Did distressed homeowners ruthlessly default or merely chose the timing of the inevitable?
Most people who defaulted on their mortgages couldn't afford to pay off the debt. They chose when to default, but the default was unavoidable. No accepted definition of strategic default exists. Lenders attempted to define a strategic defaulter as any borrower who is capable of making a payment and chooses not to. On the surface that sounds reasonable, but that definition misses a very important distinction: Some people chose to default because they know they can’t afford the payments long term, and they are merely choosing the timing of the inevitable. The only thing strategic about the default is the timing, not whether or not they will lose the home. I prefer the distinction between ruthless default and accelerated default.…[READ MORE]