Watch Out Walk Away Home Owners

The creator of FICO scores, Fair Issac, has developed a program that will predict which home owners may strategically default. The program takes into account many different aspects of a borrowers finances including but not limited to:

• Length of home ownership
• Credit Card Debt
• Timeliness of bill payments
• Newly opened credit card accounts

According to Andrew Jennings, CAO at FICO,

“Our new research shows it is possible for servicers to find those at greatest risk of strategic default, both to prevent losses and to prevent borrowers from making a decision that will damage their credit future”.*

Now this sounds like it may be a promising program geared at looking for underwater home owners that need help but I think there are deeper motives at hand. Jennings says the program is being used to “both prevent losses and to prevent borrowers from making a decision that will damage their credit future”. What does that mean for strategic defaulters? With Nevada being a deficiency judgment state I’d put more emphasis on the “prevent losses”. Lien holders and servicers are going to use this technology to sort through their loan portfolios looking for people to pursue after foreclosure. Those that walk away when they were fully capable of paying their mortgage, even if it is a poor financial decision, are now on the radar and the banks will be watching.

Have you thought about pursuing a short sale? Let me help you through it. Contact me via phone or email to get started.

Important Notice: Renown^® Real Estate Services is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating. Renown^® Real Estate Services and licensee Kristopher Kent are not engaged in the practice of law, legal advice, or tax advice. Renown^® Real Estate Services and licensee Kristopher Kent do not attest to the accuracy of this information and assume no responsibility for the actions of the recipients. The preceding is for informational purposes only and the recipient is urged to seek professional legal and tax counsel.

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