Using Strategic Default To Walk Away From An Underwater Mortgage
If you owe more on your home mortgage than the house is worth on the real estate market, you are not alone. Recent industry estimates hold that approximately 11 million homeowners are currently paying on underwater mortgages. This means that vast numbers of people are in the same position as you, paying large amounts of money every month on a mortgage payment that is based on a property value far greater than what their homes are actually worth. Being upside-down on your home loan can be a desperate situation, where you watch a large percentage of your income squandered on an unreasonable mortgage payment and may seem to have no way out.
In the event that you simply cannot afford to keep making your monthly payments, the best course of action might be to contact the bank and request their approval for a deed in lieu of foreclosure or perhaps a short sale. These strategies are, however, typically reserved for those homeowners whose financial resources are insufficient to keep up with the mortgage payment. If you are capable of affording the payment, the simplest and most effective approach may be to simply stop paying and to walk away from the mortgage.
About Strategic Default
This approach is referred to as “strategic default.” Whereas a normal default occurs when the borrower fails to make the next monthly payment and starts to fall behind, strategic default is based on a rational decision and is the result of an evaluation of the situation. Strategic default is also referred to as “voluntary foreclosure,” because as a result of quitting the mortgage payments you will also be inviting the lender to foreclose on the property. Foreclosure, however, may take far longer than you expect; in some cases, it will not occur for many weeks, months or even longer as the bank sifts through the legal complexities and also handles dozens or hundreds of other cases.
Does Strategic Default Damage A Credit Score?
Strategic default will have a major effect on your credit once the lender does foreclose, but on the other hand, you will have the opportunity to pay down your other debts while you live in the property without paying your mortgage. It may also be possible for your to negotiate for a waiver of deficiency so that the bank cannot pursue you for payment of any remaining balance of the loan.
We Will Work Tirelessly On Your Behalf
Contact Whiteman Borden, LLC, now for a free consultation with a Chicago strategic default lawyer to learn more about this option and to begin working on your case. Call