People in negative equity can abandon the mortgage
US mortgages attach to the house not the person; so by handing in tthe keys someone in negative equity ceases to be liable for the outstanding loan—intensifying the risk to the mortgage suppliers when house prices are plummeting.
CONTEXT(Help)
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The Global Financial Crisis »The Global Financial Crisis
Potential consequences of the financial crisis? »Potential consequences of the financial crisis?
More financial institutions will collapse »More financial institutions will collapse
Financial institutions will suffer further capital losses »Financial institutions will suffer further capital losses
Financial institutions forced to write off bad debts »Financial institutions forced to write off bad debts
Many homeowners will default on mortgage and loans »Many homeowners will default on mortgage and loans
People in negative equity can abandon the mortgage
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