On our Mortgage Blues website we wrote about the financial crisis as it built. We knew there was a problem, and started writing about it in 2005. Apparently Goldman Sachs and others knew it too, and bet against shady mortgages and resulting investment vehicles.
Nearly 4.5 million mortgages are in foreclosure or headed that way, and Moody’s Economy.com estimates that 20 to 25 percent of all foreclosures may be strategic defaults.
With nearly 15 million homeowners owing more than their homes are worth, those numbers could still rise, which would further depress the housing market just when it seems poised to stabilize.
But don’t talk to homeowners about their civic responsibility or their obligation to banks. Once upon a time, Americans might have felt duty-bound to pay back what they owe. But deeply unpopular bank bailouts, plus unseemly bonuses for bankers and exorbitant pay for CEOs, seem to have diluted any sense of honor in financial transactions.