About The further along we get int this foreclosure debacle, and the lower we see the home prices fall, the more likely we will encounter a strategic default.
A strategic default is when a homeowner can afford to make the payments on a home in foreclosure, but strictly for financial reasons chooses to default.
Fair Isaac, the credit rating agency, thinks that they have learned the profile of the strategic defaulter.
The strategic defaulter has a significantly different credit profile from someone that’s a distressed owner.
The credit assessment firm FICO says it’s developed a method, using consumer behavior analytics, that will allow lenders to identify borrowers who are a risk for strategic default.
Read more about strategic defaults.