Comments on: Strategic Default Not an Option with Fannie Mae

By: Jackie

Jackie — Wed, 21 Sep 2011 15:50:47 +0000

The motivation for a strategic default may depend on how far a borrower is underwater.
Having a mortgage that’s twice as much as the value of a home could be somewhat discouraging. The prospect of being stuck with a losing investment that may not reach a break-even point for 10 years or more may be enough motivation to take a walk.

By: RealtyTrac, Trulia, TransUnion | Housing Market Forecasts | Chicagoland Real Estate Forum

Wed, 08 Dec 2010 16:50:00 +0000

[...] up from 41 percent in May. Men (57 percent) are more likely than women (40 percent) to consider a strategic default to deal with their negative [...]

By: Scott

Scott — Tue, 13 Jul 2010 19:57:26 +0000

No… borrowers need to keep their promise to repay the loan. The agreement wasn’t to repay the loan only as long as the investment was good. If you buy stock on margin, you pay it back even if the stocks go down. If you buy a car, you don’t get credit for the depreciation just because you drive it off the lot. If you spend 10k on a patio and pool, you aren’t guaranteed to get it back.

The bottom line is that the borrowers promised to repay the loan and a strategic defaulter has the means… but ‘strategically’ decides not to because they made a bad bet on real estate values (like many of us). I’m under water… but I continue to make the payment because my word is worth something.

Keep in mind, this is different than those of us who’s income has dropped or have lost our jobs. Those aren’t strategic defaults. They ARE defaults, however. The lenders should then look at see what the best options are… but its not to forgive debt. Maybe a temporary forebearence until the income situation is solved because that’s the best for BOTH parties. If the income curtailment is permanent, however, something temporary isn’t going to help and maybe selling the home that can no longer be afforded is the best choice (however unfortunate).

By: Roger D

Roger D — Wed, 07 Jul 2010 13:43:11 +0000

And CitiMortgage is known for it.

By: Roger D

Roger D — Wed, 07 Jul 2010 13:42:17 +0000

People chooses to walk away because their servicers keep pushing them to the edge, and won’t cooperate.

These servicers needs to be punished, somebody needs to teach them a lesson.

Why delay the inevitable? The more you stay in an underwater home the longer you suffer.

By: Tracey

Tracey — Tue, 29 Jun 2010 01:49:46 +0000

Thanks for reading and for commenting!

By: Alan Kroll

Alan Kroll — Tue, 29 Jun 2010 01:38:36 +0000

Tracey,

I read the article you referenced on the dramatic increase in strategic defaults from March 2009 to March 2010 and found the information valuable. Thanks for a very informative post. I doubt I would have found that article if you did not post it here. Great info!

Regards,

Alan Kroll: Managing Broker
RE/MAX Allegiance – Ashburn, VA