Boom and bust in the housing market a borrowers in this situation have an incentive to walk away from their mortgages and abandon their homes even though doing so will damage their credit rating for a number of years a As more borrowers stop paying their mortgage payments, foreclosures and the supply of homes for sale increase. This places downward pressure on housing prices which further lowers homeowners equity. the decline in mortgage payments also reduces the value of mortgage- backed securities which erodes the net wol and financial health of banksBoom and bust in the housing mar ket  Borrowers in this situation have an incentive to "walk away" from their mortgages and abandon their homes, even though doing so will damage th i dit ti f b f th eir credit rating for a num ber of years  As more borrowers stop paying their mortgage p y , pp y a yments , foreclosures and the supply of homes for sale increase. This places downward pressure on housing prices, which further lowers homeowners homeowners equity. The decline in mortgage ' equity. The decline in mortgage payments also reduces the value of mortgage- backed securities, which erodes the net worth and financial health of banks