Strategic defaults now account for 12 percent of all mortgage delinquencies

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Strategic defaults are on the rise, accounting for 12 percent of all
mortgage defaults in February, according to a new report from Morgan
Stanley. That’s up 4 percent over the strategic default rate in
mid-2007 and is considered by some analysts to be one of the housing
market’s largest looming threats. The probability that borrowers with
high credit scores walk away from their mortgages increases with
negative equity, the report found. Morgan Stanley considered defaults
to be strategic when homeowners who had previously been making
mortgage payments on time skipped payments for three consecutive
months, meanwhile staying current on other consumer debt of $10,000 or
more. [Bloomberg]

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