Planet Money, NPR:

Spain, like the U.S., is going through a huge real estate bust.

But only around 3.5 percent of Spaniards with mortgages stopped making payments last year. In the U.S., the rate was above 9 percent.

What’s true for Spain is true for most of Europe: Homeowners are much more likely than Americans to keep paying their mortgage, even when the economy falls apart.

Read on for why.

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  2. Schu says:

    I would think that more research need to be done on this topic. As I am dealing with this problem right now, I can tell you that once you are behind on your US mortgage, the bank will not take any any money from you and move to foreclose. If you are 2k behind you cannot pay part of it to catch up.

    • Gherald says:

      That’s not mysterious--in the U.S., foreclosing is practically the banks’ only recourse to dealing with a delinquent mortgage, so they’re much quicker to swoop in and cut their losses.

      • Metavirus says:

        i strikes me as a strange business practice.

        i.e., we, the bank, have Door #1: a mortgage for $150k with a person that the bank could modify such that the person could comfortably make the payments if the principal on the loan was reduced to $125k with a 1% interest rate reduction.

        Then behind Door #2: the same mortgage that, if foreclosed on, would net the bank $80k and further depress the property values in the area, which may well lead to more troubled customers and more foreclosures.

        I really wonder why Door #2 is the only one the bank picks in 99% of the cases.

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