The New York Times ran a story today on strategic defaults... Homeowners who do the math and decide that it makes better financial sense to lose their homes to foreclosure than continue paying down the mortgage. There's a new brashness to the decision, and I wondered if that might have legal implications down the road. The paper profiles a number of owners who could afford to pay their mortgage, but don't. In the case of Alex Pemberton and Susan Reboyras:
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.
"Instead of the house dragging us down, it's become a life raft," said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. "It's really been a blessing."
I'll leave the debate over the morality of their decision to others (we did a show about it recently) but what about the business decision of going public while in foreclosure? Banks are allowed to sue defaulters for the remaining balance on mortgages — or a portion of it. Obviously, the news media needs people willing to share their stories with the media, but does bragging about living the good life while the bank sends foreclosure notices put a big target on your back?