Q: Recently in my local paper, I saw an article you wrote on strategic foreclosure. I now cannot locate it. Would you be kind enough to forward it to me?
Thanks so much.
A: We don’t have anything on ThinkGlink.com about strategic foreclosure, but we’re guessing that what you’re interested in is a concept known as “strategic default.”
We write about strategic default about once a month. The term strategic default refers to someone who can afford to make the payments on their property but chooses instead to turn the keys over to the lender instead, thus defaulting on future payments.
When homeowners are severely underwater, defined as more than 25 percent, they are much more likely to choose strategic default, which makes lenders nervous about the current real estate environment in some areas of the country, where home prices continue to decline.
As home prices decline, more homes decline in value. That pushing home values underwater, that is less than the mortgage amount, thus increasing the chances of additional mortgage delinquencies and defaults, strategic or otherwise.
Here is a link to the stories we’ve recently written about strategic default: http://www.thinkglink.com/tag/strategic-default/. We hope this helps.