Today’s St. Petersburg Times quotes an article that I first wrote about yesterday which suggests that more than 46% of homes in the Tampa bay have mortgages on them that total more than the value of the homes. While the article, and the study in the Wall Street Journal do not report exactly how they came up with the value of the homes, I rather suspect the value of the homes is overstated and that as a result, ther are ore than 50% of homes that are underwater.
For decades Americans worked hard to pay their bills and protect their credit. Certainly part of the motivation for this behavior was good old fashioned value and morality, but a big motivation for many people was so that the consumer could continue to access credit to buy all the things that are required to be a good American consumer. With the consumer credit market across the country very much locked up and consumer’s buying and borrowing habits changed, this motivation may no longer be as important.
As reported earlier, lenders are faced with very few options when a consumer fails to pay their mortgage and the reality is if your credit is already tanked, the consequences for walking away from a mortgage may be acceptable when compared to the alternative of slaving away making payments to creditors that your income can no longer support. Make no mistake, this is not advice or a suggestion to stop paying bills, it’s merely a practical reflection of a judgment many consumers are already making!
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