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Released: May 24, 2011

Mortgage-only defaulters may be safe credit risks

Source: Julie Schmit, USA Today

People who default on their mortgages — but no other debts — are not as risky as expected, according to a new study from credit monitor TransUnion. TransUnion's research shows that those who only default on mortgages are less likely to then default later on new car loans or credit cards than are people who default on mortgages and at least one other debt at the same time. The study results, to be released Tuesday, also show that mortgage-only defaulters saw credit scores rebound faster than people who defaulted on multiple loans, which could include people who went bankrupt. TransUnion, like other credit-management firms, is seeking insight into mortgage-only defaulters, who could prove to be a big market for lenders. In the past five years, almost 4 million U.S. homes have been lost to foreclosure, says market researcher RealtyTrac. A chunk of those were "strategic defaults," in which homeowners who could afford to pay their mortgages walked because home values had tanked so much.

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