An executive from financial security company says that individuals with the strongest and soundest finances may be among those at high risk of walking away from a mortgage.
This “strategic defaulting” is a phenomenon that has been gnawing at credit unions and lenders alike, as they start worrying about homeowners that possess properties worth less now than what they bought before.
Financial writer Barbara Eisner Bayer, however, does explain the long-term ramifications of simply walking away from a mortgage:
“Your credit score will take a huge hit. And potential lenders may not look kindly at the fact that you walked away. This could not only apply to mortgages, but to personal loans or loans for your child’s college education. Fannie Mae will treat a strategic default in a similar way as it does a bankruptcy – you won’t be able to get one of their loans for seven years.”
Bayer does point out that strategic defaults are not as end-all as they first appear to be – especially when traditional ethics are waived in favor of practical reasons.
“Strategic defaults may make people like me angry…but if my home was underwater, and I needed to relocate for a job offer, who knows what I would do. In these challenging times, it’s best to stay out of other people’s ethics and, if necessary, enroll in an anger management course.”