Homeowners Say Walking Away from a Mortgage is Unacceptable

There have been more than 2.5 million foreclosures since 2005 and more are on the way. Some of the nation’s largest banks, such as Bank of America, Citigroup, Chase and Wells Fargo have hired thousands of more workers to process a huge backlog of foreclosures. Homeowners who are under-water on their loans are having a hard time getting help from these banks and many are simply walking away from their homes and mortgages in frustration.

Although many homeowners are throwing their hands up in the air and giving up on their mortgages, most people don’t believe it’s acceptable for borrowers to simply stop paying and give up on their mortgage. A recent survey from CreditLoan found that 75% of renters and 83% of homeowners don’t think it’s acceptable to walk away from a mortgage.

The mortgage industry would content that staying current on one’s mortgage is a moral issue, arguing that homeowners that sign-up for a home loan are entering into a contract and are morally obligated to see through their contract even if home prices have fallen.

Unfortunately for those that are underwater on their loans, there’s not always the luxury of staying current on one’s mortgage, especially in situations of financial hardship and unemployment. Those that are in financial hardship and trying to sell their home to avoid foreclosure have not been getting much help from banks either, as home sellers have found it very difficult to work with banks to get short sales approved.

In Nevada alone, 65% of borrowers have negative equity on their home and would have to apply for a short sale to sell their home. The situation is also grim in California (34.7%), Arizona (47.9%) and Florida (44.7%). Nationwide, 25% of homeowners with mortgages have negative equity in their homes.

View the infographic below for additional statistics: