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News Link • Housing

Foreclosure-Gate: Charles Dickens Would Feel At Home In Florida

There are big disincentives to defaulting: giving up a house you had invested in, literally and emotionally, disruption to children, damage to one’s credit record which now also seriously impairs employability now that credit checks have become an important job screen. So the “strategic” part isn’t, I suspect, that they are financially comfortable and just chose to stick it to the banks/investors and jettisoned a losing investment. It is more plausible that many if not most/virtually all are financially stressed AND are being more rational. Why struggle to keep an underwater investment if it is going to drain your finances and possibly/probably push you into bankruptcy to try to keep it? It costs money to move; if you think it’s inevitable, better to do it before you are totally broke. But selling the public on the preferred interpretation of strategic default (the tipoff is the complete absence of meaningful investigations, which would include extensive case study examination) now serves as an excuse to oppose principal mods. Was this the intent all along?

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