Shift Seen Among Those Underwater

By:: Kirk Haverkamp | May 13, 2011

Attitudes among homeowners who are underwater on their mortgages have changed significantly over the past year, with nearly twice as many now saying it is ok for someone in financial trouble to simply walk away from their mortgage.

Twenty-seven percent of underwater homeowners now approve of so-called “strategic default,” at least in some circumstances, up from 14 percent last year. The term describes a situation where someone is still capable of making their mortgage payments, but finds it financially advantageous to allow it to go into foreclosure instead.

That attitude is markedly different from the public at large, which continues to be overwhelmingly opposed to strategic default, with 87 percent disapproving, even if the borrower is underwater or in financial distress. That’s according to a new National Housing Survey from Fannie Mae, looking at public attitudes in the first quarter of 2011.

Although underwater homeowners appear to be more willing to consider a deliberate default, fewer borrowers actually think they are underwater on their mortgage. Only 23 percent of mortgage borrowers said they owe more on their mortgage than their property is worth, compared to 30 percent who said they were underwater in January 2010.

Relatively few underwater mortgage holders have actually considered default, with 90 percent saying they had not done so. However, many seem to have growing concerns about their home loans, with 46 percent of underwater homeowners saying they feel stressed about their mortgages, up from 35 percent one year ago.

One group that does appear to willing to consider default is delinquent borrowers, 33 percent of whom said they had considered the possibility, with 20 percent saying that had given it serious consideration. That compares to only 5 percent of all mortgage borrowers who say that had considered defaulting.

Even so, many underwater homeowners express signs of optimism, with 30 percent saying they expect their home to increase in value over the next year, up from 20 percent one year ago, while 45 percent say they expect their personal financial situation to improve.

Start here to compare debt management rates from top lenders in our network

Call For Rates

800-419-1494

Speak to a lender now.

We will match calls to our toll free number with our network of lenders.

Mortgage Rate Quotes

National Rates

Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
5/1 ARM	2.75

Rates may contain points

Compare Rates »

Browse Mortgage Rates

Featured Guides

Browse our comprehensive guides to popular topics related to mortgage and personal finance.

Debt Management Calculators

Mortgage Loan Directory and Information, LLC or Mortgageloan.com does not offer loans or mortgages. Mortgageloan.com is not a lender or a mortgage broker. Mortgageloan.com is a website that provides information about mortgages and loans and does not offer loans or mortgages directly or indirectly through representatives or agents. We do not engage in direct marketing by phone or email towards consumers. Contact our support if you are suspicious of any fraudulent activities or if you have any questions.

Mortgageloan.com is a news and information service providing editorial content and directory information in the field of mortgages and loans. Mortgageloan.com is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers.