Walk Away
I'll Walk Away -- James Hunter
Calculated Risk recently had a post Freddie Mac on Walking Away. During a recent conference call, the following exchange occurred:
Analysts: What do you see? Is it in line with historical default rates as they get underwater or does it ...
Freddie Mac: No, it is different. The rate of increase in defaults in that part of the population is much steeper. For those borrowers that bought a home based on rapid house price appreciation as a way to grow wealth, if they find themselves quickly underwater - you know we're even seeing it when we try to modify and renegotiate those loans - they are walking away. They're finding it not constructive.
In short, when people go underwater, they are walking away from the property. We now have some statistical proof this phenomenon is occurring. Statistics are great for discussing macro trends and the like, but we take a microeconomic approach here at the Irvine Housing Blog: we show you the properties the owners are walking away from. Today's featured property is seriously underwater. It is being offered for sale at 27% under its peak purchase price.
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