Is it a Moral issue or just a Prudent Financial Decision?
In today's market, it's extremely hard to justify the Morality of walking away from one's home. when your local banker is getting rich, with the Feds blessings and at the same time; pointing out that the Home owner has a Moral obligation to pay their mortgage no matter what! Until the Gov. stops supporting all of these banks and mortgage holders (using tax dollars), Strategic Defaults, will only continue to rise! Hey Feds! Are you listening???
Mathews Realty Group
Retirement Advisor/Investment Services
Self Direct IRA/401K Plans Specialists
FICO Profiles the Strategic Defaulter
As home prices began heading further and further south, the term “strategic default” made its way into industry jargon…and into the minds of lending and servicing professionals already struggling to keep up with large volumes of borrowers who actually can’t afford their mortgage payments.
Strategic default refers to a relatively new phenomenon where borrowers who have the capacity to make their mortgage payments but choose instead to default, often because the property value is less than what they owe on the mortgage loan.
Experts say continued weakness in the mortgage sector is driving greater numbers of strategic defaults. Studies from the University of Chicago Booth School of Business indicate that in September 2010, 35 percent of mortgage defaults were strategic, up from 26 percent in March 2009.
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