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Strastegic Default, a new option

As the mortgage mess continues on down the tracks many new wrinkles are appearing, the one that many could not really have foresaw are the strategic defaults, the homeowners with perfect credit, great payment histories that make the decision to default on the loan as a basic business decision.

They do it knowingly and are fully aware of the consequences and look on it as a financial matter, not a ethical or moral one.

Should they be able to do this, many live in the areas where home values have declined the most and values will take a long time to recover.

The main challenge is that this will affect the homes around them and further contribute to the decline in values.

http://www.latimes.com/classified/realestate/news/la-fi-harney20-2009sep20,0,2560658.story

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Posted by Andrew Monaghan CRS, GRI, EPro Associate Broker on 09/19/2009 03:42 PM

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1 Comments on Strastegic Default, a new option

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Andrew - This is a growing problem and one without an easy solution. Declining home prices have wiped out the equity for millions of homeowners, some who put 20% down, had good jobs, and can still afford their payment. However, many of those homeowners are analyzing their position, looking at the possibility of making payments on a home that may not rebound in price for many years. And many are choosing to walk away.

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