About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.

American Attitudes Regarding Strategic Default

Last month a survey from ID Analytics revealed some surprising information about how Americans view the practice of strategic default…

…(walking away from mortgage payments on an underwater home and allowing it to go into foreclosure even though one has the financial means to make the mortgage payments). In the survey, one-third of those responding now see strategic default as a socially acceptable option. Furthermore, greater than one-third of respondents also believe having a low credit score isn’t that big a deal anymore.

What’s going on here?

For starters, some survey respondents stated that they were reacting directly to their perception of the mortgage industry as having taken advantage of people during the boom years. Concern was expressed by one survey analyst about what effect this perception could have on the market recovery, conjecturing that it could cause problems during a slow economic recovery.

Other respondents may be approaching the financial transaction of owning a home from a business perspective. In a recent article by Business Insider, University of Arizona real estate expert Brent White remarked that “a large number of Americans who are underwater on their mortgages would be better off financially if they walked away from their homes. They don’t because we have a double standard … individuals are told they have a moral obligation to pay their mortgages and corporations understand that contracts are to be breached when it’s not economically efficient.” It’s entirely possible that some homeowners, with no relief in sight on their underwater mortgages, are moving over to the business perspective and “cutting their losses.”

There’s also the distinct possibility that because discussions about short sales, foreclosures, and credit score issues are becoming more commonplace in the media, people are simply getting used to the idea. However this attitude was driven, this survey gives us a snapshot of how Americans are reacting to the concept of strategic default in this time and place. It remains to be seen if the acceptance of strategic default and lower credit scores will continue to grow, or if an economic recovery will walk those numbers back…but for now, it’s an indication that nationwide, homeowners are more willing to look at all viable options, including short sales, in order to address their mortgage concerns. And that’s an opportunity for agents to step up and provide guidance and assistance to those who need answers.

About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.