Strategic defaulters
Strategic defaulters

What bank wants to lend someone money for a mortgage if the borrower will just stop paying?

"Strategic defaulters" are borrowers who walk away from mortgages they can still afford, and use the money to pay down other debts instead. In most cases, the mortgage is "underwater" -- meaning the loan exceeds the value of the home -- and the bank can't touch the borrower's income due to federal rules.

Now banks can get a heads up on whether you're likely to walk away. FICO, the company behind FICO credit scores, has come up with a prediction formula that banks can use to avoid such borrowers.

If you've lived at your current address for a short period of time and have a high FICO score, but lower levels of debt utilization, you're a prime suspect.



Last updated May 11 2011: 3:56 PM ET

These 7 credit cards are the superheroes of the banking world, say industry experts, providing low fees and sane rates to people trying to build or repair their credit. More

Can't escape your bank's dirty tricks? We found 8 with zero ATM fees and free checking. More

Find Homes for sale
  • Property Type
  • Find a home in:
    New York | Atlanta | Chicago | Los Angeles
    Washington D.C | Houston | Philadelphia | More options
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.