• Josh Valjan

Strategic Defaults

For the last few months, I have been discussing that more and more homeowners are actually ‘strategically’ defaulting on their mortgages. By that I mean that some homeowners that have the financilal capability to pay mortgage have just decided not to.

Northwestern University teamed up with the University of Chicago to study this situation. They came to the conclusion that as many as 25% of all foreclosures are strategic.

Now, in a paper released last week, Brent White,a professor at the University of Arizona’s James E. Rogers College of Law, is actually suggesting that it makes no since not to walk away! In his extensive report he saids:

“Home owners should be walking away in droves…The real mystery is not why large numbers of home owners are walking away, but why, given the percentage of underwater mortgages, more home owners are not.”

Ladies and Gentlemen, I am NOT suggesting that we support the professors arguements. I am just letting everyone know that the whole issue of foreclosures and ‘short sales’ will be with us for a some time to come.

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