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SALT LAKE CITY -- The sluggish economy has more people in other parts of the country walking away from homes they still can afford. Their homes have lost so much of their value, borrowers figure they'll never be able to recover what they're expecting to lose.
The value of many homes that used to be worth $1 million in Salt Lake County has dropped 40 percent since the real estate market hit the skids a few years ago. That means some homeowners are stuck paying $400,000 more than their house is worth.
Senior Loan Officer Lee Yates says, "The high-end homes -- meaning the $1 million-plus homes -- it'll be years before they gain their full value back, and it may never come back."
Some mortgage analysts say half-million dollar homes might be a different story.
"I think they're going to see the value come back quicker, but it's still several years out," Yates says.
He says, although he doesn't advocate it, he can understand why someone would want to walk away from a house they would lose money on. He says "strategic default" isn't a major problem here, but if someone does this, they still would have to pay the difference between the resale value of the home and the amount of their loan.
"By law, the lender can come after them and force them to pay that difference. So, the lenders do have a protection there," he explains.
Plus, Yates says people who walk away from their home loan won't be able to buy another home for at least four years, possibly longer depending on the lender.
E-mail: pnelson@ksl.com
