Most-Financially Sound Members Most at Risk for Strategic Default: Onsite Coverage
LAS VEGAS — An executive with Genworth Financial told credit union mortgage executives that members who have been among their most financially strong may be among the most at risk of walking away from their mortgage.
Buz Merts, director of industry relations for Genworth Financial, reported that statistics had shown that borrowers with strong credit scores and multiple homes and mortgages, are up on all their other bills and have a relatively strong income are most at risk for walking away from a mortgage obligation.
“A number of credit bureaus and other financial firms have tools now that should help you analyze a portfolio and determine which borrowers might be most at risk in time to take action,” Merts said in a session Tuesday at the American Credit Union Mortgage Association conference in Las Vegas.
He noted that one sign of strategic defaulting loans is that a loan goes from initial delinquency to six months in one shot. A member who is genuinely trying to pay the loan might be delinquent one month then up to date and then delinquent again.
As suggestions of what to do, Merts urged CUs to move to foreclosure quickly to get the member’s attention and make sure the member understands the negative ramifications of that decision before they go to final foreclosure and might offer a deed in lieu of foreclosure or a short sale, which would cost the CU less money, than a default.