Strategic foreclosure is a term that's causing controversy amongst nearly everyone.
The majority of people that attempt this method can afford to pay their loan installment, but instead choose to stop payments.
Their goal is to force banks to foreclose on the property, modify the loan, or enter into a short sale agreement.
The tides of strategic foreclosure have begun to shift.
Not so long ago, this tactic was primarily utilized by property owners and real estate investors with impeccable credit.
They could afford to take a hit to credit scores and still qualify for financing if they wanted to buy another house.
Since voluntary default has received considerable media attention of late, a lot of homeowners with underwater mortgages have decided to give it a try.
There are countless people that owe more on their loan than their property is worth.
The foreclosure crisis has affected millions of people.
There's little doubt it will take years for housing prices to return to where they were at the turn of the millennium.
Foreclosure has wiped out entire communities or left a handful of residents that are now coping with declining property values and neighborhoods riddled with crime.
Many homeowners that stuck it out are now faced with difficult decisions.
Do they continue to pay for a home that's worth half its original value? Do they stay in their home if the community has become a ghost town or poses threats to their safety? Banks typically don't work with borrowers that aren't experiencing financial hardship.
Nor are they concerned that a borrower's loss of home equity has resulted in an upside-down mortgage.
The only way homeowners can hope to get help from their mortgage lender is to stop making payments.
As a real estate investor, strategic default is a topic often discussed at networking meetings.
People have varying opinions about it.
Some think it's unethical to bail out on a mortgage note and people that can afford their payments need to hold up their end of the bargain.
Others think it's financially irresponsible to pay on property that isn't worth the paper it's written on.
Irrespective of your opinion, it's wise to become informed about the process and weigh the pros and cons.
Sometimes it's best to walk away from your house.
Other times it can result in catastrophic financial fallout that can take years to overcome.
People with mediocre credit scores will find it to be a painfully slow process to repair FICO scores after foreclosure.
It could take 4 to 5 years before they could qualify for another mortgage.
Another consideration is banks often issue deficiency judgments for unpaid loan balances.
If property is repossessed and sold at auction for $50,000 less than the owed, the bank can come after homeowners for the difference.
Worse yet, deficiency judgments stay on credit reports for up to 10 years after the judgment if paid.
It's nearly impossible to qualify for financing of any kind when a large judgment is reflected on credit reports.
Depending on the circumstances, some banks might enter into a 'Payment in Full' agreement which means they accept the sale price to satisfy the outstanding loan.
This is usually accomplished by obtaining a deed in lieu of foreclosure.
It's strongly recommended to talk with a real estate lawyer to gather the facts about strategic foreclosure.
This method could provide much needed mortgage relief, but it's not without financial risk.
The majority of people that attempt this method can afford to pay their loan installment, but instead choose to stop payments.
Their goal is to force banks to foreclose on the property, modify the loan, or enter into a short sale agreement.
The tides of strategic foreclosure have begun to shift.
Not so long ago, this tactic was primarily utilized by property owners and real estate investors with impeccable credit.
They could afford to take a hit to credit scores and still qualify for financing if they wanted to buy another house.
Since voluntary default has received considerable media attention of late, a lot of homeowners with underwater mortgages have decided to give it a try.
There are countless people that owe more on their loan than their property is worth.
The foreclosure crisis has affected millions of people.
There's little doubt it will take years for housing prices to return to where they were at the turn of the millennium.
Foreclosure has wiped out entire communities or left a handful of residents that are now coping with declining property values and neighborhoods riddled with crime.
Many homeowners that stuck it out are now faced with difficult decisions.
Do they continue to pay for a home that's worth half its original value? Do they stay in their home if the community has become a ghost town or poses threats to their safety? Banks typically don't work with borrowers that aren't experiencing financial hardship.
Nor are they concerned that a borrower's loss of home equity has resulted in an upside-down mortgage.
The only way homeowners can hope to get help from their mortgage lender is to stop making payments.
As a real estate investor, strategic default is a topic often discussed at networking meetings.
People have varying opinions about it.
Some think it's unethical to bail out on a mortgage note and people that can afford their payments need to hold up their end of the bargain.
Others think it's financially irresponsible to pay on property that isn't worth the paper it's written on.
Irrespective of your opinion, it's wise to become informed about the process and weigh the pros and cons.
Sometimes it's best to walk away from your house.
Other times it can result in catastrophic financial fallout that can take years to overcome.
People with mediocre credit scores will find it to be a painfully slow process to repair FICO scores after foreclosure.
It could take 4 to 5 years before they could qualify for another mortgage.
Another consideration is banks often issue deficiency judgments for unpaid loan balances.
If property is repossessed and sold at auction for $50,000 less than the owed, the bank can come after homeowners for the difference.
Worse yet, deficiency judgments stay on credit reports for up to 10 years after the judgment if paid.
It's nearly impossible to qualify for financing of any kind when a large judgment is reflected on credit reports.
Depending on the circumstances, some banks might enter into a 'Payment in Full' agreement which means they accept the sale price to satisfy the outstanding loan.
This is usually accomplished by obtaining a deed in lieu of foreclosure.
It's strongly recommended to talk with a real estate lawyer to gather the facts about strategic foreclosure.
This method could provide much needed mortgage relief, but it's not without financial risk.
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