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Thursday, March 18, 2010

Strategic Defualts are on the rise

Strategic defaults also known as Short Sales, on homes are on the rise.

The number of people choosing to cut their losses on their homes continues to rise. Studies estimate about one-quarter of all defaults are voluntary "walkaways," also know as strategic defaults and jingle mail (for the sound the abandoned keys make in the mailbox).

The phenomenon reflects shifting attitudes toward debt and commitment. In an era where high-profile investors have walked away from multibillion-dollar real estate projects and more than 2 million Americans have gone through foreclosure, defaulting has begun to lose its stigma.

Being underwater - owing more than a home is worth - is a big trigger for those strategic defaults. Often another problem, such as job loss, divorce or higher monthly payments, is involved. But some homeowners just don't want to be saddled with a huge mortgage when they have no equity.

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Sidney Kutchuk