chess-piece-istock-365 2Lessons Learned from the Strategic Default Phenomenon


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Given how far the housing market has come since the foreclosure crisis, it’s easy to forget how recently it was that “strategic default” was a top-of-mind concern in the mortgage industry.

The debate surrounding this phenomenon was fierce. The notion that borrowers who could afford their homes would rather walk away than be saddled with the debt of an underwater mortgage was so inconceivable that the industry’s initial reaction was out of touch. Warnings about tarnished credit scores and the harm strategic defaulters cause to their neighborhoods fell on deaf ears when coming from the same banks blamed for far greater offenses.

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