Academia Shmackademia

From the LA Times: In mortgage market, ‘walkaway’ homeowners may be urban myth.

Bankers and housing market analysts are warning of a chilling new trend in the mortgage world: Homeowners voluntarily defaulting on their loans even though they can actually afford to make the payments.

It's known colloquially as "walking away," or more jocularly as "jingle mail," from the sound your house keys supposedly make when you mail them back to your bank.

It's a way of saying that Americans are beginning to apply a cold financial calculation to home ownership: When a home's value has fallen below what is owed on its mortgage, they feel it makes no sense to keep up the payments.

But he said the bank did not have "firm figures" on how many homeowners were unnecessarily defaulting on their mortgages.

"We are working hard with our analytics to get at how much that is happening," Francisco said. Others suggest that it may be impossible to find out.

"How would you know what someone's true ability to pay would be?" asked Todd Sinai, an associate professor of real estate at the Wharton School of the University of Pennsylvania. "I'm not sure you could even come up with a definition."

Not to put too fine a point on it, Herr Doktor Professor, but the only goal of a lender is finding out the ability to repay. This is the core competency of a lender. If a lender can't even manage to do the job of their core competency, they should pack their bags and pick a different profession.

Of course, lenders also used to have downpayment requirements a.k.a. "skin in the game". Without any skin in the game, all the ability to repay isn't going to make them throw money on a rapidly devaluing asset.

Doubt the journalist knows their core competency here.