You might be surprised at the answer.
In July I wrote a post “Strategic Foreclosures are Lenders Listing” which indicated from Wall Street Journal research that that once the value of a home fell by more than 15% the number of homeowners would simply “walk away” increased.
Now a new report produced by Experian and Oliver Wyman adds to that study with their own research about who it is that will make the decision to walk-away.
“New research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50 percent more likely to “strategically default” — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring mortgage borrowers.”
There is some very interesting data to support the thought that strategic foreclosures are not something to scoff about.
The number of strategic defaults is far beyond most industry estimates — 588,000 nationwide during 2008, more than double the total in 2007. They represented 18 percent of all serious delinquencies that extended for more than 60 days during the fourth quarter of last year.With more Alt-A loans ready to reset in 2010 and the value of homes in Prince William County as much as 50% lower than 2005 this new research might be an indication of more trouble to come for the area.
Read the full article by Kenneth Harney as published in the St. Petersburg Times