Photo: Wikimedia Commons
More and more homeowners in California are walking away from their mortgages, even though they can technically afford them.This is a trend that’s been happening for a while, but it’s picking up steam, and in part these homeowners see it as a big middle finger to the bailed-out banks.
[Wynn] Bloch paid $385,000 for the two-bedroom in 2006, when prices were still surging. Comparable homes are now selling in the low-$200,000s. At 66, the retired psychologist doubted she’d see her investment rebound in her lifetime. Plus, she said she was duped into an expensive loan.
The way she sees it, big banks that helped fuel the mess all got bailouts while small fry like her are left holding the bag. No more.
“There was not a chance that house was ever going to be worth anywhere near what my mortgage was,” said Bloch, who is now renting a few miles away after defaulting on the $310,000 loan. “I haven’t cheated or stolen.”
Says Luigi Zingales in the piece: “The fact that people are strategically defaulting — there is no question… The risk that the number of people doing this might explode is significant.”