Recent reports have focused on strategic defaulters, or homeowners who walk away from their mortgages even though they have the ability to pay them. Although, UPI reported today that the strategic default phenomenon may have peaked early last year.
Researchers believe that the frequency of strategic defaulters, who are defined as those remaining delinquent for six months after the initial date of delinquency, has been declining for over a year.
Data suggests that strategic defaults may have been at their highest in the fourth quarter of 2008. The number of strategic defaults for the first half of 2009 (355,000), as well as first-time mortgage delinquencies in general, declined in successive quarters in 2009.
According to the Experian-Oliver Wyman Market Intelligence Report, strategic default occurs more in areas where home price declines have been the steepest.
Although strategic defaults and delinquencies remain at high levels, after data from 2008 and the first half of 2009 showed a definite decline, it is expected that defaults have continued to decrease.
Temporarily distressed borrowers whose payment behavior closely mimics strategic defaulters but continue to make occasional payments on their mortgage, rose from 20 percent in 2008 to 26 percent in the first half of 2009.
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