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Wednesday, May 18, 2011

Walk Away?

A strategic default may not be explainable now, but how about in a few years. If enough people walk away and mortgage lenders start lending again, a strategic default may not be looked at in the same light it is today. The key point Ms. Gaskin makes is that “credit remains tight across the board.” That means lenders are looking for reasons to turn down borrowers. When that wind changes, so will the view of a strategic default on a person’s credit report.

Hoak then throws out the canard that landlords won’t want to rent to someone who has strategically defaulted, with Gaskin saying this, “Landlords that make inquiry into credit history may be disinclined to rent to a strategic defaulter or may offer less favorable terms than to a consumer with a strong credit history.”

So we’re supposed to believe that a landlord would turn down a renter because the landlord notices that previously the potential renter made the savvy financial decision to walk away from an underwater mortgage?

Gaskin goes on and on. Your insurance rates will go up and you’ll even have to pay more for your cell phone if you walk away. People don’t walk away unless the numbers are very compelling. So, even if you had to pay another $10 a month for phone and a little more for insurance the thousands saved each month not feeding an underwater mortgage is still worth it.

FICO Says Don’t Walk Away

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