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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 ...
While there may be signs that the housing market is mounting a comeback, homeowners hit hardest by the real estate meltdown aren't growing any more patient, a new poll suggests. An online poll ...
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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The default effect, a concept within the study of nudge theory, explains the tendency for an agent to generally accept the default option in a strategic interaction. [1] The default option is the course of action that the agent, or chooser, will obtain if he or she does not specify a particular course of action. [ 2 ]
Patricia Adams, executive director of Probe International, a Canadian environmental and public policy advocacy organization and author of Odious Debts: Loose Lending, Corruption, and the Third World's Environmental Legacy, stated: "by giving creditors an incentive to lend only for purposes that are transparent and of public benefit, future tyrants will lose their ability to finance their ...