From last Friday’s Wall Street Journal Real Time Economics blog:

More homeowners are willing to walk away from their homes voluntarily, according to new research released by the University of Chicago and Northwestern University. About 31% of foreclosures in March were considered “strategic defaults,” in which homeowners walk away when the value of a mortgage exceeds the house value — even if they can afford the mortgage. That’s up from 22% in March 2009.

One likely cause: About 56% of borrowers still believed lenders wouldn’t go after them for walking away from a home, up slightly from 54% a year earlier, according to the study that was based on surveys of more than 1,000 people in March. “With more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of homeowners will walk away from their homes even if they can afford monthly payments,” said Paola Sapienza, a finance professor at Northwestern’s Kellogg School of Management who conducted the study with Luigi Zingales, a professor at the University of Chicago’s Booth School of Business. The latest research was released late Thursday with the two universities’ Financial Trust Index, which tracks public trust in the financial system.

Their survey showed that the likelihood of strategic default increased by 23% when homeowners learned that a neighbor with negative equity received a partial loan for forgiveness. It increased by 29% if homeowners could find alternate financing for a new home. “A key deterrent to strategic default is the fear of losing a good credit score,” Zingales said. About 74% of homeowners “believe it is very important to maintain good credit and this can be a factor in encouraging them not to walk away.”

The Financial Trust Index fell slightly to 23%, from 25% the prior quarter. The authors found that the fear of a stock market decline showed a slight increase. The fraction of people who think the stock market is overvalued also rose. The share of Americans who feared losing their jobs increased from a revised 21% in December 2009 to 26% in March 2010.

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