Strategic Default

[number9dream]

Has anyone had experience (or know anyone who has experience) with a strategic default?

What's it been like?

Would you/they do it again?

[gatkinso]

Seems like a stupid idea. If you can pay your mortgage, then do so.

[number9dream]

Seems like a stupid idea. If you can pay your mortgage, then do so.

Thanks for your opinion, but I was looking for recounts of first-hand experience.

I assume from your reply that you have some knowledge of what a strategic default is. The question I now have is do you know why a property owner considers one?

If so, what alternatives does a property owner have to resolve the problems that may otherwise be resolved by employing a strategic default?

[barrysanders20]

I technically work in the real estate field. I would suggest talking to a financial adviser or real estate attorney because situations vary. There are alternatives. Regardless of what you do, the bank or creditors will want their money. Here's a recent article about penalties from strategic defaults:

http://washingtonindependent.com/884...ing-homeowners

"On Wednesday, Fannie Mae, the government-sponsored enterprise that buys up mortgage contracts from loan originators to keep the housing market liquid, announced new penalties for homeowners who strategically default. ?Defaulting borrowers who walk away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure,? the company announced, adding that the policy goes into effect July 1. ?Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.? The new provisions mean that if you strategically default, you likely cannot get a conforming mortgage for seven years. And if you strategically default in some areas, Fannie Mae will come after you in court."
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[nptfool]

good. if you do not pay your debts, you should pay the man later.

[Jaz]

Fannie Mae better have a lot of money to pay lawyers.

[KennyPowers55]

Debt relief act of 2007 relieves you from the debt with your lender and a 1099 defiency statement if you do this on your primary residence.

read up on debt relief act.

[Jaz]

Debt relief act of 2007 relieves you from the debt with your lender and a 1099 defiency statement if you do this on your primary residence.

read up on debt relief act.

I read it, sounds like it just excuses you from owing taxes on the amount of debt forgiven by the lender. Otherwise you would have to record the amount forgiven as earned income for that tax year.

[sigmalady]

I don't know about legality, but I think strategic default is morally wrong.

[carlito]

I don't know about legality, but I think strategic default is morally wrong.

Worse than taking obscene compensation for management after running the bank into the ground, than going to the taxpayer with your hand out?

[Matildahound]

I don't know about legality, but I think strategic default is morally wrong.

Of course it is but that won't stop some from taking advantage of it because their greed has no conscience.

[Up2DaRack]

Worse than taking obscene compensation for management after running the bank into the ground, than going to the taxpayer with your hand out?

So it's OK to parade out a more egregious breach of ethics in order to justify and rationalize this instance of unethical behavior?

[carlito]

The strategic defaulters are just emulating the bank management who are looting these banks, buying their houses and joining multiple country clubs and living large and not being taken to court for their "moral failings".

I say lets go after them rather than the strategic defaulters.

[gatkinso]

Thanks for your opinion, but I was looking for recounts of first-hand experience.

I assume from your reply that you have some knowledge of what a strategic default is. The question I now have is do you know why a property owner considers one?

If so, what alternatives does a property owner have to resolve the problems that may otherwise be resolved by employing a strategic default?

Yes I know what a strategic default is.

I also know that you promised to payback your loan.

If you can pay, then you are compelled by your word to do so.