruthless’ – CNN Money.)
Most walk-away borrowers are good credit risks with high FICO scores. One Florida couple paid $1.4 million for a house which is now worth $400,000. They are still paying, but not all borrowers would stick with that mortgage.
Consumers are adapting the rationality of professional investors. An investor who purchases an office building will often use a company to make the purchase and borrow the money. If the value fell by half while the mortgage is 70% of the original price, and if the loan is not personally guaranteed, the investor might send in the keys and wish the lender good luck.
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