Identify suspected strategic default behavior to improve lending and account management strategies



Terry Stockman (not his real name) earns a handsome income, maintains a high credit score and owns several residential properties. They include the Southern California home where he has lived since 2007. Terry is now angling to buy the foreclosed home across the street. What’s so unusual about this? Terry hasn’t made a mortgage payment on his own home for more than six months. With prices now at 2003 levels, his house is worth only about one-half of what he paid for it. Although he isn’t paying his mortgage loan, Terry is current with his other debt payments.  

Terry is a strategic defaulter — and he isn’t alone. By the end of 2008, a record one-in-five mortgages at least 60 days past due was a strategic default, according to Experian Information Services data. Since 2008, strategic defaults have fallen below that percentage in every quarter through the second quarter of 2010, the most recent quarter for which figures are available. However, the percentages are still high: 16 percent in the last quarter of 2009 and 17 percent in the second quarter of last year.

Mortgage lenders need to be able to identify strategic defaulters in order to best employ their resources and set different strategies for consumers who have defaulted on their loans. Experian’s Strategic Default IndicatorsSM helps lenders identify suspected strategic default behavior as early as possible. The indicators can be used to prioritize account management or collections queues for better treatment strategies. They also can be used in prospecting and account acquisition to better understand payment behavior prior to extending an offer.

To learn more about how the new Strategic Default Indicators can help you improve lending and account management strategies, please contact your Experian sales representative at 1 888 710 4093 or click here to have an Experian representative contact you.

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