The myth of the poor shlub desperate to pay off a loan he didn’t understand that was practically forced on him shady bankers is a leftist fantasy. The reality is that most sub-prime mortgages went to people whose credit was already bad because they were lazy, shiftless or stupid. These dead beats used loan modification programs to buy time to accumulate more debt that they fully intended to walk away from and stick to the tax payers.

This is especially the case with speculators and other morons who thought their house was an investment that would grow in value. Once the markets began to reflect the actual value of their purchases and the illusory appreciation housing disappeared there was no incentive for these homeowners to stick around since they never wanted a home in the first place, just an investment that would continue to gain in value.

From Bloomberg:

March 25 (Bloomberg) — More than half of U.S. borrowers who received loan modifications on delinquent  mortgages defaulted again after nine months, according to a federal report.

The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months.

U.S. homeowners are struggling to make payments as depressed housing prices leave them owing more than their properties are worth. About 24 percent of properties with a mortgage were underwater in the fourth quarter, First American CoreLogic said last month. The median price of a U.S. home was $165,100 in February, down 28 percent from its peak in July 2006, according to the National Association of Realtors.

Modifications are “clearly not working well and it’s not a surprise,” said Sam Khater, a senior economist at First American CoreLogic in Tysons Corner, Virginia. “It’s pointless to rewrite these loans because they’re underwater.”

Who could have seen this coming?