Strategic Default

When the housing market takes a dive, your property can become a huge drain on your finances. If your home has lost a significant amount of value since you purchased it, your monthly mortgage payments will still reflect the higher value. If the market fails to rebound, you end up with a long term investment loss that you cannot recover from a future sale of the property. This means you could be paying substantially more money than your home is actually worth and there is very little you can do about it.

Strategic Default

When your home loses its value, strategic default may be an option worth considering. Strategic default is a conscious choice not to pay your monthly mortgage payments even though you are financially able to do so. In other words, strategic default is a kind of voluntary foreclosure. Instead of making payments and losing more money month after month, you choose to walk away from the ownership of your home. While walking away from your mortgage may seem like a great idea, you need to know that strategic default is not a fix-all. If you decide to walk away from your real estate, defaulting on your mortgage obligation can have major negative consequences on your credit. This could make it extremely difficult, or even impossible, for you to finance the purchase of a car or other property for years. In addition to triggering your lender’s right to recover the secured property, defaulting on your loan can enable your lender to pursue you and your other assets for a deficiency (the difference between what you owe and what your lender is able to recover from the value of your property). Florida law provides for a number of exemptions and protections that can forestall your lender’s ability to pursue you or your assets. If you are considering strategic default, it is highly recommended that you seek out experienced legal counsel. Look for an attorney that is able to understand the risks associated with strategic default and also the potential gains. When pursuing a default strategy, it is important that you are counseled on the credit and legal implications of a default. By working with a foreclosure attorney, you will have a better understanding of the pros and cons associated with strategic defaults. You can then decide if this is a course of action you really want to take. In 2009, nearly one quarter of all existing defaults were strategic. For some people, strategic default is ideal for avoiding excessive financial losses, but it is not a decision that should be made lightly. If you are considering strategic default, call our office today at (844) 330-2727 or contact SunCoast Law online to talk to one of our attorneys about whether or not this option is in your best interest. After we have an understanding of your financial goals, we can help you weigh your choices and then determine the best course of action.