Experian, a credit-reporting firm, announced Thursday the availability of a Market Insight Snapshot report that analyzes strategic defaulters and provides recent findings on the profile of these individuals.
The study found that in 2008, strategic defaults peaked in Q4, accounting for 20% of all mortgage defaults 60 days past due or greater and have fallen below that percentage every quarter through Q2 of 2010. The last quarter in 2009 indicated a 16% strategic default rate and 17% in Q2 of 2010. Although percentages slightly dropped since 2008, they still remain high creating a continual issue for lenders.
The report also shows that consumers with higher origination balances are more likely to strategically default. Of loan default customers with origination balances of less than $50,000, only 6% were strategic defaulters while 38% were distressed defaulters. For those with loan origination balances of more than $1 million, one-third had strategically defaulted while only 20% had defaulted under distress.
"Experian, along with Oliver Wyman, pioneered and published the first research on strategic defaulters in 2009 and has continued the in-depth analysis to further understand and identify key behaviors and trends," said Charles Chung, Experian's president of Decision Analytics. "It's important for lenders to understand findings such as why about 90% of strategic defaulters are continuing to stay current on their other obligations — even a year after they've gone delinquent on their mortgage. Knowing more about these behaviors helps lenders personalize strategies for consumers who have defaulted on their loans."
