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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 ...
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 ...
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 1994, Riddiough coined the term 'strategic default', which is used to indicate purposeful borrower default in order to extract concessions from a lender. [11] The phrase, along with the term 'trigger event,' have been commonly used in the literature and popular media since the financial crisis of 2008.
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A mortgage lender is an investor that lends money secured by a mortgage on real estate. In today's world, most lenders sell the loans they write on the secondary mortgage market. When they sell the mortgage, they earn revenue called Service Release Premium. Typically, the purpose of the loan is for the borrower to purchase that same real estate.
FICO Labs, a unit of the Fair Isaac Corp., is implementing a new technology that will measure the likelihood of a homeowner walking away from their mortgage, even when they can afford the payments ...