Leaving North Las Vegas No Option for Many 'Underwater' Homeowners
Los Angeles Times
By Ashley Powers and Alejandro Lazo
Charles Mills can barely afford to stay here. But he also can't afford to move.
That's why the 44-year-old heavy-equipment operator was preparing to leave his wife and young daughter here and go where he could find work -- the Oklahoma oil fields. Mills has a mortgage to pay, even if its size pains him.
...Some economists argue that, in a way, these homeowners are worse off financially than those who lost their houses through foreclosure and were forced to move on. Those borrowers often were able to live rent-free for years because of the snail's pace of foreclosure proceedings.
Meanwhile, their underwater neighbors poured money into mortgages, not savings or investments. They couldn't chase higher-paying work. Homeowners with negative equity are at least a third less mobile than other homeowners, according to a recent study in the Journal of Urban Economics.
But abandoning their homes was an option that appeared too dicey. "Walking away, it does wreck your credit history for a while and you can't get another mortgage for seven years," said Richard Green, director of the USC Lusk Center for Real Estate. Defaulting also makes it harder to rent an apartment. "The other thing is, there is also some sense of obligation to repay your bills," he said.