Posted on Wednesday, May 5, 2010
The percentage of foreclosures thought to be strategic was 31% in March 2010, compared to 22% in March 2009.
One likely reason is the increasing perception that lenders are not going after borrowers who walk away. 54% of those surveyed thought their lender would pursue them.
Strategic default increases by 23% when homeowners learn that their neighbor with negative equity has received a partial loan for forgiveness and 29% if homeowners are able to find an alternate way to finance a new home.
A key deterrent to strategic default is the fear of losing a good credit score. 74% felt that way.
A report from Morgan Stanley’s says 12% of defaults in February were strategic, up from 4% mid-2007. Most likely to walk away are those with high credit scores and outstanding mortgage balances far above the current market value of their homes.