It is more than a moral issue

Even though the real estate market is limping into its continued recovery and foreclosures seem to have subsided a bit, there are still many folks who are finding it increasingly difficult to stay in their homes. Some hang on until foreclosure, others opt for the short sale strategy - agreeing to sell their homes for less than they owe - a sometimes arduous process that requires patience and stamina from both buyer and seller as they wait for the lien holder to make a decision.

Although by many accounts, short sales are becoming less stressful and foreclosures a bit more straightforward, these options don't help those who just can't wait. Many, who are unable to find employment or are strapped with medical bills cannot bear the thought of one more call from a collector or another letter from a lender promising actions to follow if payments aren't made.

This can be especially hard on the mature population as they stress and fuss over not meeting their obligations. Those, from the "my word is my bond" generation experience severe anxiety over unfulfilled promises, be they to a friend or to a bank. Many are humiliated and committed to living up to their expectations, sacrificing food and compromising health for the sake of saving to make their payments. Some eventually lose that battle and end up in foreclosure after all, no better for the experience.

Not so, for many of the younger demographic. A recent survey done in Nevada found that walking away from a mortgaged home is socially acceptable to 45 percent of homeowners there. The other half however, think that homeowners have a "legal and ethical obligation to pay their mortgage if they can."

The practice of walking away from mortgages has become so prevalent that it even has a new, less obtrusive name. Referred to in many circles as "strategic default" the stigma of defaulting has become - to some - a good strategy for managing personal finance. With strategic default, homeowners often walk away, not because they can't make their payments, but because they are making payments on a home that is worth far less than they owe.

One could argue that a person on a fixed income, who has stopped buying prescription medications and forfeited their health to stay in an underwater home, would be justified by walking away. Harder for many, is justifying that same strategy because you made a mistake. The survey referenced here was summarized in a report issued by the Nevada Association of Realtors. "This year's report shows it's more socially acceptable to strategically default on your mortgage," says Blane Johnson, NVAR's president. "I hope banks and government leaders will look at this to help them get ahead of these issues."

"For those who decided to walk away from their mortgage, 40 percent said they had been advised by their lender or financial adviser to stop paying their mortgage so that they could qualify for more assistance with their home loan."

Given the prevalence of unemployment in this country, it may be time for assistance for those who would like to meet their obligations but are upside down in their homes. At least that's the way they see it in Nevada, one of the hardest hit by foreclosures in recent years. "NVAR is calling on lenders to do more to help distressed home owners, such as through refinance and loan modification programs or streamlining the short sale process so that fewer homeowners will opt to walk away from their mortgage."

As we see it, expediting short sales will certainly help prevent foreclosures - which are costly for lenders and emotionally damaging to the debtors - and will help clear inventory from the housing market before those homes go vacant where often they are left to deteriorate.

For help navigating through the short sale process, call a Realtor. Although this experience may be your first, it certainly isn't the first for many of us.

Trust an expert... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.