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Take This House And Shove It: The Emotional Drivers Of Strategic Default, Brent T. White
Take This House And Shove It: The Emotional Drivers Of Strategic Default, Brent T. White
Brent T. White
An increasingly influential view is that strategic defaulters make a rational choice to default because they have substantial negative equity. This article, which is based upon the personal accounts of over 350 individuals, argues that this depiction of strategic defaulters as rational actors is woefully incomplete. Negative equity alone does not drive many strategic defaulters’ decisions to intentionally stop paying their mortgages. Rather, their decisions to default are driven primarily by emotion – typically anxiety and hopelessness about their financial futures and anger at their lenders’ and the government’s unwillingness to help. If the government and the mortgage industry wish …
Underwater And Not Walking Away: Shame, Fear And The Social Management Of The Housing Crisis, Brent T. White
Underwater And Not Walking Away: Shame, Fear And The Social Management Of The Housing Crisis, Brent T. White
Brent T. White
Despite reports that homeowners are increasingly “walking away” from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations - and to ignore market and …