Homeowners who take the path of strategic default on their mortgage go from having a perfect payment history to making no mortgage payments at all. Most financially distressed people try to keep up with their mortgage payments at the expense of other bill payments.
Squatters are not just setting up house in these vacant homes for their own benefit either; many phoney home 'owners' are trying to make a buck with these bank owned properties as well. Many renters have been taken in by Craigslist and other advertisements for rental properties that are being rented out by people who do not actually own the property.
It is unclear how many of these million dollar-and bigger-homes are primary or secondary residences. While it can be a tough choice to walk away from an underwater mortgage for your primary residence, defaulting on a loan for a secondary or vacation home is far less difficult and might partly explain why this subsection of home owners is defaulting at such high rates.
As homeowners struggle to cover their mortgage payments, utility bills, childcare costs and food bills, the accompanying tension and anxiety can wear down a person's ability to cope. Prolonged periods of stress and hardship can quickly turn into an anxiety disorder or to full-blown depression.
One of the major problems in today's real estate market is that banks and financial officers are having problems with home owners and their strategic defaults.
The Mortgage Bankers Association has released its figures for the fourth quarter of 2010 and the reviews are mixed about the findings. The report has shown that homes in foreclosure had risen in the last quarter to 4.63 percent. This is higher than third quarter results, yet the figure may be skewed. Most of the major banks halted many of their foreclosure proceedings in the fourth quarter in an effort to respond to the robo-signing scandal.
Some cite their banks' refusal to work out new terms based on the new value of their homes. Others simply say that they aren't going to pay more money to own a home – with all of its attendant maintenance and repair bills – when they could pay half as much and have the landlord take care of that.
Some experts think that home prices have hit bottom now while others are forecasting that the bottom won't truly been seen until at least the second quarter of 2010. While so many home owners are struggling to decide what the best way to deal with their underwater mortgages, many people are watching the trends very closely right now.
With the piles of vacant properties already crowding many areas real estate inventory across the nation and a great many home owners are having their credit rates gutted as many homes fall into foreclosure, many banks are turning to alternatives to standard foreclosure proceedings.
As the shadow inventory is put on the market, it is likely going to have some effect on the price of homes for some time to come. Some experts think that the current stash of shadow inventory will take almost three years to clear up if buying rates stay the same as they are now.
The effects of the bail out strategy may finally filter down to American homeowners. President Obama's recent conference in Phoenix outlined a plan for providing relief to millions of people facing a home foreclosure, stabilizing the housing market and possibly driving down interest rates.
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