FICO study for lenders inadvertently creates blueprint for strategic defaults

Robert Aldana: "How long before you break
even on your underwater mortgage?"

"Predicting Strategic Default," by major credit scoring system architect FICO (Fair Isaac Corp.), could encourage more strategic defaults. Contrary to some assumptions, strategic defaulters are far from being financially distressed before they decide to walk and they are quite calculating in their move.

by Broderick Perkins
© 2010 DeadlineNews.Com

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Deadline Newsroom - An early warning system to help lenders detect impending strategic defaults could serve as a blueprint for homeowners considering walking away from their mortgage and that could encourage more strategic defaults.

Strategic defaulters are homeowners who can afford to make mortgage payments, but proactively decide to stop making mortgage payments in order to induce foreclosure.

The strategy grew in popularity in an uncertain economy with bleak employment prospects, particularly among short term homeowners who are "underwater," owing more on their mortgages than their homes are worth.

What could encourage more strategic defaults is "Predicting Strategic Default," by major credit scoring system architect FICO (Fair Isaac Corp.). It found that contrary to assumptions, strategic defaulters are far from being financially distressed before they decide to walk.

Get the full story here: "Study Inadvertently Draws Blueprint For Strategic Defaults"

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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