Strategic Default: Homeowners Learning to Think Like Wall Street

TUSTIN, Calif., Sept. 21 /PRNewswire/ -- A huge shift in the average homeowner's thinking has begun. The old stigmas associated with foreclosure and defaulting on an upside down mortgage are fading into history.  And who taught them that not all contracts are meant to be honored? None other than corporate America.

Many experts feel struggling homeowners are tired of watching corporations, especially banks, dump their own bad investments with little or no legal ramifications, and even in some cases receiving bail-out money assistance. Yet when a residential homeowner considers a strategic default there seems to be finger pointing and shame.

David Wentink, president of Strategic Default Information, an online firm which helps homeowners through the default process, stated, "For the first time, homeowners are beginning to think like business people, crunching the numbers to see if it makes sense to stay in the house or default based on financial facts rather than emotions... Numbers don't lie." 

Fannie Mae recently estimated that 7 million U.S. homes are vacant or in foreclosure. Others estimate up to a third of these are strategic defaults, meaning those who can still afford their payments have chosen to default since their current home may not regain positive equity for years.

Wentink noted, "Many have decided it's better to lose the house than keep throwing money into a sink-hole. Especially when in many cases they can rent for half the price and actually have funds left at the end of the month to take care of basic family obligations."

But a strategic default is not without pitfalls. In most states, banks can pursue homeowners for a deficiency judgment (the difference between what the bank can sell the house for and what is still owed on the mortgage), and credit scores can drop anywhere from 100-300 points. Regardless, if the economy continues to be stagnant, leading to further depressed home prices, we could be in for a tsunami of strategic defaults.

"However," Wentink cautions, "homeowners need to have their ducks in a row before defaulting. Policies are changing almost weekly and just handing the keys back to the bank and saying, 'Here - it's yours' is not a wise idea."

Strategic Default Information is an industry leader in helping homeowners considering a mortgage default.

For more information, visit www.strategicdefaultinformation.com

CONTACT:  David Wentink, 1-800-753-4350, [email protected]

SOURCE Strategic Default Information