Majority Of Homeowners Say Strategic Default Is Not An Option

A survey by Harris Interactive indicates that 59 percent of homeowners would not consider walking away from their mortgage obligation — no matter how great the gap between …

A survey by Harris Interactive indicates that 59 percent of homeowners would not consider walking away from their mortgage obligation — no matter how great the gap between their earnings and debt. On the other hand, 41 percent of homeowners would at least consider the option of defaulting, a matter of some concern for lenders. The following article from HousingWire has more on this.

Of those homeowners surveyed by Harris Interactive, 59% said they would not consider walking away from their mortgage no matter how far underwater they sank.

Harris conducted the survey of more than 2,500 adults, including 1,690 homeowners from May 10-12. The survey was conducted for the online foreclosure marketplaces, Trulia.com and RealtyTrac.

Only 1% of homeowners said a strategic default would their first choice if they fell behind, and 41% said they would at least consider walking away.

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The amount of mortgages in foreclosure or at least 30-days behind did decrease to 14% in Q110 from 15% in the previous quarter, according to the Mortgage Bankers Association, but the situation is not bad.

While Rick Sharga, senior vice president of RealtyTrac said the market has a long way to go, there are some positive signs returning to the market.

“We are not out of the woods out by any stretch of the imagination. The MBA was almost in lockstep with the RealtyTrac report last month,” Sharga said. “What we are seeing is that new delinquencies are beginning to slow down. That’s the first positive sign in the housing market in some time.”

For April, RealtyTrac reported the first annual decrease in foreclosure activity since the company began releasing the data in 2005. With these new positive signs come new attitudes from homebuyers, said Pete Flint, co-founder and CEO of Trulia.com.

“There are changing attitudes of homeowners entering foreclosure,” Flint said.

Sharga wouldn’t say the market is in a recovery mode just yet. In terms of housing prices, he said, if the market was a patient in a hospital, its status could be changed from critical to stable with a full recovery in the distance.

“Normal levels will probably come in late 2013,” Sharga said.

This article has been republished from HousingWire. You can also view this article at
HousingWire, a mortgage and real estate news site.

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