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IPFS News Link • Housing

"Strategic Default" on the rise

• LA Times
Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores?

Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers.

1 Comments in Response to

Comment by Kitty Antonik Wakfer
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"Strategic defaulters may know that their credit scores will be severely depressed by their mortgage abandonment, Tantia said, but they appear to look at it as a business decision: "Well, I'm $200,000 in the hole on my house, and yes, I'll damage my credit," he said of defaulters. But they see it as the most practical solution under the circumstances."

The fact is that everyone who does not do this strategic defaulting - and even to some extent those who do - will wind up paying for these defaults, eventually. However this is being lost on most people. Government funding (always money taken from residents directly or indirectly) for bailouts of banks and individuals *and* bankruptcy laws have fostered and encouraged the thinking that if it's "legal" then it's OK to do - and even "smart". When the typical irresponsible people are "bailed out" by government, then it is not surprising that it becomes increasingly common for those who have thought of themselves as self-responsible to walk away from mortgages on houses that have greatly lost market value. This blatant narrow range short-term version of self-responsibility is a cancer that is destroying the current society - and government is the initiator and promoter.


**Kitty Antonik Wakfer

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