The head of a credit counseling organization says she's glad that consumers have irrational and self-destructive attitudes about mortgages.
The National Foundation for Credit Counseling conducted a financial literacy survey in which 15 percent of respondents said that there is "no justifiable circumstance under which it would be acceptable to default on a mortgage." (Emphasis in the NFCC's news release.)
There are several justifiable circumstances for defaulting on a mortgage and going into foreclosure. Among them: being unemployed and not making enough money to make the monthly house payments.
Are 15 percent of Americans so dumb as to believe that there is no justification for giving the house to the lender? That's scary. And here's something that's scarier: NFCC spokeswoman Gail Cunningham agrees with those people.
In the news release, Cunningham says: "Taken together, the NFCC survey data brings us some encouraging news: consumers still place a priority on making their mortgage payment, less than one-fourth think that defaulting on a mortgage is justifiable simply because the property is underwater, and a significant number take mortgage obligations so seriously that they find no acceptable reason to default on a home loan. Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders and the housing market overall."
On the contrary, it's indeed bad news that there are people who would struggle to pay unaffordable mortgages when it would be wiser to hand the keys to the lender and move into an affordable rental.
Cunningham's comments make you wonder about the quality of the advice that the NFCC's member credit-counseling agencies give to troubled borrowers. Lenders provide more than half of credit counseling agencies' funding. We know who pays the piper, and we know who calls the tune.