Letting your house go to foreclosure because you are out of money and purposefully defaulting on a mortgage to save money: murky
The difference between letting your house go to foreclosure because you are out of money and purposefully defaulting on a mortgage to save money can be murky. But a growing body of research indicates that significant numbers of borrowers are declining to live under what some waggishly call "house arrest."
Using credit bureau data, consultants at Oliver Wyman calculated how many borrowers went straight from being current on their mortgage to default, rather than making spotty payments. They also weeded out owners having trouble paying other bills. Their estimate was that about 17 percent of owners defaulting in 2008, or 588,000 people, chose that option as a strategic calculation.
BUSINESS
In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040.
No Help in Sight, More Homeowners Walk Away
By DAVID STREITFELD
Published: February 3, 2010
By June, about 5.1 million people will own a home whose value is below 75 percent of what is owed.