This article was written by —Nick Timiraos of the Wall street journal- my comments are in quotes……….

Seeing the Allure of 'Can Pay, Won't Pay'

When Chris Hanson bought his $875,000 luxury condominium in Scottsdale, Ariz., four years ago, he could afford the $90,000 down payment.

He said he had no difficulty paying the $5,000 monthly mortgage on the three-bedroom unit, which has floor-to-ceiling windows and views of Camelback Mountain. The condo is in a gated complex with a gym and pool.

Chris Hanson is 'strategically' defaulting on his Scottsdale, Ariz., home.

Chris Hanson- The Strategic Default man!

And, true to his word, he didn't miss a single payment—until last month. Concluding that the home, now worth about half of what he paid, won't recover its value for at least 10 years, Mr. Hanson decided to walk away.

“I purchased a 1 bedroom apartment at 175 Prospect Park South West in Brooklyn in 1998. The cost of the apartment was $83,000 and I made $30,000 per year and my monthly mortgage and maintenance payments were $800.”

“My debt to income ratio was 32.25% clearly higher than the norm of 28%.”

A year later the market collapsed and the same apartment in the same line in the building was now selling for $38,000. I was very concerned, but I held on. I began to rent the apartment at a loss of 1200 per year and eventually was making a $4800 profit after 7 years of rental increases. If I was like Mr. Hanson, I would have handed the keys back to the bank, had my credit score ruined for years and let the bank deal with my real estate. But, that is NOT what I did. My fiscal responsibility was to pay my debt service to the bank and pay my maintenance to the cooperative. If I had walked, not only would the bank be holding a piece of real estate that they would never recoup there investment in, but my fellow shareholders would have to absorb my monthly fee and cost everyone in the building more money.”

"It's a no-brainer once you do the math," said the 27-year-old real-estate investor.

“My question for Chris is this: as an investor, if you bought 1000 shares of AIG in 2006 for let’s say  for 60 bucks a share and in 2008 it was then  worth $4 per share……would you call AIG and say that you did not want the shares anymore and let them deal with it? They would have laughed in your face! No, you would have either sold them at a loss, or held onto them over a longer term and seen the stock from its reverse split rise well over 90% in 2010?”

He plans to let the lender foreclose on the home and rent an even nicer unit in either the same complex or one nearby, which he figures will cost less than half of his monthly mortgage payment.

Borrowers like Mr. Hanson represent the latest—and for lenders the most troubling—wave of the foreclosure crisis. When the housing downturn began, economists and industry executives believed homeowners would walk away from underwater properties only after a financial shock—a job loss or divorce.

Mr. Hanson's case illustrates the growing risk that borrowers in hard-hit housing markets will "strategically" default, even when they can afford to stay in the homes. Nearly one-third of homeowners in Arizona, and half of those in Nevada, owe more than 125% of the value of their homes, according to CoreLogic Inc., a real-estate data firm.

Mortgage-finance giant Fannie Mae has threatened to withhold credit for up to seven years from people who carry out strategic defaults and to pursue their assets in states that allow for deficiency judgments. GOOD

Mr. Hanson said that he felt little moral obligation to make his payments because he felt banks' shoddy lending practices were primarily responsible for fueling the housing boom and bust. Financial institutions often have no problem defaulting on soured commercial real-estate investments, he said.

Mr. Hanson runs an investment firm that buys up foreclosed properties and resells them. He said the company buys two to three homes a week at prices ranging from $15,000 to $1 million; they've recently expanded into distressed multifamily homes. He said he realized months ago his home would take years to recover its value but decided only six weeks ago to stop making payments.

“The fact that Mr. Hanson runs a company that buys distressed properties and resells them to make a profit makes me sick.”

He worried that wrecking his sterling 800 credit score would make it harder to run his business. But, in the end, he said he decided it was worth the risk.

"It's actually really relieving," Mr. Hanson said.

“Being stuck in a foreclosure scenario because you have lost your job and cannot refinance at a lower mortgage rate is absolutely horrific and I would not wish it on anyone, but people like Mr. Hanson who can clearly afford to pay the note and may have to wait for ten years to actually see a profit are helping to destroy the banking system and I have zero sympathy for him.”

“PS- I held onto my apartment in Brooklyn for nine years.

Purchase price of $83K

Low point was $38K

And finally sold it for $187K- “