FICO Now Predicts Strategic Default: Don't Walk Away
Think you know your neighbors? FICO Labs, a unit of the Fair Isaac Corp., is implementing a new technology that will measure the likelihood of a homeowner walking away from their mortgage, even when they can afford the payments.
The concept is known as strategic default, and it has been difficult to predict in the past. But according to the latest research, the typical strategic defaulter is a far savvier borrower than previously imagined.
As more homeowners find themselves saddled with underwater mortgages – cases in which the home is worth less than the debt -- the prospect of simply walking away has broadened for many Americans.
But make no mistake – no matter which risk profile you fall into, defaulting on your home loan will have a lasting impact on your financial future.