Strategic defaulters opt to continue paying on second liens

In finance, default is failure to meet the legal obligations (or conditions) of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond. Default can be of two types: debt services default and technical default. debt service. main article: strategic default.

An idea for how to deal with second liens. By Felix Salmon.. the banks are quite happy when homeowners default on their mortgage – that frees up cashflow to continue paying the second-lien loan.

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 · Strategic default behavior suggests that the default process is not only a matter of inability to pay. Economic costs and benefits affect the incidence and timing of defaults. As with prior research, the authors find that people default strategically as their home value falls below the mortgage value (exercise the put option to default on their first mortgage).

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In some cases, borrowers have second liens. this option. Citigroup’s program goes further. It targets delinquent homeowners who do not qualify for mortgage relief. During the time the borrower is.

PACE liens pose a real danger. to homeowners that they may need to pay off their PACE assessment when they sell or refinance, as they would with any property-secured financing,” Renovate America.

(If that beast doesn’t exist, be on the lookout for it to appear, as these offerings continue. pay the minimum amount on all debts and put all excess capital toward knocking out the smallest debt.

Strategic defaulters opt to continue paying on second liens to keep access to the line of credit. I agree with this author that the banks shouldn’t be giving strategic defaulters access to easy credit so soon after the default. Word will get out, and people will have one less reason not to walk away from their mortgages. Irvine Home Address.

mortgage, but who choose to default for what are called strategic reasons. The second contribution of the paper is to systematically study not only defaulters, but. defaulters who have the ability to pay, but who default because their. borrowers, since most of these borrowers continue to pay (Foote et al.

New homes sales jump 11% in March WASHINGTON – Sales of new U.S. homes accelerated strongly in December, a sign that home-buying may improve this year after a lackluster 2014. The Commerce Department said Tuesday that new home sales climbed 11.6 % last month to a seasonally adjusted annual rate of 481,000.