As the economy is still in a bad state, more homeowners are choosing to walk away from their homes, leaving not only their residence but the mortgage payments as well. This new trend is what is now being referred to as a strategic default. This is when a borrower has the money to pay the mortgage but decides not to.
The reason might be that while those, such as banks, government, and big corporations, frown on homeowners that make a decision to go this route and not take responsibility, they do not hold themselves to the same “high” standards. In recent years, there have been several corporations that have been discovered to have stolen pensions from workers that have been there for years, leaving them with no savings. How are these people supposed to afford a mortgage payment every month with no money, after working at a company for 30 or 40 years?
Banks have also been known to “release” businesses from paying their mortgages or lend money to companies with little or no equity. This is not to even mention the help they receive from the government when they supposedly have no money to pay salaries.
Yet, they show up at these meetings, as they did in recent years In Washington, D.C., in limos and private jets. Some banks have also been known to buy defaulted loans or credit cards from other companies. The results are they can’t collect on the debts as well and end up destroying their own creditworthiness.
Another fact that is told to borrowers that choose to strategically default on their mortgage loan is that it will bring down property worth of the neighborhood. While this might be true when you have mounds of debt, do you really care about the property value? A neighbor’s property really isn’t really a concern of another neighbor. This is especially true in a market where if you look up and down any block in America, you are guaranteed to see at least two or three homes in foreclosure.