REAL ESTATES FORUM

New York Times
Facing Default, Some Walk Out on New Homes

By JOHN LELAND
Published: February 29, 2008

When Raymond Zulueta went into default on his mortgage last year, he did
what a lot of people do. He worried.

In a declining housing market, he owed more than the house was worth, and
his mortgage payments, even on an interest-only loan, had shot up to $2,600,
more than he could afford. I was terrified, said Mr. Zulueta, who services
automated teller machines for an armored car company in the San Francisco
area.

Then in January he learned about a new company in San Diego called You Walk
Away that does just what its name says. For $995, it helps people walk away
from their homes, ceding them to the banks in foreclosure.

Last week he moved into a three-bedroom rental home for $1,200 a month, less
than half the cost of his mortgage. The old house is now the lenders
problem. They took the negativity out of my life, Mr. Zulueta said of You
Walk Away. I was stressing over nothing.

You Walk Away is a small sign of broad changes in the way many Americans
look at housing. In an era in which new types of loans allowed many home
buyers to move in with little or no down payment, and to cash out any equity
by refinancing, the meaning of homeownership and foreclosure have changed,
economists and housing experts say.

Last year the median down payment on home purchases was 9 percent, down from
20 percent in 1989, according to a survey by the National Association of
Realtors. Twenty-nine percent of buyers put no money down. For first-time
home buyers, the median was 2 percent. And many borrowed more than the price
of the home in order to cover closing costs.

I think I could make a case that some borrowers were renting (with risk),
rather than owning, Nicolas P. Retsinas, director of the Joint Center for
Housing Studies at Harvard University, said in an e-mail message.

For some people, then, foreclosure becomes something akin to eviction