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A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments.. This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house's price such that the debt owed is (considerably) greater than the value of the ...
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When a debtor chooses to default on a loan, despite being able to service it (make payments), this is said to be a strategic default. This is most commonly done for nonrecourse loans , where the creditor cannot make other claims on the debtor; a common example is a situation of negative equity on a mortgage loan in common law jurisdictions such ...
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A new study sheds additional light on the issue of "strategic defaults" in America, offering further insights into homeowners who are statistically more likely to make a calculated decision to ...
In his Ph.D. dissertation published in 1991, Riddiough coined the term 'trigger event', which is used to indicate mortgage default outcomes that are the result of a low house price combined with an income interruption event such as job loss or severe illness. [6] His dissertation received the AREUEA Best Dissertation Award in 1992. [7]
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Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien ".