As more people fall behind on their mortgages and see their home’s value decrease to less than what they owe the bank, some homeowners are simply mailing in the keys to the house. Instead of the mortgage payment, they are giving the property back to the bank and walking away, allowing the house to go into foreclosure.

This action of sending in they keys to the house in lieu of the mortgage payment has been termed “jingle mail.” Both homeowners in trouble or who do not want to overpay for their house as well as investment banks are increasingly turning to jingle mail to relieve themselves of large debt burdens.

There has been a lot of judgment and negativity directed at homeowners who do this, as people who were not taken in by the housing bubble see jingle mail as the latest indication that people do not take enough responsibility for their own financial decisions. Homeowners who bought at the top of the market hoping the market would go even higher, and are now sending in they keys because they do not want to pay for their gambling losses are obviously taking advantage of the situation.

But homeowners who send in the keys to their homes will face serious consequences long after the house has been foreclosed on. There is little chance they will be able to participate in the real estate market at all for a few years, except as a renter, and their credit will be scarred for nearly a decade.

Investment banks have also been engaging in jingle mail, a form more subtle than homeowners but also more costly. The Federal Reserve is allowing banks to use as collateral toxic mortgage debt in return for loans, which is allowing the entire banking system to get these bad loans off of their books and keep up an appearance of solvency.

Banking jingle mail is far more serious to the general public than the homeowner who sends in the keys to the house. In that instance, the previous owner has to face the effects of foreclosure and give up the real estate asset, while banks will be able to foreclose on the house and resell the property in the open market.

When banks send in nonperforming mortgages to the Fed in return for Treasury securities and loans, they are building up an edifice of financial fraud and sticking the general public with their bad mortgage debts. Inflation of the money supply leading to higher food and energy prices is one result, combined with the collapse of the dollar are foreign countries lose confidence in a currency backed by nonperforming real estate loans.

Homeowners who give up on their homes and send in the keys hurt only themselves and the lenders directly. The owners will lose the house and not be able to obtain affordable credit for years, while the banks will lose money on the interest they were expecting to collect from the mortgage payments. The general public is hurt indirectly in the form of higher mortgage rates and stricter lending guidelines.

But when banks engage in jingle mail actions with the Federal Reserve and hide the effects of their moral hazard, the general public is hurt more directly. Prices for all other goods and services, not just the cost to borrow money, rise as the money supply is inflated, while bankrupt financial institutions are allowed to continue robbing creditors and taxpayers.

Homeowners who no longer want to pay more for a house than it is worth reflects badly on the irresponsibility of the American people who are the greatest debtors the world has ever seen. But large financial institutions sending in jingle mail and sticking the American people with the bill is an even poorer reflection on the criminality, corruption, and economic manipulation of corporations.

The ForeclosureFish website has been created to provide homeowners in danger of losing their houses with relevant and important foreclosure help, news, and information. The site examines numerous options that may be used to save a house, such as foreclosure loans, loss mitigation, short sales, deed in lieu of foreclosure, and many more. Visit the site to read more articles about how foreclosure works and how the process may be avoided before it is too late: http://www.foreclosurefish.net/

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