The Rise of the Mortgage 'Walkers'

Wow. The WSJ lays out the rational -- and ethical argument for walking away. Basically, because people can -- and the lenders and bankers asked for it.

If hundreds of thousands of people with decent work histories are going to have less-than-stellar credit because of foreclosures this year and next, they won't suffer so much as in the past. Many walkers are going to want to buy houses again some day; and when they do, lenders are going to want to make money lending them money to do so (hopefully requiring a good down payment). Investors searching for yield likely won't bypass what could be a large pool of borrowers.

This rapid transformation shows that the continuing political hand-wringing over what to do about failed mortgages isn't needed. It's beginning to dawn on lenders and their agents -- who assumed that borrowers who could afford to do so would make payments no matter what -- that they could be stuck owning hundreds of thousands of houses at a minimum. This realization will pressure the companies administering those mortgage loans to renegotiate more quickly with borrowers in cutting loan balances. Thus, some version of the "Paulson plan" would have happened without Treasury Secretary Henry Paulson's pressure on the capital markets in December.