Survey: 48% OK with walking away from mortgage

By Mary Ellen Podmolik
Posted Dec. 7, 2010 at 12:47 p.m.

Nearly half of consumer say they are comfortable with the idea of walking away from homes with underwater mortgages — an ominous sign if the expected rise in foreclosures next year puts additional pressure on home prices.

Some 48 percent of homeowners with a mortgage said they’d consider a strategic default if the amount they owned on their mortgage was higher than the value of the property. Six months ago, just 41 percent of consumers said they’d consider it, according to a survey released Tuesday by realty Web sites Trulia and RealtyTrac.

“If this continues we’ll see an epidemic of strategic defaults,” said Pete Flint, Trulia’s co-founder and CEO. “The stigma is definitely gone and it could very well be perceived as a smart decision.”

Some of that increasing level of comfort is traced to issues of joblessness that are rising up the socio-economic ladder. Last week, the Bureau for Labor Statistics said the unemployment rate of 5.1 percent for college graduates represented the highest jobless rate for that demographic group since 1970.

“The market conditions have continued to deteriorate,” said Rick Sharga, senior vice president of RealtyTrac. “There’s just less and less faith in the lending institutions and less trust that they’ll be a good partner in working (you) out of this situation.”

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