It is said that 20% of home owners are "underwater" on their mortgages and more and more homes are going into foreclosure every day. For many the best financial option is to let their home go into foreclosure instead of throw away thousands of dollars that the home has lost in value.
The prediction is that most of these home owners will do just that but some think that people aren't always so rational.
One reason is that people tend to over value their own home. That makes it to valuable for them to just walk away from.
Secondly, people tend to place greater importance on immediate consequences than they do the long term ones. Walking away might help you out down the road but is a lot of pain and effort right now.
Then there is the morality of it. Some feel it is just plain wrong to walk away because if you borrowed the money, then you need to pay it back, it's that simple. Check out this article with great real-life examples of home owners situations and what they intend to do about it.
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