The number of prime mortgages facing foreclosure has shot up 425 percent since 2008 due to falling home values and rising unemployment. Many of those prime borrowers facing foreclosure are choosing to “strategically default” on their home mortgages. But how does a homeowner facing foreclosure strategically default the smart way?
First let’s take a look at some of the problems homeowners face when they decide to go through a strategic foreclosure:
- The number one problem that homeowners face when going through a strategic foreclosure is that mortgage lenders usually choose to pursue them relentlessly for payment. The fact is that mortgage lenders have the legal right to pursue the homeowner for the balance of the mortgage even after foreclosure and even if the home is valued for less than the mortgage, which is often the case.
- The second problem is that homeowners going through a strategic foreclosure often still have assets that they are trying to protect. But using the legal system, mortgage lenders can get access to those assets by winning a judgment against the debtor.
So how does a homeowner choosing strategic foreclosure overcome these two obstacles? Filing bankruptcy will help the homeowner discharge the balance of the mortgage after foreclosure and protect their assets. Strategic foreclosure is not about getting away without paying your creditors; it is about realizing that you are up against the wall financially BEFORE you lose all of your assets; that is why they call it strategic. By getting out of the mortgage early, you are better positioned to protect critical assets and get a better financial fresh start after foreclosure and/or bankruptcy.