More on jingle mail


A bank CEO says, unlike in previous economic downturns, once homeowners go 30 days late on the mortgage they never make another payment. In previous times, they might have kept paying, remaining 30 days late. But no more. They just walk away from the home, and mail those jingling keys back to the bank.

This is something quite new. In the past, people would try to hold on to the house. However, they probably also put 20% or so down and thus had a financial stake in the house.  But many current homeowners in trouble today probably got NINJA loans (No Income, No Job, No  Assets) and might have only put a few thousand dollars down, if that. Some put nothing down.

Thus, the homeowner has little or no money in the house, can live in it for several months as foreclosure happens without paying anything, then walks away. Sure, their credit is damaged for a while, but if their mortgage just reset to a higher level they probably have no real choice anyway.

  • And don’t forget those partial interest loans where the “buyer” fell further into debt each passing month going “upside down” as soon as they signed the mortgage. I’ll take 30% down and 20 years fixed any time.

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