[quote=davelj (in response to Briansd1)]. . . MOST people get utility out of being financially responsible, even if it negatively affects their overall wealth. This does not mean that they are acting against their own economic interests. You’ve merely defined “economic interests” incorrectly.[/quote]
davelj, if you define “utility” as keeping a good credit rating, then that IS in keeping with one’s own economic interests. Since a poor credit rating can’t be fixed (for a good number of years) for ANY amount of money, IMO, it’s totally worth it to do what it takes to maintain one.
I DO see real live “homeowners” squatting in their properties for up to 30 mos. When I see them, they have recent professional manicures, are still sporting jewelry they haven’t yet sold and are driving newer expensive vehicles. EVENTUALLY, these people WILL give a deed in lieu or be foreclosed upon and some may even have a judgment filed against them for their defaulted recourse paper.
Even though I have to REALLY financially toe the line more than most people would be willing to do to keep my own show running, I DO NOT want to be in these defaulters’ places. Why?? Their credit is SHOT to H@LL and getting worse by the day! Their choices in life are extremely limited and their bad credit could even keep them from being chosen for good jobs in the future.
The only time I think it might be prudent for a person with good credit to “strategically default” is if it would take them longer than ten years to pay down a mortgage so as to no longer be “upside down” on a property. Ten years is enough time for this ONE isolated incident (and no other derogatory items) to disappear from a credit report on its own.
I would only suggest this tactic for non-recourse (purchase money) debt for a creditworthy person who mistakenly made a terrible investment, i.e. bad location, bad construction, high MR/HOA and surrounding properties lost >30% of value, never to be recouped.
For persons whose credit already has multiple pockmarks and/or is completely shot, all bets are off. These people have nothing to lose (exc. a poss. judgment for recourse-paper default, which they can easily discharge in a Chap. 7 BK) by maxing out their credit cards and squatting as long as their lenders allow them to.
Credit scores tie into one’s name and nationwide reputation and is the most valuable possession there is, IMO.
