What is meant by strategic default behavior?
What will be an ideal response?
The concept of strategic default behavior relates to LTV (which is defined as the ratio of the current loan balance divided by the estimated market value). Let us explain. First, the LTV has been found in numerous studies to be the single most important determinant of the likelihood of default. This is because homeowners with large amounts of equity in their properties are unlikely to default. Data on the behavior of these borrowers indicate that they have an increased propensity to voluntarily stop making their mortgage payments once the current LTV exceeds 125%, even if they can afford making monthly payments. This behavior is referred to as
a "strategic default" behavior as borrowers consciously default when it is to their advantage.
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Fill in the blank(s) with the appropriate word(s).
Complaining about the service you received won't do ____ good
A) no B) any C) hardly any
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Indicate whether the statement is true or false