U.S. lenders claim people who owe more on their homes than they are worth are simply abandoning them, walking away from high mortgage payments.

Bankers say the trend is frightening because homeowners in the past have gone to great lengths to avoid foreclosure.

But the Los Angeles Times reports few banks or real estate trade groups have been able to produce hard figures about the phenomenon. Marianne Sullivan, senior vice president at Fannie Mae, said she hears more stories about walkaways but still called them folklore.

Bruce Marks of Neighborhood Assistance Corp., a Boston group that helps homeowners, said that to the extent that there are walkaways lenders should take the blame.

Who do you see walking? They're people whose rate is about to reset and they see no way out, Marks said. People who have a fixed-rate mortgage that was initially affordable and continues to be affordable don't walk away from their home, even when it's underwater.

Stuart Gabriel, a real estate expert at UCLA, said some of the apparent walkaways are likely to be people who bought houses as speculation and lied on mortgage applications, saying they would live in them.

Copyright 2008 by United Press International


Publication date: 11 May 2008   

Source: UPI-1-20080511-01264900-bc-us-walkaways.xml

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