"Homeowners should be walking away in droves. But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits. One can have a good credit rating again--meaning above 660--within two years after a foreclosure."
That's the conclusion reached by a law professor who's written a paper about strategic default, which is when you elect to walk away from an underwater mortgage because you stand to lose more money trying to keep it than if you cut your losses immediately.
The problem is, lots of people think it's the wrong thing to do, because individuals are supposed to play by different rules than the companies they do business with.
The government has shovelled loads of money the banks' way, boosting their record profits and now the executives are salivating at fat bonuses again.
As for the taxpayers, they are screwed big time as the government racked up billion dollars deficits each month (which has to be paid eventually). And for the millions of unemployed, seriously, Wall Street don't give a damn.
This law professor has written a great article about strategically defaulting our mortgages (of course, it is best to be prudent rather than defaulting on debts). Maybe it is time for homeowners and local lenders to screw back the predatory bankers and mortgage firms.