WC Varones

Don't lend your hand to raise no flag atop no ship of fools

Debtors revolt: they just stop paying their mortgages

We've been advising it here for a year and a half: if you're underwater on your house, just stop paying your mortgage (and eminent blogger Skeptical CPA said it even before that).

Now, via Calculated Risk, the LA Times reports that homedebtors are following that advice with "Strategic Defaults":
National credit bureau Experian teamed with consulting company Oliver Wyman to identify the characteristics and debt management behavior of the growing numbers of homeowners who bail out of their mortgages with none of the expected warning signs, such as nonpayments on other debts.
...
[Some results:]
...
* The number of strategic defaults is far beyond most industry estimates -- 588,000 nationwide during 2008, more than double the total in 2007. ...

* Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. ...

* Strategic defaults are heavily concentrated in negative-equity markets ...

You walk away! One simple step to a better life!



Of course, the taxpayers are still making near-zero-down loans through the FHA's subprime lending program, so there's going to be a bloodbath as soon as some of those homes go into negative equity.

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