A new way to predict the likelihood borrowers will default, even if they can afford their mortgage, just hit the marketplace. FICO Labs, a unit of Fair Isaac Corp. (FICO), is releasing new technology that helps lenders identify the probability of strategic default by looking at a borrower’s credit score. Strategic default is a rising trend where borrowers who can afford their monthly mortgage payment opt not to pay it. Often times borrowers strategically default because the value of their home has depleted to the point they are underwater, or owe more on the home than it is worth. “Mortgage payment patterns have shifted, and some borrowers are intentionally defaulting on their mortgages because they believe it is in their best financial interest, and because they believe the consequences will be minimal,” said Andrew Jennings, chief analytics officer at FICO. “Before mortgage servicers can work effectively with potential strategic defaulters, they must first be able to identify them.” The strategic default borrower, according to FICO Labs, is one with a reputable credit score, low levels of revolving credit, little retail balance and a short occupancy in their current residence. By these characteristics, the strategic borrower is money conscious, has a low probability of past defaults and has little attachment to their property. FICO reports that borrowers whose homes lost the most value are only twice as likely to default as those who lost the least value. Through its custom analytics, FICO is able to identify the riskiest borrowers, who are 110 times more likely to default than the average homeowner. The riskiest 20% of borrowers in FICO research included 67% of those who later committed strategic default, the research firm said. “Our new research shows it is possible for servicers to find those at greatest risk of strategic default, both to prevent losses and to prevent borrowers from making a decision that will damage their credit future,” Jennings said. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.