And CNBC let it slip that 50% of the owners of houses in foreclosure don’t need BO’s “loan modification” programs because they are GONE, and the houses are empty. There are more prime than subprime mortgages going into bankruptcy now because, just as Rick Santelli predicted, home owners in trouble saw their irresponsible neighbors being bailed out, so they stopped paying their house payments, too.
Or they got laid off
Also factor in the fact that in some states, the lender can’t go after the borrower for any difficiency in the loan. If a person got a low or no down payment mortagage and their house is now worth $100,000 or more less, it MIGHT be a wise financial decision to allow it to go into foreclosure. That process can take a year and if the person saved the money used for mortgage payments, they would have a pretty good stash of cash to put into another home a few years down the road.
The loan practices of lenders were largely responsible for the run up in real estate, so there is no reason to feel bad for them.