U.S. homeowners are deciding to strategically default in greater numbers. A homeowner strategically defaults by ceasing mortgage payments he could otherwise afford because the loan is underwater. According to Morgan Stanley, approximately 12 percent of all mortgage defaults in February 2010 were strategic, up from 4 percent in mid-2007. A Morgan Stanley analyst stated that a homeowner with a high credit score and a large loan is the most likely to stop paying the mortgage and walk away. One reason for increased strategic defaults in prime-jumbo debts is because these loans, which exceed $417,000, do not benefit from government-aid programs.
Tisha Black Chernine, Esq.
