Homeowners unknowingly paid more in closing costs because their state laws prohibit the lender from coming after them on underwater (negative equity) mortgages.

If you live in one of these 8 states:

Alaska, Arizona, California, Oregon, Minnesota, Montana, North Dakota and Washington.

Your lender may have charged you more closing costs because of this law.   Please consider this New York Times article:

In fact, borrowers in nonrecourse states pay extra for the right to default without recourse.In a report prepared for the Department of Housing and Urban Development, Susan Woodward, an economist, estimated that home buyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so.

How does it feel to know that you may have paid higher closing costs than other homeowners, just because your state literally blocks and prohibits the lender from coming after you for anything other than the house.  In the lenders defense, they knew that if anyone in those 8 states were to default, it would be more costly for them, so they had to charge more.  Does that make it more justifiable to strategically default? Possibly … Read More Here

Jon Maddux

CEO at  www.YouWalkAway.com

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