Walking Away from the American Dream

"Across the country, more than 30 percent of homeowners who bought in the last two years are now saddled with negative equity, meaning they owe more on their mortgages than their homes are worth, the research firm Zillow reported recently. Those homeowners can’t easily sell or refinance their way out of those loans, especially with house prices still falling. The Wall Street Journal described this as a vicious cycle, giving borrowers "an incentive to walk away from their mortgages."

It’s more fodder for a blogosphere already inflamed by the prospect of widespread walkaways, prompted by Bank of America CEO Kenneth Lewis’ observation that social attitudes toward default have changed, making walkaways culturally acceptable. Fear of walkways also motivated a recent plan to delay foreclosures for some borrowers. Although walkaway reports remain anecdotal so far, "I think there is a real tendency to move in that direction," Susan Wachter, a real estate professor at The Wharton School at the University of Pennsylvania, told the Orange County Register recently.

The fact that owners...around the country are willing and even eager to give their homes to the bank at a huge loss, or that they might consider walking away, is proof that the mortgage crisis has altered in significant ways the long-held American dream of home ownership."