What is a strategic default? Is it legal?

What is a strategic default? Is it legal?



We are hearing more and more about strategic defaults so what is a strategic default on a mortgage?  Is it legal?  Currently there is no laws stopping them.

So what is a strategic default on a mortgage?    A strategic default is where a home owner intentionally lets the bank foreclose on their home for the purpose of

  • getting a lower house payment
  • getting out from under a mortgage
  • to move into a better school system
  • to buy a bigger house with the same payment
  • to move into a better neighborhood
  • to get back on the right financial path

strategic default is going into foreclosure on purpose. Those who participate in this choice are people who have the ability to pay their mortgage, have a stellar credit rating and abruptly choose to walk away from their home payment responsibility.  They are choosing to go into foreclosure on purpose.

Currently as of January 2010 they are saying about 25% of all foreclosures are strategic defaults.  Is it legal…. yes at this time.  Is it ethical?  It is up to each person that is thinking about going into a strategic default.  Some people don’t think it is right to go into foreclosure on purpose that we as consumers are paying for it.

So this is what a strategic default is?  What do you think about it?  Should homeowners be penalized for it?

Russ Ravary your Metro Detroit real estate agent serving the Detroit suburbs and out lying areas.

Selling Home Tips 7 – West Bloomfield Homes

What does closing in escrow mean? – Metro Detroit real estate

What does CCS mean? – Home buyer tips

Metro Detroit relocation – Don’t you believe it

Lake Angelus Oakland County MI

Moving to Michigan – South Eastern Real Estate!

Homes for sale in Metro Detroit Michigan

Moving to Michigan

Top All- Sports Lakes in White Lake MI- Detroit Michigan Real Estate








Homes for sale in Livonia MI


Posted in Foreclosures, investment properties, landlord Tagged with:

Search Homes



The data relating to real estate for sale on this website comes in part from the IDX program of Realcomp. Real estate listings held by brokerage firms other than Keller Williams Realty Commerce Market Center are marked with the IDX logo and detailed information about them includes the name of the listing brokers.

All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Keller Williams Realty Commerce Market Center shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. IDX information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.