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Survey: More Say It's Okay to Walk Away when Mortgages are Underwater

September 30, 2010

PIERRE, S.D. - One in every 2,100 homes in South Dakota is in some sort of foreclosure, according to RealtyTrac. At the same time, public support is growing for those who walk away from home loans that are underwater, a Pew Research Center survey has found. Thirty-six percent agree it makes sense to stop making payments, in some cases.

Liz Quick, an attorney who counsels homeowners considering that decision, advises having a lawyer or credit counselor look at the original loan documents first.

"You might end up having issues related to your loan, perhaps predatory lending. A professional can look at your contract to see if there's any protection for you within your contract rights."

In Quick's experience, most people don't intend to default on their obligations, however. Instead, she says, they run through their savings to stay current - and often they wait too long to seek help.

"Educating yourself and getting as much information as you can, as early as you can, is always the best advice. There's a lot going on now that's there to find, but you do have to put out the effort and go after it."

Curtis Everson, president of the South Dakota Bankers Association, says walking away from a loan can have a long-term impact on your credit.

"You are going to have hard time having a credit card, you are going to have hard time borrowing money to buy a car, you are going to have a hard time borrowing money to help support your kids while they are in college - all those kinds of things."

In the Pew survey, the less secure people felt about their finances and the more their homes had dropped in value, the more likely they were to say it's okay to default on a mortgage. The survey, "Walking Away," is at www.pewsocialtrends.org.

Dick Layman, Public News Service - SD