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Foreclosure Report Shows Divide in Homeowner Attitudes
Foreclosure Report Shows Divide in Homeowner Attitudes

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AIR DATE: August 1, 2012

A new study suggests that at least one type of foreclosure may be losing some of its stigma.

According to the 2012 Face of Foreclosure report, 45 percent of those surveyed felt that walking away from an underwater mortgage, or “strategic default,” is OK, while 45 percent thought homeowners should honor their financial obligations.

“The trend is that its more socially acceptable now to make a business decision that it is no longer worth holding on to the property, and to go ahead and let that go back to the bank,” says Blane Johnson, president of the Nevada Realtors Association. “You just hand over the keys and walk away.”

According to the report, there’s been an uptick in homeowners who are behind on their payments and are going the strategic default route. Johnson says that taking this path is viewed as a business decision similar to moving on after losing money on any other bad investment.

Another factor in favor of the defaulting homeowner is something the report refers to as the “plus one factor.” This means that the homeowner experienced a setback in addition to a foreclosure, such as a job loss or a medical bill.

“There are two events collaborated to cause a strain on you where a lot of people unfortunately lost their homes,” says Johnson. “So some peoples’ credit score, while it was damaged, are going to be able to recoup more quickly.”

The public perception of foreclosure may be changing, but public attitudes toward home ownership are not, according to Johnson. Even people who have gone through the painful process of losing a home are eager to get back into the market.

“A huge majority said they’d go buy a house again,” he says. “People love the idea of home ownership. They like buying into their community.”

And once and future homeowners who have gone through the foreclosure process may find lenders surprisingly forgiving.  

“Lenders are starting to understand that a lot of people went through a short sale or a foreclosure, and they take that into consideration,” says Johnson. “Hopefully there’s going to be some sort of leeway with these fico scores going forward.”

 


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COMMENTS:
I agree that the individual homeowner is being made the fall guy and it makes me mad! Today I read an article stating that Goldman Sachs had a 500 million dollar fund and Blackstone had a 200 million dollar to buy up REO properties and rent them back to us. So the distressed homeowner will not get the write down or refi but Goldman Sachs will. You the person who lives and works here well you will now be a class of renters and good luck getting them to fix the water heater. So sad!
LvjackieAug 2, 2012 11:35:26 AM
Why should we expect mother government to bail out either banks or homeowners? Businesses - including banks - and individuals make bad investment decisions and fail every day. The proper course was, and is, to just take the losses, let the market clear, and then move on. Of course, in socialist America, it's the taxpayer that is expected to take all of the losses, whether it be bank losses or homeowner losses.
Tom HurstJul 30, 2012 08:51:16 AM
The split is due to propaganda, some people believe what the banksters tell them to believe...brass tax...the banks created the situation, they were bailed out (corporate socialism) they were given TARP money, and the people got hung out to dry. If we were honest with ourselves, we would know that this is not a capitalist system, otherwise the banks would have failed (all of them) we the people would have to clean up a mess and we would be better off today.
Jennifer FlorioJul 29, 2012 20:22:47 PM
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