More Owners Opt for 'Strategic Default'

December 12, 2011

Strategic defaults are on the rise due mainly to two factors: the growing number of mortgages where the outstanding balance is greater than the home's current market value, and continued high unemployment. 

A study by the Mortgage Bankers Association warns that the trend could have a significant harmful impact in certain markets.

"While the merits of such a choice can and will continue to be debated, what is indisputable is that the possibility to strategically default has certainly been brought to the attention of current homeowners like never before, with potentially negative consequences for housing markets," said Michael Seiler, who headed the study.

Source: "More Homeowners Opt for 'Strategic Default'," Sioux City (Iowa) Journal (Dec. 10, 2011)

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