Strategic Default

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As it becomes painfully obvious that home prices are not going to come back anytime soon more and more borrowers are considering a “strategic default”.  When the housing bubble first began to deflate many borrowers who lost their homes did so because of hardship reasons (loss of employment, work hours cut, health issues).  These days many who consider walking away from their homes do not have a “hardship” but rather faced with the fact that their homes values may never come back in their lifetime.

As we enter the third week of 2012 our hope for this year is to see home prices stabilize.  Most economists are predicting a very slight increase for the foreseeable future.  With this type of economic housing outlook those who are severely underwater have two basic options: 1) stay in their homes until the market rebounds or 2) consider a strategic default.  Banks are reporting an increase in strategic defaults as borrowers are seeing this as the only avenue to get out from underneath their current mortgage.

For more information on strategic defaults read here.

Category : Blog

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