"Jingle Mail" Reports On the Increase In Arizona

In Arizona, The Arizona Republic reports:

• Instead of mailing in their monthly mortgage payment, a growing number of homeowners are sending lenders their keys. As housing prices fall and rates on some mortgage loans rise, more homeowners are walking away from their homes, according to housing-market watchers. [...] The growing trend, called "jingle mail," is pushing up foreclosures and alarming market watchers, particularly in metropolitan Phoenix, where home prices have dropped 18 percent in the past year.

***

• The mortgage industry is struggling to estimate how many homes are going into foreclosure because of people who don't want to pay, rather than because of people who can't afford to pay. Industry estimates and anecdotes suggest the figure is climbing in the Valley because so many people who bought during the peak are now upside down in their mortgages.

***

• "Instead of calling it a foreclosure, these couples are saying, 'We're giving it back to the bank,' and then moving a couple of blocks away and renting a home for half their mortgage payment," [one housing analyst] said. "These people are finding it easier to walk away."

• Businesses are popping up that guide homeowners on the best way to walk away from their mortgage. [...] Also, the Mortgage Forgiveness Debt Relief Act of 2007 took some of the penalty away from a homeowner filing for foreclosure. Before the act, if a bank sold a foreclosed home for less than the mortgage and forgave the rest of the debt, the borrower had to pay tax on the difference. Now, the Internal Revenue Service is forgiving the [tax on the] difference.

For more, see More homeowners mailing keys to lenders (Owing more than home is worth, recent buyers walk away).