OK to Walk Away?
Survey says 36% of Americans believe strategic defaults are acceptable in some cases.
More than one-third of Americans (36%) believe it’s acceptable for homeowners to walk away from their mortgages under some circumstances, according to a Pew Research Center survey.
However, 59% say doing so is “unacceptable,” according to the survey of 2,967 adults.
As the housing market continues to flounder in many parts of the country, 21% of homeowners say they owe more on their mortgages than their homes are worth, the survey finds. Some homeowners in this situation stop making their mortgage payments and let the financial institution foreclose on their homes.
How people fared financially during the Great Recession is linked to their views on walking away from a mortgage. Those who have had financial problems during the recession are more likely than others to say that walking away from a mortgage is acceptable.
Nearly one-in-four adults (24%) who say their families are just able to pay their monthly bills or can't meet expenses say it's OK to stop paying a mortgage, compared with 14% of those who say they “live comfortably.”
But homeowners who say their homes are worth less than what they owe are not more tolerant of the practice than those who would break even or make money on a sale (18% vs. 17%).
Nearly half (48%) of homeowners say the value of their homes declined during the recession, and as a group they are more likely than those whose homes didn’t lose value to say it's acceptable to renege on a mortgage (20% vs. 14%).
While some demographic groups are more likely than others to say it's OK to walk away—among them, Hispanics, adults younger than age 65, and those living in the West—these differences are mostly modest.
For example, 24% of all Hispanics say it's acceptable to abandon a mortgage, compared with 17% of whites and 21% of blacks.
However, roughly similar majorities of Hispanics (58%), blacks (56%), and whites (61%) say it's wrong to do so.
There are sharp differences by partisanship. Democrats are about twice as likely as Republicans to say it’s acceptable to walk away (23% vs. 11%).
As the housing market collapsed and the Great Recession took hold, sinking home values left many homeowners owing more on their mortgages than they could collect if they sold their properties.
In real estate terms, their mortgages are “under water” and their home loans are “upside down.”
According to the survey, about one-in-five mortgage-holders (21%) are currently “under water.”
Black homeowners are more likely than whites to be in this circumstance (35% vs. 18%) and lower-income homeowners are more likely than upper-income homeowners to face this problem (33% for those with family incomes of less than $30,000 vs. 15% for those earning $75,000 or more).
Middle-aged homeowners are more likely than either younger or older homeowners to be in this situation.
Caught between big mortgages, sinking home values, and the financial strains associated with periods of high unemployment, many homeowners have stopped making mortgage payments and opted to “walk away” from their loans and their homes.
Read the full report [pdf].