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Mark Zandi, chief economist for Moody’s Economy.com, said he expects the problem to get worse this year and next. “As people struggle to make ends meet, they will say this just doesn’t make sense” about continuing to make payments, he said.
The trend is being fueled by the large number of underwater mortgages – those where the bank is owed more than what a sale might net a homeowner. Michigan is fourth in the nation in underwater mortgages, with 38.5% of homes — or 532,774 — underwater.
Those who walk away often do so after failing to negotiate a loan modification or a short sale.
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