Jingle Mail
Jingle mail is a phrase that is being used more frequently in this housing market crisis and one in which lenders fear and cringe. Jingle mail happens when a borrower gives up on the property mortgage, put the keys into an envelope, and sends them back to their lender. Then they pack up and walk away.
Why would homeowners do such a thing? Because borrowers overstretched their pocket books and can no longer keep up with rising prices and increased interest rates on those subprime loans. People are tired of stretching their hard-earned paychecks trying to keep up with a losing cause. Sending the keys back to the bank will force a foreclosure and ruin a credit score for at least seven years.
It seems that homeowners have become that desperate.
One of these homeowners recently blogged about the situation she is facing. She was thinking about walking away from her $520,000 mortgage. She feels that it is her god-given choice and right to walk away from a bad deal and suffer the consequences, just as many corporations write off billions of dollars of debt, lose money for their shareholders, and lay off people from their jobs because of bad decisions.
And most readers agreed with her; a frightening trend for mortgage bankers and lenders.
But for the subprime borrowers who are the homeowners mainly affected by the housing crisis, walking away may be the only choice. Their credit rating was already shot when they signed for their home loans. Ruining their credit rating is no longer of any concern.
Lenders will be hearing a lot more Jingle in their mail as the situation worsens. Financial experts forecast that the foreclosure boom is going to last until 2010.
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