One of the things the whole strategic default issue lacks is any set definition. There are words that get used with motives embedded in them, such abuse of language only exists when there is not a set meaning to the word. To call a default strategic is two very different things depending on who is talking about it.
To a bankers mind it might mean any loan unpaid where the person has a penny to spare, to a borrower it might only be where a person withholds all money from the lender and goes and lives the life of Reilly.
I’m asking for your help on this one, please use comments to add your thoughts and I’ll re-edit the post appropriately.
To start with I’ll attempt to define a strategic default on multi-investment properties, there are other types so feel free to give the example or way of defining it as you see it.
1. Multi-investment property investors: Where the person is collecting rent and paying interest only, then the bank look for capital and interest and the person goes from paying the interest to paying zero. In this instance the default is strategic. This would also include situations where the person defaults and uses several months of cash flow for some personal reason (albeit one that may be very important or necessary to them). A default is also strategic when they withhold money in order to advance negotiations. It is important to note that the occurrence of this is often bank lead, if a bank makes a demand which the borrower would have difficulty in adjusting to they might strategically default but you cannot absolve bank responsibility in that process.
2. Home owners: (undefined)
3. Home owners with another property, be it an investment or holiday home: (undefined)