Report Says Strategic Defaults May Have Peaked

According to updated findings from Experian and Oliver Wyman, strategic defaulters, who are defined as remaining delinquent for six months after the initial date of delinquency, continued as a high percentage of all mortgage delinquencies at 19% in the second quarter of 2009. While, overall, the broad trends observed in the first Experian-Oliver Wyman Market Intelligence Report on strategic defaults have continued into 2009, there is reason to believe the phenomenon may have peaked, or be close to peaking. The first Experian-Oliver Wyman Market Intelligence Report demonstrated that strategic default occurs more in areas where home price declines have been the steepest. The refreshed report shows this trend continued into 2009, with strategic defaults running 80 times higher in California than in 2005 and 53 times higher in Florida. Data from the first half of 2009 may contain the first signs of a decline in strategic defaults, the report says. The report shows that the absolute number of strategic defaults for the first half of the year, 355,000, as well as first-time mortgage delinquencies in general, declined in successive quarters in 2009, suggesting they may have peaked in Q4 2008.