Economy Watch: Mortgage Walk Away? No Way

Is it right to walk away from a seriously underwater mortgage? According to a survey released by the Pew Research Center, a majority of those surveyed--59 percent--think not, deeming it "unacceptable."

September 16, 2010
Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user Valentin.Ottone

Is it right to walk away from a seriously underwater mortgage? According to a survey released by the Pew Research Center, a majority of those surveyed–59 percent–think not, deeming it “unacceptable.” Some 19 percent said it was “acceptable.” That leaves a large chunk of the survey (17 percent) saying, in essence, “maybe”–or rather, it “depends on the circumstances.”

Interestingly, about 21 percent of the nearly 3,000 people that Pew Research talked to were, in fact, underwater. On the face of it, that’s suspiciously close to the total who feel that walking away is acceptable, but in fact homeowners whose mortgage debt surpasses their home values weren’t more likely to approve of walking away than those who rented or didn’t have underwater mortgages.

Among that 21 percent who are underwater, Pew Research found that the majority are either black (35 percent) or Hispanic (41 percent); make less than $50,000 a year (62 percent); and live in the South or the West (23 percent and 28 percent, respectively). The concentration of underwater mortgages in the West might be called the “Vegas effect.”

CoreLogic Home Price Index Flat

Information- and number-cruncher CoreLogic said on Wednesday that its Home Price Index remained essentially flat in July as transaction volumes wilted in the post-tax credit environment. The index showed no gain or loss year-over-year, following a run of months in which the index was up (2.4 percent higher in June 2010 compared with June ’09, for instance).

Most states saw a drop in home values year-over-year. Still, houses appreciated in some places, such as Maine (4.5 percent), South Dakota (4.3 percent), California (3.7 percent), New York (3 percent), and Virginia (2.6 percent). The states with the largest home-price depreciation, including distressed sales, were Idaho (-12.6 percent), Alabama (-9.7 percent), Utah (-5.6 percent), Oregon (-4.8 percent) and Washington (-4.3 percent).

“Although home prices were flat nationally, the majority of states experienced price declines and price declines are spreading across more geographies relative to a few months ago,” said Mark Fleming, chief economist for CoreLogic, in a statement. “Home prices fell in 36 states in July, nearly twice the number in May and the highest since last November, when national home prices were declining.”

Biggest Solar Development Ever Approved by California

California regulators greenlighted construction of the world’s largest solar-power plant on Wednesday, a $6 billion project in the desert neat Blythe, Calif., by two German partners: Solar Millennium AG and Ferrostaal AG. The plant will use solar-thermal panels that direct the sun’s heat to create steam that turns turbines, and all together will generate 1,000 megawatts of power.

The California Energy Commission has said that it will approve the building of nine such plants by the end of 2010, which will eventually double the amount of solar power generated in the entire United States. Federal loan guarantees for the Blythe project are still pending, but if approved, the JV, called Solar Trust of America, might be able to begin construction this year.

Wall Street clawed its way up on Wednesday, with the Dow Jones Industrial Average ending 46.24 points in positive territory, or 0.44 percent. The S&P 500 was up 0.35 percent, and the Nasdaq gained 0.5 percent.