NPR’s Planet Money did a podcast on March 1st which compared mortgage delinquency rates in the US & Spain. In the US mortgage delinquency rates are currently around 10%. Despite the fact that the unemployment rate is currently higher in Spain the mortgage delinquency rate is down around 3%. So why the big difference?
In Spain, if a borrower is foreclosed on and the lender suffers losses on the loan they can seek the deficiency by going other assets. This is known as a “recourse” loan. Because Spanish banks can go after personal assets Spanish citizens scrape and crawl to make their mortgage payments.
In the US each state has different laws which dictate whether or not a lender can make recourse or non-recourse loans. I’m not sure how reliable this information is but according to Answers.com Oregon & Washington are on the list of non-recourse states. See the entire list HERE.
What I think would be interesting based on this comparison is to see if delinquency rates are higher in non-recourse states versus recourse states. If anyone has a link to this information please leave it in the comment section below.
AN UPDATE TO THIS POST:
I emailed my friend Brent Hunsberger, the author of “It’s only money” blog on oregonlive.com who contacted a real estate attorney. The response is super convoluted. It turns out there are many instances where a mortgage in Oregon can be considered a “recourse” loan. If you are seeking information regarding your personal situation then my advice is to find a competent attorney.