Survey: 77% of Borrowers Would Not Strategically Default if Underwater

If one were to rely solely on the headlines, you might be inclined to think that all mortgage-holders whose loans are underwater are planning on throwing in the towel, walking away from their mortgages, and allowing the property to go into foreclosure.
[IMAGE] Admittedly, some do intentionally plan a strategic default â€" the term that refers to consumers who can afford to make their mortgage payment but choose not to since the value of their home has decreased. However, the ""National Foundation for Credit Counseling's"":http://www.NFCC.org (NFCC) 2010 Financial Literacy Survey revealed data that supports consumers' desires to stay in their homes.

The survey asked under what circumstances, if any, mortgage-holders would consider it justifiable to default on their home loan. Only 23 percent of respondents answered that foreclosure is justifiable if the property is now worth less than what is owed on it. Fifteen percent replied that there is _no justifiable circumstance_ under which it would be acceptable to default on a mortgage.

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The survey also found that the overwhelming majority of consumers, even those in financial distress, still consider their mortgage payment to be the top priority. When asked if they were unable to meet all of their financial obligations, would they be more likely to keep their mortgage or their credit cards current, 91 percent of respondents said they would pay their mortgage first.

""Taken together, the NFCC survey data brings us some encouraging news,"" said Gail Cunningham, spokesperson for the NFCC. ""Consumers still place a priority on making their mortgage payment, less than one-fourth think that defaulting on a mortgage is justifiable simply because the property is underwater, and a significant number take mortgage obligations so seriously that they find no acceptable reason to default on a home loan.""

Cunningham added, ""Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders, and the housing market overall.""

The NFCC, founded in 1951 and headquartered in Silver Spring, Maryland, is a nonprofit credit counseling organization, whose mission is to promote the national agenda for financially responsible behavior. The ""organization’s member agencies"":http://www.debtadvice.org help struggling borrowers evaluate their housing options through trained and certified housing counselors.

NFCC members annually help four million consumers through nearly 830 community-based offices nationwide.