Corrente

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"Strategic defaulting"

I guess, in a kleptocracy without the rule of law, that's what you do:

A growing number of underwater borrowers are walking away from their homes even if they can afford the payments, according to recent studies. More than 25 percent of mortgage defaults during this housing crisis have been so-called strategic defaults, according to a study published in June by professors at Northwestern University, the University of Chicago and the European University Institute. Another study by credit bureau Experian and Oliver Wyman, a strategic consulting firm, estimated that nearly 600,000 borrowers "strategically defaulted" on their mortgages in 2008, more than double the number from 2007.

Housing experts say these borrowers are calculating that their homes are no longer a sound investment. For example, a borrower who is 25 percent underwater would spend nearly 10 years making regular payments before regaining any equity in the home, according to mortgage research firm HSH Associates.

As the story almost says, and as we've pointed out, it's the financial sophisticated who think of their homes as investments; and they're the ones walking away. It's the poor schlubs who think of their homes as places to live that are hanging on.

NOTE HOLC would have avoided "inequity aversion"...

UPDATE Here's another one, from FL (making it all the more unseemly that Kendrick Meeks is sliming his way to the center). Now we've got lawyers setting up seminars in "strategic defaulting." So, if you can afford to go to a seminar, you're in. And if you play the game by the rules, you're a sucker. Which is what they're counting on. What a mess.

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chicago dyke's picture
Submitted by chicago dyke on

"good credit," v "bad credit" will be very different things, in the near future. i reflect upon this as i perceive more and more formerly conformist groups fail to conform to the credit construct foisted on us over the last few decades. really, i think this is one of those ironic moments. the dam wouldn't be breaking, if not for Gekko levels of greed and dishonesty by the master class. which is so arrogant, they made such a trope for hollywood, so in love with themselves are they. when the rubes picked up on it, it was only a matter of time before they started adopting similar behaviors. "make me pay for it, bitches" is a fine strategy in life. all money is an illusion, after all, a shared insanity of representation that a majority can collectively decide to redefine, at will.

Submitted by lambert on

... because if you lose your job, you can destroy your credit rating, and without a credit rating, you can't get another job. This is a feature, not a bug (a formulation I've been noticing a lot lately).