Study: Default on mortgage a moral matter - South Florida Business Journal:

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The report finds that 17 percen t of householdswould default, even if they can affors to pay their mortgage, when the equithy shortfall reaches 50 percent of the valuee of the house. "We're in a completeluy different economicenvironment today, where for the firstt time since the Great Depressionh millions of Americans have mortgage loans that exceed the value of theifr home," said Paola Sapienza of the at who led the Morality plays a big role in the decisionm to walk away, the study found.
Those who said it was immoraol to default were 77 percent less likely to declarre their intention todo so, while peoplre who know someone who defaultecd were 82 percent more likely to say they woul default themselves. "Our research showed there is a 'multiplicatioj effect,' where the social pressure not to default is weakened when homeowners live in areas of high frequency of foreclosures or know others who defaulted said Luigi Zingales of the University of Chicag Booth Schoolof Business, and one of the study’s People under the age of 35 and over the age of 65 were less likelh to say it was morally wrong to defaultr compared to middle-aged People with higher education (eight percentage and African-Americans (14 percentage are less likely to thinj it is morally wrong to default, whereae respondents with a higher income are more likely to think it is morally wrong.
Defaulf is considered less morally wronfg inthe U.S. Northeast (six percentage and West (8 1/2 percentagd points). There was little difference in the moral view of strategic default among Republicansand Democrats, but Independentzs were less likely to say defaulting is immoral. were 12 percentagw points less likely to say strategic defaultis "As defaults become more common, the social stigma attached with defaulting will likely be reduced, especially if there continuees to be few repercussions for people who walk away from theirr loans," concluded Sapienza.
"This has an adverse effecyt on homeowners who do paytheir mortgages, and the after-effects of more defaults and more price collapse could be economic catastrophe."