What is a strategic default in today's real estate marketplace? Surprisingly, nearly 600,000  strategic defaults happened in the United States last year according to the LA Times. Most of these defaults happened in Florida, California and Nevada. What is a strategic default? This is when an owner stops making payments on their mortgage thinking that they will walk away from the property since the market has shifted so dramatically that it will not recover for the owner to keep making those payments. This amount is double the number from the prior year.

It is also surprising that the majority of home owners who opted to do this have great credit and good payment histories vs. lower credit scores. They see the writing on the wall and believe walking away, although taking a major hit on their credit ability, is better than being tied to a house without a chance of recovery in these markets.

This trend will probably continue especially in the states mentioned above. Unless there is more stability in the real estate market, it will continue.