Would you walk away from your mortgage loan?

Filed in archive becoming a better borrower on June 29, 2009

If your home lost half of its value — not too unbelievable of an occurrence in today's housing market — would you be willing to simply walk away from your mortgage? Would you have any qualms about not making that monthly payment and simply leaving your house behind?

Surprisingly, a new study shows that 17 percent of households would willingly stop paying their mortgage payments if their homes fell in value by 50 percent or more. They'd do this, according to a study by the Kellogg School of Management at Northwestern University, even if they could afford to make their mortgage payments.

According to the study's authors, the moral stigma of defaulting is lessened in areas where homeowners have already seen many of their neighbors lose their homes to foreclosure. A higher number of respondents said that they were willing to default if they happened to live in an area with many foreclosed homes.

This is one depressing study. It's a shame to know that so many homeowners are simply willing to abandon their financial obligations.

We have to remember that no one forced anyway into owning a house. Yes, the government promoted home ownership as the American ideal. And, yes, mortgage lenders and real estate agents often led buyers to homes that were too expensive for them.

Yet, the people making the final decisions were those homeowners who signed the mortgage papers. They knew — or at least they should have known — what their mortgage payments would be. There's no excuse to simply walk away from this obligation.

Now, I do have great sympathy for owners who lose their homes to foreclosure despite their best efforts to make their monthly payments. Financial and personal setbacks can befall us all.

But to willingly walk away, with no moral qualms? That's a different story.