‘Strategic default’ on the rise
At a time when one in four homeowners is underwater, and 2 million more Americans have gone through foreclosure, the thought of defaulting on a loan is becoming less taboo. In fact, many homeowners are taking a cue from high-profile investors, who have walked away from multi-billion dollar real estate investment projects, and choosing to cut their losses, the San Francisco Chronicle reports.
Foreclosure and delinquency rates remain high, a Treasury official said in a prepared statement Monday. And though there are signs of recovery in the housing market, the federal government still has a lot of work ahead of them, he said.
Part of that work is putting pressure on U.S. banks to ease terms for distressed homeowners, as well as incentive programs to encourage homeowners to sell their properties at a loss. A “Hardest Hit Fund” is aimed at supporting state and local housing agencies in California, Florida, Nevada, Arizona and Michigan help unemployed workers keep their homes and to help underwater homeowners into loan modification programs.