Flipped out: Gamblers who walk away

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Good morning. Here’s how far we’ve come in this housing cycle: The Mortgage Bankers Assn. is now talking about flippers who gambled on houses, got stuck, and then walked away. Jeez, that doesn’t sound like a Washington lobbying group talking, it sounds like a comment on one of those cranky housing blogs.

Annette Haddad writes in today’s L.A. Times: ‘Blame it on the speculators. That’s what the Mortgage Bankers Assn. did Thursday in a report showing that as many as 1 in 5 mortgages in default in California belongs to borrowers who are not living in the homes with the troubled loans.’

Doug Duncan, the trade group’s chief economist: ‘Defaults are on the rise in most parts of the country, but it should be recognized that it is not always the case of a homeowner losing his or her home but is often the case of an investor gambling on a continued increase in home values and losing that gamble,’ Duncan said. Many of these investors ‘simply walked away from the mortgages,’ he said.

Our take: Many commenters have pointed out here that the gambling mentality is not unique to investors -- many people who bought homes to live in were also gambling that they’d be able to refinance, or sell the home at a profit.

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