Commercial Real Estate Lender / Syndicator · Dallas, TX · Member since 2011 · 888 posts · 309 votes
According to this article, http://www.examiner.com/article/the-fico-credit-score-and-strategic-default, researchers have found distinct character traits that identify potential strategic defaulters. They say strategic defaulters typically have higher FICO scores, lower revolving balances, fewer instances of exceeding the limits on credit cards and lower overall retail credit card usage.
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
Sounds like if you have a high FICO, low balance and pay on time, you should go ahead and ding your credit with a strategic default so you will have crappy enough credit to qualify for a mortgage.
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
Sounds like if you have a high FICO, low balance and pay on time, you should go ahead and ding your credit with a strategic default so you will have crappy enough credit to qualify for a mortgage.
Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
14y
Why is this surprising?
People with high FICO scores, etc etc are financially sophisticated individuals. People who strategically default are financially sophisticated... why wouldn't those groups overlap?
Foreclosure Specialist · Fresno, CA · Member since 2012 · 11 posts · 0 votes
14y
Originally posted by Nathan Emmert:
Why is this surprising?
People with high FICO scores, etc etc are financially sophisticated individuals. People who strategically default are financially sophisticated... why wouldn't those groups overlap?
Contractor · Washington, Washington D.C. · Member since 2011 · 29 posts · 9 votes
14y
I would also venture that their credit is so good that the foreclosure hit has minimal impact. At 650 with a foreclosure you may as well hang it up. At 800+ (with low balances and on time payments) with a foreclosure your cards may knock you back some but won't close you, and you'll still be ok in terms of car loans and such. The day to day impact will be minimal plus you get to swim out of that underwater house. Give it 3 years and move on.
Foreclosure Specialist · Fresno, CA · Member since 2012 · 11 posts · 0 votes
14y
Originally posted by Carlos F.:
The data is not the problem, the problem is potentially being rejected by underwriting because the predictive FICO model deems you as high risk.
I would imagine expanding the data over a longer time period (say 20-30 years) would show those same people have a much better chance of paying you back.
just because they made a calculated risk in the worst housing market since the great depression doesnt really tell the whole tale in my opinion.
I do however see your point and that would not be good forcing out legit buyers.
Wholesaler · Scottsdale, AZ · Member since 2011 · 73 posts · 17 votes
14y
Originally posted by J Salter:
This string is funny. I think about Strategic default all the time, just not for myself!
About a year ago I had a few clients that were in balloon payments and that was the only way the bank would consider a loan modification with a traditional 30 yr fixed loan.
After going 90 days late they got the loan modified cut the payment by a third and they lost about 150 points but they didn't lose their home.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
14y
I have a hard time imagining me doing this too. I can attribute the good fortune I have to doing things I said I'd do when it was hard, and sticking with financial obligations when walking seemed to make better sense.
Having said all this, it is easier to see this in today's climate as a business decision and businesses' primary function is to stay alive. AND the fact that so many conspired, and dishonestly I might add, to not care about the general good; and it is these same lenders that we have to pay back because of the mess they created, that really they are getting what they deserve. The seconds that created 100% financing are simply bad business decisions on their part, and they charged for the risk. Since the buyer took a risk in buying and the lender took a risk in lending 100%, then maybe the pain should be shared.
Didn't personally partake in the latest borrowing/feeding frenzy so don't have to make these choices but know people who are only guilty of buying a home to live in and can't move on now.