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Today on MyMoneyLife with Chuck Bentley

Monday, February 1, 2010

Strategic Mortgage Default

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Chuck Bentley

Did you think we’d ever see the day when folks would walk away from their houses—even when they can easily afford the payments?

It’s true and it’s happening all across the country—there’s even a new industry name for it—it’s called “strategic default.”

This isn’t the same as someone losing a job and not being able to make the mortgage payments.  Strategic default is when someone still has the means to pay the mortgage, but chooses not to because the home’s value has dropped dramatically.

According to the Wall Street Journal, strategic default is spreading like an epidemic across the country.

Here are 3 things you should know:

  1. When all the numbers are counted, the total number of strategic defaults in 2009 may exceed 1 million. That’s more than 4 times the number in 2007.


  2. The states hardest hit by strategic default are Florida, California, Arizona and Nevada. Almost a third of all mortgage defaults in California are now classified as “strategic.”


  3. It’s wrong.  Psalm  37:21 says, “the wicked borrow and do not repay.”

Now, it’s one thing if you lose your job or suffer a medical condition that keeps you from working. Most lenders are anxious to work with you until you can get back on your feet.

But if you simply owe more on your house than it’s worth, you’re morally bound to honor your commitment and make your payments.

By trusting God to provide, we show others the blessings of living in God’s economy, not man’s and our faith proves more valuable than gold.

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