Magazine article Mortgage Banking

Strategic Defaults Running 80 Times Higher in California Than in 2005

Magazine article Mortgage Banking

Strategic Defaults Running 80 Times Higher in California Than in 2005

Article excerpt

According to updated findings from an Experian-Oliver Wyman Market Intelligence Report, the incidence of strategic defaults remained high last year--it was running at 19 percent of overall mortgage delinquencies in the second quarter of 2009. But there is some reason to believe this trend may have peaked or be close to peaking, according to a June 28 release from Costa Mesa, California-based Experian and New York-based Oliver Wyman.

The first Experian-Oliver Wyman Market Intelligence Report on the subject of strategic defaults found that the practice was more common in areas where price declines were steepest. The new, refreshed report documents that trend continued into 2009, with strategic defaults running 80 times higher in California than in 2005 and 53 times higher in Florida.

The report found that in the first half ol 2009, 28 percent of super-prime delinquent borrowers (those with VantageScores[R] between 901 and 990) became strategic defaulters. That was a 50 percent higher rate than for the overall population of those with delinquent mortgages.

The Experian-Oliver Wyman research also found that borrowers with higher mortgage balances were more likely to be strategic defaulters. …

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