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 afford to make the payments.
It's known colloquially as "walking away," or more jocularly as "jingle mail," for 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 think it makes no sense to keep up the payments.
"That is going on, clearly, and there's lots of evidence of that in the market," Donald K. Truslow, senior executive vice president of Wachovia Corp., said in a conference call with investors last month.
A few weeks earlier, Treasury Secretary Henry M. Paulson had waggled a stern finger at homeowners contemplating walking away from affordable mortgages: Do that, and you're no better than a "speculator," he said.
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.
'Hard to quantify'
When pressed for the number of walkaways who could afford their mortgage payments, major banks and lender groups could not produce figures. Nor could the Mortgage Bankers Assn., the leading trade group for housing lenders.
Truslow acknowledged during the conference call April 14 that walkaways were "hard to quantify." A Wachovia spokesman said this week that "we have heard anecdotally that people are walking away" but that the bank had no hard numbers.
Bank of America Chairman and Chief Executive Kenneth D. Lewis, whose company is acquiring mortgage lender Countrywide Financial Corp., complained about "a change in social attitudes toward default" in an interview with the Wall Street Journal in December.
In response to questions from The Times, Bank of America spokesman Terry Francisco said the bank had seen indications that some homeowners were taking pains to keep their credit card accounts current at the expense of their mortgage balances, often by raiding their home equity lines to pay their cards, a reversal of traditional customer priorities.
