Strategic defaulters opt to continue paying on second liens

The strategy here is working and there is a strong runway for growth. Expect this REIT to continue making waves and creating. of the capital structure (the Revolver, Term Loan, Second Lien Notes,

Further, the Company’s second lien lenders. advisors to continue their ongoing active discussions to evaluate these various alternatives for the Company’s capital structure and financial position..

 · A default is considered strategic when homeowners have the capacity to pay, yet choose to walk away from their mortgage. The trigger, researchers say,

Default rates of second liens are generally similar to that of the first lien on the same home, although HELOCs perform better than CES. About 20 to 30 percent of borrowers will continue to pay their second lien for more than a year while remaining seriously delinquent on their first mortgage.

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The data contradict the hypothesis that consumers would strategically default on a second lien and keep their first lien current to reduce their monthly payment and thus avoid a foreclosure, the.

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Even if a lender cannot collect on a second mortgage through foreclosure or sale of the property, the lender has a right to sue the borrower personally. A second mortgage is a debt obligation that is secured by a piece of property and secured by a borrowers personal promise to pay.

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 · Borrowers who strategically default on their first mortgage often continue to pay on home equity lines of credit, according to a new white paper from two.

2 Background: The Strategic Default Decision When the price of housing falls, mortgage borrowers may nd default an attractive option compared to paying a premium to stay in their home even if they can aord to keep paying. The following two-period model, which we borrow from Foote et al. (2008), illustrates this concept.

The company attributes this to their strategy. The second option is to take on additional debt, but I struggle to see how this company will entice lenders to lend them money. Any creditor can see.

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The causes of mortgage default: Ability to pay versus negative. (2010) suggest two possible forces.. In this case homeowners have the ability to pay but choose to. We classify mortgagors as strategic defaulters if they could have. limited ability to pay chose to continue to make mortgage payments.