The other day 60 Minutes ran another report on “Strategic Defaults” as they are called – home owners who are underwater in their mortgage and walk away from their home (causing a foreclosure) even though they have the ability to continue with mortgage payments.
The most interesting thing about the story was a University of Arizona paper entitled “Underwater and Not Walking Away: Shame Fear and the Social Management of the Housing Crisis” (Typical University title for a paper!)
It’s a fascinating read if you have some time. We can debate all day long the ethics of home owners walking away from their obligations, but the fact that it’s happening isn’t in dispute – and real estate agents, investors and other professionals should be thinking through the ramifications of it for their business.
Most home owners don’t realize (or maybe don’t care) that there are many alternatives that are much better than a foreclosure – a loan modification or short sale are all much better alternatives to giving up and walking away.
Here is the 60 minutes segment