Daily Real Estate News  |  November 4, 2009  |   Voluntary Loan Defaults Are on the Rise
Voluntary foreclosures are challenging the government’s $75 billion effort to keep troubled and underwater borrowers in their homes.

About 588,000 borrowers walked away in 2008, twice the number in 2007, according to a study by credit management firm Experian and management consultants Oliver Wyman. Many more are expected to walk away, hampering the real estate recovery, economists say.

The mortgage unit of Citigroup says one in five borrowers defaults willingly, even though they're able to pay the mortgage.

"It's increasingly a more important factor driving the foreclosure crisis," says Mark Zandi, of Moody's Economy.com. "As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn't make financial sense to hold on to their homes. That's going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time."

Source: USA Today, Stephanie Armour (11/3/2009)