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The term “Strategic Default” has been actively reported on for the last few months as more homeowners who can afford their mortgage payment just “walk away” for various reasons.

And the #1 reason they walk away is because they owe more than the home is worth.

And according to the latest research, the larger the negative equity, the higher the chance of someone defaulting on their mortgage no matter what their credit score is.

According to a story in the LATimes regarding the Strategic Default problem:

But research by three academics suggests that the willingness of people to default depends largely on just how far underwater they are. Or, as the study’s authors put it, “People default because of the size of their negative equity, not just because they cannot afford to pay.”

And when the shortfall is between 10% and 20% of their home’s value, Luigi Zingales of the University of Chicago, Paola Sapienza of Northwestern University and Luigi Guiso of the European University Institute found that just 5% of the owners they sampled would quit. Even when the difference reaches 50%, only 17% said they would throw in the towel.

And it appears that at least one factor when making the decision to default or not when you can afford your mortgage is how many of your neighbors are doing it.

Then there is something the study’s authors call a “multiplication effect,” meaning that the social pressure not to default is weakened when the borrower lives in an area with a large number of foreclosures. The predisposition to run away increases with the number of foreclosures in the same ZIP Code, the study found.

Lastly, many homeowners are finding that the banks are “just asking for more foreclosures” because they are not working with homeowners as much as they could.

Deede Wockenfuss of CybrSold Concepts in Chandler, Ariz., has had several clients who tried to no avail to work with lenders to get their loans modified. “The bank is asking the borrower to default,” she said.

When push comes to shoving your loved ones out the door, Bob Hunt of Keller Williams O.C. Coastal Realty in San Clemente says the moral duty to protect your family outweighs the moral duty to repay the loan.

Regardless of whether someone can afford to pay their monthly mortgage payment, one thing is clear: the more that their house is “under water” the greater the chance is of them defaulting.

No matter where they live.

Some homeowners who’ve had mortgage loans modified have ended up in foreclosure anyway. In many of those cases, people who got modifications experienced a drop in income due to a job loss and were unable to keep up with mortgage payments anyway, according to an article in the Record.

Economists now say unemployment is contributing to more people becoming delinquent on mortgage loans than sub-prime mortgages. Unemployment in the U.S. is currently at 9.8%, and more people are expected to lose jobs. Just this week, Johnson & Johnson announced it would cut up to 7% of its workforce, or about 8,000 jobs.

Although mortgage loan modifications have helped some homeowners, a new study from the Federal Reserve Bank of Boston says many mortgage lenders believe that they will recover more from foreclosures than from modified loans. That’s because about 30% of homeowners who are behind on mortgage payments are able to begin paying again without help from a mortgage lender.

The Fed study also says about 30% to 45% of people who have mortgages modified are likely to end up missing payments again. Loan modifications simply postpone foreclosure for some people, the study says, and mortgage lenders end up recovering less money when those homes eventually end up in foreclosure.

Just as I’ve long suspected, many homeowners who are defaulting on their mortgage loans are doing so on purpose. According to a study by Northwestern University’s Kellogg School of Management and the University of Chicago’s Booth School of Business, 26% of existing mortgage defaults are strategic. 

About 22% of U.S. households have negative home equity, according to Zillow.com, an online real estate service. Many people who strategically default, or skip mortgage payments even though they can afford them, are doing so because they have negative equity in their homes. The study found that even if they could afford mortgage payments, 17% of people polled would default if the equity shortfall is 50% of their home’s value. No households indicated they would default if the equity shortfall were less than 10%.

Apparently people who believe that it is immoral to default on a mortgage loan are less likely to do so. The poll found that people who view it as immoral are 77% less likely to default on a home loan. People who know someone who has already defaulted strategically are 82% more likely to say they are willing to default themselves.

Less than 20% of folks polled felt it was morally acceptable to walk away from a house when they could afford to pay the mortgage. However, 9% of homeowners said they would walk away if they had an equity shortfall of $50,000, 26% would with a shortfall of $100,000 and 41% would with a shortfall of $200,000. 

The poll also found that certain demographic groups are more likely to think strategically defaulting is OK. People under 35 were less likely to think it was wrong to default, followed by folks over 65. African-Americans, people who are more educated and wealthy individuals were more likely to believe that defaulting is morally wrong.

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her Web sites, www.Huffwrites.com and http://supersavvyspender.blogspot.com/.