Beach To Bay Real Estate Center

Wall Street Journal (02/29/08) P. A3; Simon, Ruth; Patterson, Scott
During previous housing slumps, homeowners would default on their mortgages only when payments became unmanageable due to job loss, illness, divorce or other financial problems. However, observers say more homeowners--some of whom purchased their homes as investments--are walking away from their properties even though they can afford the mortgage payments, simply because they owe more than the real estate is worth, cannot orchestrate a loan modification or cannot sell due to falling prices that show no signs of recovery in the short-term. PMI Mortgage Group Inc. chief economist David Berson notes that "delinquencies and defaults could be higher than the industry is estimating" if these scenarios indicate a national trend. Meanwhile, Fannie Mae officials are considering penalties for borrowers who abandon their mortgages despite having the means to repay, including litigation or forcing them to wait a certain period of time before qualifying for another mortgage backed by the government-sponsored enterprise.