Strategic default threatens to drown a fragile housing market

Paul Stevenson walked away from two mortgages in 2009 before the term “strategic default” had become household term. The serial entrepreneur, who considers himself astute on financial issues, got stuck on a couple of bad real estate loans that were far underwater. “I had little choice but to do strategic defaults on both of them,” he said. “When I began the process, there was little information to comprehensively address the issues that I knew I had to be worrying about — particularly the recourse versus nonrecourse issue.” He grappled with potential tax liabilities, the impact to his credit score and whether he should walk and await a foreclosure or pursue a workout. “It was a very fearful time in my life,” Stevenson, who now advises homeowners on strategic default, told HousingWire. Paying the mortgage is no longer about the ability to write the check. It also is about the willingness to do so.

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