Strategic Default: Would Half of Homeowners Walk Away?

While there may be signs that the housing market is mounting a comeback, homeowners hit hardest by the real estate meltdown aren't growing any more patient, a new poll suggests.

An online poll conducted by real estate website HousingPredictor found that nearly half of of those who responded said that they would walk away from their mortgage obligations if home prices continue to slide. The poll, which drew more than 1,000 responses from visitors to HousingPredictor's forecasting website, is unscientific, but it does seem to reflect changing attitudes toward strategic default.

An identical poll conducted in March 2010 by HousingPredictor found that 32 percent of respondents said that they would pursue strategic default if prices continued to drop. In HousingPredictor's most recent poll that number ticked up to 47 percent, suggesting that a wider swath of beleaguered homeowners -- or at least homeowners who visit HousingPredictor -- are willing to ditch their loans.

In 2009, a national survey conducted by Reecon Advisors found that just one in 10 homeowners would probably choose to default on a home if its mortgage was significantly higher than the home was worth. But attitudes may have changed over the last few years, with strategic default shedding some of its stigma as many homeowners grow frustrated with falling home prices and revelations of bank malfeasance.

"Back in 2008 people were very emotional, very scared, in disbelief or denial," Jon Maddux, co-founder of YouWalkAway, told DailyFinance last fall. "Now they are simply fed up. It's a very calculated, black-and-white business decision. People feel very relieved."

A recent prediction by Fitch Ratings would seem to suggest that such a cynical outlook among borrowers' would be unlikely to change anytime soon. The agency recently released a report that forecasts that home prices will drop another 9.1 percent before leveling out. That would leave even more Americans underwater, and perhaps even more open to pursuing strategic default.

The Price of Walking Away

While walking away from a loan may seem like the best route for a homeowner navigating the rocky terrain of today's economic landscape, homeowners should think twice about choosing the path of strategic default, some experts say.

Before the housing meltdown, a 30-day late payment often dinged a homeowner's credit score by only about 30 to 40 points, lending manager Glamis Haro told AOL Real Estate. But as of last sprin, that number is now closer to 100 points, Haro said. And if a bank forecloses on a home, its former owner may have to wait up to seven years before being eligible for a mortgage again.

What's more, in most states banks may sue a delinquent homeowner for the "deficiency," or the amount that the homeowner owes on a loan after the home sells.

If an underwater homeowner is set on getting out from under a loan, the borrower may want to consider opting for a "short sale." While the option may not release a borrower from liability for a deficiency altogether, it reduces a deficiency amount and limits damage to the borrower's credit score.