Illinois lawmakers have a prescription to combat recession side effects and it could provide the life preserver for homeowners treading water and considering swimming away from their mortgages.
They're looking to ban business' credit checks on potential employees.
"Can you imagine you're someone who, at no fault of your own, you lose everything -- you're laid off, you can't afford your mortgage so you lose your home -- and then when you're trying to get back on your feet, you got companies running credit checks on you while you're looking for jobs?" said Rep. Jack Franks (D-Woodstock), chief House sponsor, to the Sun-times.
15 other states, including Michigan, Wisconsin and Indiana, have similar measures on the table.
Nearly one in four U.S. homeowners owed more than their homes were worth at the end of 2009, according to The Wall Street Journal.
Underwater loans are leading to a new trend of strategic default; meaning homeowners who never missed a payment are purposely defaulting on their homes and walking away.
Some analysts say the lack of fear is making the practice more acceptable.
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"Banks are backlogged with paperwork on foreclosures and short sales," said Jon Maddux, CEO of the web site YouWalkAway.com, to CNBC. "And a lot of lenders are not really eager to take the property back because there's no housing market right now. There's no rush to go after delinquent payments."
