The housing market continues to show few signs of recovery. According to a report released this week by analytics firm FICO, mortgage defaults are expected to plague creditors through this year. Specifically, nearly half of lenders - 46 percent - expect strategic defaults to surpass their 2011 levels, while 56 percent of respondents believe the supply of home financing will not be able to meet consumer demand. The report also found more than one-quarter of of U.S. homeowners currently owe more on their mortgages than their homes are worth. "After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality," said Dr. Andrew Jennings, chief analytics officer at FICO. "Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets." This is a huge component of credit risk management. With such widespread consumer distaste for the mortgage market, Americans can be expected to remain in the rental market or seek out alternative credit
options. Strategic default will remain an acceptable exit strategy for homeowners.