Strategic default: the abandonment of mortgage and property. A financial explosion. Most buyers of property were seeking riches from appreciation. They all enjoyed the synchronized movements of the market when everyone was clamoring for more property. Trees don’t grow to the sky, and no matter how close prices get to heaven, nirvana is always out of reach. Strategic Defaults Threaten All Major U.S. Housing Markets Posted by Keith Jurow 09/30/10 8:00 AM EST In my last article, we examined the shadow [Read More...]

The economy is being dragged down by massive debts taken on by insolvent households. We have tried loan modifications, and they failed. Voluntary principal forgiveness is not forthcoming, so that leaves only one alternative to purging the excess debt: massive strategic default. Massive default is best way to fix the economy Commentary: Clearing away the debt is the only way forward Brett Arends — Sept. 12, 2011, 12:00 a.m. EDT NEW YORK (MarketWatch) — You want to fix this economic [Read More...]

There is an art to strategic default. There are many options, and some have stronger consequences than others. Does the borrower want to maintain some lines of credit? Will selectively defaulting on certain debts hurt their credit score more than others? Will strategic defaulters need to declare bankruptcy? Now that millions have defaulted on their mortgage, we have anecdotal data and research studies on what really happens to those who quit paying. The results will surprise some and inspire many. [Read More...]

People form strong attachments to their homes. Walking away is never a decision they take lightly. We can discuss the pros and cons and come up with our own beliefs and attitudes about it, but the turnover of our housing stock caused by the housing crash will be very painful for those who go through it. Ruthless default or accelerated default?  I write often about hidden premises buried within the arguments writers make. These distinctions are important, and unless we uncover [Read More...]

Do loan owners really want to spend a decade or more under water? It will be difficult to send their children off to college when they make too much for their kids to get aid, but they haven’t saved anything because they are paying on a bloated mortgage. At some point, they may decide they don’t want to stay, but then they can’t move because they can’t sell. They spend the rest of their lives quietly fading away. Many in California will stay [Read More...]