"No-Deficiency" Laws Give Homeowners "Get Out Of Jail Free" Card When Walking Away From Unaffordable Mortgages In Some States

The Associated Press reports:

• Mortgage law experts say the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds after foreclosure.

• "These anti-deficiency laws make a huge impact on foreclosure rates because they are basically 'get out of jail free' cards," said Todd Zywicki, a law professor at George Mason University [...].

• This handful of non-recourse mortgage states includes the high-foreclosure states of California and Arizona, which not coincidentally also are leaders in the numbers of mortgage walkaways.

For the story, see Walkaways highest in 'non-recourse' states.