The AP reports that more and more people are doing the “midnight move” and just walking away from their house as the mortgage payment increases and the equity decreases. And most surprisingly, it’s not just the “subprime” borrowers doing it: people with decent credit are also considering this more and more.
That has already led to surging defaults among risky subprime borrowers who could barely afford their mortgage payments even before they got hit with the double whammy of falling home values and rising adjustable-rate loans.
Seemingly creditworthy homeowners are bailing out now, too. They aren’t following the predictable script of the past, which meant stopping payment on credit card and other debt just to keep up their mortgage obligations.
“If you go into a new home purchase with no skin in the game, with just your credit score but no money down, then you really don’t have much to lose from walking away,” said Alex Stenback, a mortgage banker in Minneapolis who writes the blog “Behind the Mortgage.”
There’s even a website to educate people to the process of bailing on their house: www.YouWalkAway.com. Seems like a trend in the making.
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