Inman News reported yesterday that Fair Issac, the company that brought you FICO scores has developed a system to predict which homeowners are the most likely to engage in a strategic default, that being homeowners who have the ability to pay, usually a good credit history, but still choose to walk away from their property and the mortgage obligation.
They now have
"THE BLACK BOX"
My first thought is
So what
Mortgage lenders have always attempted to identify those who will default and hopefully attempt to prevent that default.
nothing new there
This isn't brain surgery here now. Who might these people be? the dreaded
Strategic Defaulters
I live in Southwest Florida, so I'm aware that we still have many individuals who are severely underwater with their homes, and I do mean severely.
$50,000...$100,000...$200,000 and more. Yup and more.
How long will it take them to get back to at least breakeven?
don't know
Many of these homeowners have been in their homes 5 years or less and haven't necessarily developed an emotional attachment to their homes, unless of course they feel their situation is a nightmare.
they just want out.
Many have chosen a short sale, which are easier today than they were previously, but still require a great deal of work and/or patience.
is this a better choice than a strategic default?
I'll leave that for you to decide.
The mortgage holders want the "defaulters" to know there are consequences.
Really
The obvious:
a low(er) credit score which will adversely effect any purchases involving credit. Either they will be turned down or have to pay a higher rate.
deficiency balances, where allowed
Okay, so a little piece of advise to the "strategic defaulters."
Weigh your decision carefully. Consider all your options. Seek legal advise. Consult a Realtor to determine your property value and other options.
And remember your mortgage holder wants you to know, or think that they know
they know who you are!
They have the BLACK BOX
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