Why Underwater Owners Still Pay the Mortgage

April 23, 2018

Nearly 2 million homeowners are underwater on their mortgages despite huge gains in home prices in recent years. But unlike during the last housing crisis, when many made “strategic defaults” by stopping payments and walking away from their home, underwater borrowers now are trying to keep up with payments.

Nearly 87 percent of underwater homeowners say they have not considered stopping their monthly mortgage payments, according to the New York Federal Reserve’s Survey of Consumer Expectations. Six percent of respondents say they’ve considered it but haven’t followed through. 

Researchers prodded respondents further about why they’ve kept up payments, and nearly 78 percent say: “I like my home and don’t want to lose it.” Here’s a closer look at survey responses.

  • 77.6 percent: “I like my home and don’t want to lose it.”
  • 16.8 percent: “The lender can come after my other belongings if I stop making payments.”
  • 10.9 percent: “House prices will recover, and my home will eventually be worth more than the debt on the home.”
  • 19.1 percent: “Not making payments will negatively affect my credit score.”
  • 25.2 percent: “The cost of having to move to a different home is too high if I stop making payments.”
  • 15.5 percent: “I think it is morally wrong to stop making payments.”

Source: “Why Do Underwater Homeowners Keep Paying the Mortgage?” MarketWatch (April 23, 2018)