New Mortgage Product

This will be the last post on the home market and mortgages for a while, but saw an article {$$$} in the WSJ last week on a trend were home owners are abandoning their homes & mortgages as home values decrease.

"As home prices plummet, growing numbers of borrowers are winding up owing more on their homes than the homes are worth, raising concerns that a new group of homeowners -- those who can afford to pay their mortgages but have decided not to -- are starting to walk away from their homes."

"Many are speculators who had planned to quickly flip the home, but others appear to be homeowners who had second thoughts about their purchase."

"Some borrowers feel they have no good alternative. A tight credit market has made it tough for would-be sellers to find buyers or for borrowers looking to lower their mortgage costs to refinance."

"Other borrowers are walking away in frustration because they can't arrange a workout with their lenders, says D.J. Enga, director of outreach services for Auriton Solutions, which counsels homeowners nationwide. Mr. Enga expects that 10% to 15% of the roughly 4,000 callers counseled this month by Auriton, of St. Paul, Minn., will walk away from their mortgages."

"Some financial advisers are even encouraging homeowners who are upside down to consider foreclosure, which they see as a purely financial decision with limited negative consequences. YouWalkAway.com, a Web site started in January that offers foreclosure counseling to homeowners, advises that borrowers who default on one mortgage can typically get another mortgage between two and four years after a foreclosure. Then, "before you know it, you will have this behind you and a fresh start!" the site says."

I think the mortgage industry is missing a great way to increase market share. They can offer a new loan product. It comes with a slightly higher interest rate but allows you the flexibility to walk away from it. In the past they've offered loans where you could pay want you wanted and ones in which you did not have to show proof of income. This is next logical step.

Source
http://online.wsj.com/article/SB120424677934501611.html