I’m not much for saying “I told you so” regarding my trends that will influence the markets in 2010, but this story of a young professional getting a free bachelor pad in the gorgeous sunshine state of Florida for 28 months (and counting) is just too newsworthy to pass up.
Here’s the cool, or infuriating, part depending on your point of view.
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I’m not sure if I should love this guy for his ingenuity in gaming the system (e.g. strategic default), or hate him for his lack of ethics. Personally, I think it sets a extremely negative tone by breaking his word since he signed a contract to repay a loan. Business wise, I think it’s a smart move to strategically default as long as his lender has no legal recourse against him other than tanking his credit score.
After all, many well known and well respected financial corporations are doing, and have done, many strategic defaults during the Great Recession, so why should a savvy, in-the-know homeowner be any different?
Regardless of our personal ethics, the more stories like this emerge and the popularity of walking away from an underwater mortgage embeds itself in U.S. culture, the faster the stigma of foreclosure and defaulting on your mortgage will dissipate from our social construct.
The result? A real estate market that will continue to bounce along the lows or continue it’s decline.