Interestingly, after I posted a local story on strategic defaults in the Richmond commercial development world, I came across this article by Kenneth Harney, a national real state columnist, on the impact of residential defaults. Seems the lending and credit scoring world is analyzing strategic defaults in the residential market. A "strategic default" occurs when a homeowner intentionally walks away from a mortgage, usually when he or she owes substantially more than the current market value of the property. In other words, the homeowner CHOOSES to stop making payments, knowing the lender will ultimately foreclose. The article suggests this phenomenon is more likely in states that limit the ability of lenders to go after the mortgage holders for any deficiency, i.e, the difference between the foreclosure sale price and the original mortgage. Harney also suggests the strategic default issue is likely to create stricter underwriting requirements for anyone trying to borrow, even folks previously considered "platinum" because of their credit scores.
Personally, I have not yet come across anyone who is making a conscious choice to default on their mortgage. Maybe I'm lucky. Maybe this is a function - as I believe - of the fact that the Richmond area is much better off than other, harder hit markets, like Florida, Arizona, California and Nevada.
I don't know that there is a "moral" to this story. Maybe the takeaway is things could continue to get worse, before they get better. I sure hope that's not the case.
To become a real estate broker you have to be an active real estate agent for 1 year take a class and pass the state exam. After wards you can do anything that you like in your own name. You can even open your own real estate business.
Posted by: Poplar Bluff Real Estate | October 31, 2010 at 12:11 PM