Strategic Default

James Surowiecki writes the Financial Page for The New Yorker (always? often? sometimes?). This weeks' story is about defaulting on loans you don't want to pay anymore. Businesses do it when circumstances dictate. He argues that homeowners whose mortgages are underwater should do so as well. I agree. I did not agree with his reasons and I said so in a letter-to-the-editor:

“Strategic default” may not be popular, but not for any of the reasons James mentions. For one it is a big hassle, now and for the next seven years until this default is erased from your credit report, if it ever is. Not to mention the hassle of moving, and how are you going to buy another house if you just bailed on your last mortgage? Who is going to lend you the money? For most people, those with jobs who can afford the mortgage payment, it's easier to just keep paying the mortgage.

I posted a possible solution for people who are facing foreclosure a while back. Haven't heard of anyone trying it.