Saturday, April 14, 2012

Strategic Defaults to Plague Residential Real Estate Market Throughout 2012, According to FICO Survey



 MINNEAPOLIS, MN /PRNewswire/ -- FICO (NYSE: FICO), the leading provider of analytics and decision management technology, announced additional results from its latest quarterly survey of bank risk professionals, finding that a plurality of respondents (46 percent) expected the volume of strategic defaults in 2012 to surpass 2011 levels, as more than 25 percent of U.S. homeowners owe more on their mortgages than their homes are worth.

"After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality," said Dr. Andrew Jennings (top right photo), chief analytics officer at FICO and head of FICO Labs.

 "Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets. Many homeowners who find themselves upside down on mortgages in the future are likely to consider strategic default as an acceptable exit strategy."

Concerns about strategic defaults were also reflected in response to a question about the consumer payment hierarchy. When asked if the current generation of homeowners considers their mortgage to be their most important credit obligation, 49 percent of bankers said no. By comparison, 29 percent said yes.

For a complete copy of FICO’s news release, please contact:

Media, Jeff Scott for FICO, +1-408-884-4017, jscott@iqprinc.com, or Investors/Analysts, Steven Weber, 1-800-213-5542, investor@fico.com

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