Because Americans can find a way to make a buck off anything

You Walk Away.

This is a company that for $995, will help people cede their houses to the bank in foreclosure:

You Walk Away is a small sign of broad changes in the way many Americans look at housing. In an era in which new types of loans allowed many home buyers to move in with little or no down payment, and to cash out any equity by refinancing, the meaning of homeownership and foreclosure have changed, economists and housing experts say.

Last year the median down payment on home purchases was 9 percent, down from 20 percent in 1989, according to a survey by the National Association of Realtors. Twenty-nine percent of buyers put no money down. For first-time home buyers, the median was 2 percent. And many borrowed more than the price of the home in order to cover closing costs.

“I think I could make a case that some borrowers were ‘renting’ (with risk), rather than owning,” Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University, said in an e-mail message.

For some people, then, foreclosure becomes something akin to eviction — a traumatic event, and a blow to one’s credit record, but not one that involves loss of life savings or of years spent scrimping to buy the home.

“There certainly appears to be more willingness on the part of borrowers to walk away from mortgages,” said John Mechem, spokesman for the Mortgage Bankers Association, who noted that in the past, many would try to save their homes.

In recent months top executives from Bank of America, JPMorgan Chase and Wachovia have all described a new willingness by borrowers to walk away from mortgages.

Carrie Newhouse, a real estate agent who also works as a loss mitigation consultant for mortgage lenders in Minneapolis-St. Paul, said she saw many homeowners who looked at foreclosure as a first option, preferable to dealing with their lender. “I’ve had people say to me, ‘My house isn’t worth what I owe, why should I continue to make payments on it?’ ” Mrs. Newhouse said.

“You bought an adjustable rate mortgage and you’re mad the bank is adjusting the rate,” she said. “And sometimes the bank people who call these consumers aren’t really nice. Not that the bank has the responsibility to be your friend, but a lot are just so uncooperative.”

The same sorts of loans that drove the real estate boom now change the nature of foreclosure, giving borrowers incentives to walk away, said Todd Sinai, an associate professor of real estate at the Wharton School of Business at the University of Pennsylvania.

“There’s a whole lot of people who would’ve been stuck as renters without these exotic loan products,” Professor Sinai said. “Now it’s like they can do their renting from the bank, and if house values go up, they become the owner. If they go down, you have the choice to give the house back to the bank. You aren’t any worse off than renting, and you got a chance to do extremely well. If it’s heads I win, tails the bank loses, it’s worth the gamble.”

In the boom market, homeowners took their winnings, withdrawing $800 billion in equity from their homes in 2005 alone, according to RGE Monitor, an online financial research firm.

Since the Depression, American government policy has encouraged homeownership as an absolute good. It protects people from increases in rent and allows them to build equity as they pay off their mortgages. And it creates stability in communities, because owners are invested in their neighbors.

But new types of loans like interest-only mortgages and cash-out refinance loans mean buyers do not pay down their mortgages. And adjustable rate mortgages, which accounted for 39 percent of mortgages written in 2006, expose owners to rent-like rises in their housing costs.

The value of homeownership, then, has increasingly shifted to the home’s likelihood to rise in value, like any other investment. And when investments go bad, people tend to walk away.

Didn't people who didn't pay back loans used to be called "deadbeats"? On the one hand, it's tempting for me to sit here in the house we bought at the bottom of the market in 1996 and since refinanced into a 4.75% fixed rate and say "Well, I did my homework and we didn't buy until we could afford it." On the other hand, there was such an element of using the middle class and the poor as cash cows for lunatic investment vehicles designed to make banks and the wealthy even more filthy rich that it's gratifying to see them get THEIR comeuppance for a change. If only it didn't mean that the inevitable bank failures and other signs of coming economic collapse would impact those who were careful with their money as well as those who were reckless.

Are those who bought homes with these option ARMs and interest-only mortgages and have absolutely no reason, other than the commitment they made to the bank, to actually pay the mortgage now that the home is in a negative equity position, any more unethical than the wealthy who have had access to more ways to game the system for a longer time? Working- and middle-class Americans have opened savings accounts in banks that started out with one interest rate and now pay significantly less. They've taken credit cards that started out with a 9.9% fixed rate and have now gone up to 15%. They've seen their representatives and Senators in Congress pass bankruptcy legislation to benefit the banking community at their expense. So aside from a personal moral code that may say "This is wrong", can you blame them for wanting to be able to have a way to game the system too?

I'm not saying all these people are worthy of our sympathy. As someone waited till the age of 40 to buy a house and is still living with the 40-year-old bright red carpet left by the previous homeowners and a kitchen that is going to be updated piecemeal and an original first-floor bathroom tiled in black and sage green, it's hard for me to have any sympathy for those who bought houses they couldn't have afforded if they'd had to make an equity commitment. It's hard to sympathize with people dumb enough to not see that a 1950's 1500 square foot Cape Cod just wasn't a half-million dollar house by anyone's measure. It's hard for me to sympathize with people who took an extra $50,000 when they bought their houses so that they could have the new kitchen with the granite and stainless RIGHT NOW, and it's even harder to sympathize with people who tapped their equity to buy Escalades and luxury vacations.

But when you have a president who took us to war on a lie, who has allowed incompetent contractors to gain generous government contracts; when you have a vice president who helped blow the cover of a CIA operative working on nuclear proliferation; when you have White House officials who don't think they have to respond to subpoenas, can you blame ordinary Americans to want their own piece of the "no accountability pie"?