The customer is never right

Another story that's old in blogtime, coming from the LA Times for May 10, but still worthy of quick notice, something to store in your head for future reference:

Bankers and housing market analysts are warning of a chilling new trend in the mortgage world: Homeowners voluntarily defaulting on their loans even though they can actually afford to make the payments.

It's known colloquially as "walking away," or more jocularly as "jingle mail," from the sound your house keys supposedly make when you mail them back to your bank.

It's a way of saying that Americans are beginning to apply a cold financial calculation to home ownership: When a home's value has fallen below what is owed on its mortgage, they feel it makes no sense to keep up the payments. ...

Elsewhere, media reports and Internet postings are rife with stories about the trend and a supposed sea change in American attitudes toward debt. But there's a major problem with all this talk about the phenomenon of solvent homeowners "walking away": There doesn't appear to be any hard evidence that it's actually happening.

A senior executive vice president of Wachovia Bank claimed there was "lots of evidence" for such willing defaults. A representative of Bank of America said that some homeowners were paying off their credit card balances at the expense of their mortgage balances, often by raiding their home equity lines. Someone speaking for the Mortgage Bankers Association said walkaways are "becoming more prevalent." But in each case, when asked for actual numbers, for actual facts, none of those accusing ordinary homeowners of being no-good cheapskates trying to keep decent, hardworking banks from getting their well-deserved, hard-earned payments could back up their charges.

The bottom line? Here it is:

Bruce Marks, CEO of Neighborhood Assistance Corp., a Boston-based nonprofit agency that helps strapped homeowners, says flat out that the notion that legions of borrowers are simply deciding not to pay is an "urban myth" that largely reflects the mortgage industry's desire to blame homeowners, rather than their lenders, for the surge in problem loans.

Just another case where, when you hear tales of the poor, honest, beleagured corporations being victimized by those mean, two-timing, conniving consumers, you should consider the source.