part 2

3. If the number is correct below that 25% of delinquencies are walk- aways from people with a sound financial situation the problem will even be much bigger going forward. Mainstreet is smarting out banks or the situation currently as a few mio live in homes who do not service their mortgages but live in the houses exploiting the situation of the banks who can not handle the process for many reasons. Which is a multi billion stimulus package by its own but the fact that 25% go short the negative home equity is rather alarming as the healthier segments of prime borrowers add the the negative momentum of subprime ones and the 1 tril. package the FED holds plus the tril of the GSE's are loosing big time money on their holdings. I had estimated that in real market terms the FED has likely a loss of 200 bil probably on their hands. Houseprices are nowhere close to a low and with real inflation shooting up the value of homes is even imploding faster than official numbers may tell.

excerpt

Why Homeowners 'Walk Away' From Their Mortgages

By: Mark Koba
Senior Editor

Wayne Bryant and his wife have just stopped paying the mortgage on their home in northern California, even though they can afford to pay. The reason? Because, Bryant says, the value of the house is less than what they owe.

"We are 45-50 percent under water," claims the 61-year-old Bryant, who works in airport management. "At this point we are 20 years away from being even. We're walking away because it's a good business decision."

Bryant bought his home three bedroom townhouse in 2006 for $582,000 and says it's worth about $315,000 now. He says he has never missed a payment on any of the homes or cars he's bought over the years. But that's changed.

"I thought about the moral hazard," Bryant admits. "But look at what's going on. Big banks are not helping anyone out. Big investors are walking away from debts. I'm angry how the system works. There's no way I'm going to feel guilty about this."

Analysts say Bryant is joining an increasing number of homeowners across the county who are "walking away" or making a 'strategic default' on their mortgage payments.

"About 25 percent of mortgage defaults across the country are the strategic kind," says Greg McBride, senior financial analyst for Bankrate.com. "That not a small number."

And it appears to be a growing option for homeowners.

"It's somewhat substantial," says Bob Walters, chief economist at Quicken Loans. "We are talking about it more in the industry and it's becoming more accepted among homeowners."

Lenders and Backlog of Mortgage Problems

What's helping make walk aways more acceptable is a lack of fear. If homeowners like Bryant don't dread the banks coming after them, there's a reason, says Jon Maddux CEO of the web site YouWalkAway.com that, for a fee, advises homeowners on strategic defaults.

"Banks are backlogged with paperwork on foreclosures and short sales," Maddux says. "And a lot of lenders are not really eager to take the property back because there's no housing market right now. There's no rush to go after delinquent payments."

While Bryant says frustration and anger with the system are driving him to skip his payments, not everyone is walking away because of outrage.

"I stopped getting child support payments and that meant the end of paying my mortgage," says Jayme Protich, a divorced mother of two college age children from Tallmadge, Ohio. "I tried working with the lender but they never got back to me. Not once."

Protich, who used Maddux's service, stopped making her $1,300 monthly payments in early 2009 on the three bedroom, two car garage home she and her ex-husband built 16 years ago. She tried selling the house after her divorce but got no offers. Even when the house was listed at the price of the mortgage, $215,000.

After living in the home for months and not making payments, Protich eventually had to move into an apartment. But any break in not paying the mortgage went to covering college fees for her children.

"The bank finally took over the house after a sheriff's sale," says Protich, who works at a local food service distribution company and has a second job in the summer at a local golf course. "I didn't want to do this, not pay my mortgage. But with my two kids, I didn't have much choice."