Just Walk Away?

How does the non-profit community account for the new state of home ownership, where “underwater” homeowners are increasingly prepared to walk away from the mortgage debt on their homes.

Here’s the problem: from policy leaders to on-the-ground community organizations, non-profits were telling their clients to buy a home for the last ten or fifteen years.  Now, many of those households are in homes that are underwater. Poor America, and in particular female black America, own less now than they have at any time in the last decade.

No one, from investors in mortgage-backed securities down to municipalities and neighbors, are happy when someone walks away. It creates all kinds of problems.

Do not confuse walking away with seeking a loan modification. The latter group are struggling to remain rooted to the American dream. The “walkers,” though, are rejecting the very concept that drove so many non-profit groups to support any effort at stimulating home ownership.

Home-ownership is still very popular, of course. Walking away is an option taken up by only a small minority. Fannie and Freddie articulate their mission as “the American Dream” business. Still, “walking away” is less rare than it used to be, and in (more…)