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Strategic Defaults- Homeowners! Choose Strategic Short Sale Instead Of Walking Away!

By
Real Estate Agent with The Gasset Group & Get It Done For Me Virtual Services 13253167-SA00

There is so much internet chatter going on about strategic defaults since 60 minutes aired and had a segment on homeowners just walking away from their homes.

Is it tempting for you to just leave the keys on the table and get out from underwater? Does the option of renting for the next 4 to 5 years look pretty appealing to you right now? 

 

  • Have you discussed your situation open and honestly with your real estate attorney who really understands the mortgage default law in your state? 
  • Have you discussed the ramifications of your decision to walk away with your certified accountant who understands the IRS code regarding foreclosures? 
  • Have you discussed your goals of what you want to accomplish with your strategic default with your Realtor® who actually closes on short sales that are strategic defaults? 

 

If you have not looked at all your options- then please explore them before making a fast decision just because everyone else is doing it or just because you may have been sold some bad information. 

A strategic short sale may be an option for you.

You may be able to negotiate down the balance you owe to a very small amount on which you can then execute a small promissory note for. Some homeowners have been able to get strategic defaults approved by offering pennies on the dollar of what they owed. 

Strategic short sales on first loans are most often easy to get negotiated to approval. 

HELOCS are another story- that is when you took out a home equity line of credit after you bought your house and then you used that money to buy cars or trips or pay for college tuition or to buy other properties. HELOCs are held in secondary position and there is not much benefit for them to foreclose on you.

So they most often will charge your loan off after you don't make payments and then sell that debt to collection agencies who will seek to collect from you for a very long time. 

Different states have different rules but in general the credit reporting agencies will leave that charged off debt on your credit report for 7 to 10 years. But the kicker is that when the time is near to get it released the collection agency sells the debt to another collection agency who then starts the process all over again. 

How long can you hide from them? What state do you live in and how do your credit laws protect your assets or not in your state? Something to think about. 

But you can negotiate a settlement with your HELOC and then that will wipe out the major part and the only part you will be now paying on and be liable for is the part you negotiated the debt down to. You are going to be asked to do that very same thing when the collection agency takes you to court to get a judgment against you. Why not take care of it now to avoid all of that hassle and stress later on down the road? 

If you do a short sale and you are late on your payments only because your lender told you to be late in order to complete your short sale and you are doing the short sale because you are moving to another area for a job- FHA may allow you to buy a home right away. 

Most homeowners who go into foreclosure will be able to buy another home in about 5 to 7 years but FHA will not approve your loan until you take care of your judgments. Have you thought about that?

If you do a short sale you can get an FHA loan or a Fannie Mae loan within about 2 to 3 years conservatively speaking. There are a lot of other differences in getting a future home loan after a foreclosure and after a short sale. You may want to visit the Fannie Mae website to find out more. 

Nothing in this article is to be construed as legal advice. Please seek the advice of your attorney. We are not attorneys and we are not giving you legal advice. 

For more information about selling your home as a Florida short sale click here. 

 

Foreclosure Is NOT An Option! Call Nestor and Katerina Gasset today at 561-753-0135 for a confidential interview regarding your options. 

 

Don't Delay! Don't Wait Until The Sheriff Is Knocking On Your Door! Pick up your phone and call us to see if you can avoid foreclosure.

 

Search for your Home here   Short Sale Information

 

 

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Copyright © By Katerina Gasset 2010 * All Rights Reserved*Strategic Defaults-Homeowners! Choose Strategic Short Sale Instead of Walking Away!*

 

 

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In real estate we service Utah County, Salt Lake County, Wasatch County, Tooele County. This includes many towns and cities. Some of which are: Provo, Orem, Salt Lake City, Draper, Springville, Spanish Fork, Payson, Lehi, American Fork, Vineyard, Saratoga Springs, Eagle Mountain, Pleasant Grove, and more. 

Katerina Gasset is a real estate agent who is also a digital marketing strategist, website designer and consultant for real estate brokerages, agents, entrepreneurs and small business owners. She is also the owner of Get It Done For Me Virtual Services. 

Katerina is a Certified AI Marketing Specialist. She can help you with ChatGPT, Content at Scale, Neuronwriter, prompting, and many other AI tools. 

She develops products and online courses to empower real estate agents to reach their marketing, SEO, social media and branding goals. Katerina Gasset is a blogger, author, podcaster, and keynote speaker.  

Text Katerina with your name + number to work with her:

 561-502-1577 

 

 

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Comments (53)

Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Jay- I used the word, 'MAY'- that is my disclaimer along with the statement that they need to consult with their QUALIFIED attorney. Yes, the guidelines are subject to change, good thing our articles and posts are date stamped :) Katerina

May 12, 2010 03:02 AM
Rachel Purser
Prudential American Realty Center - Pickerington, Ohio - Pickerington, OH
SFR e-certified

I wish I would have saw this 60 minutes eppisode. I am certain that many people will not understand that laws very by state and the huge ramifications that can come with walking.

May 12, 2010 03:23 AM
Melissa Brown
Helen Adams Realty - Charlotte, NC
Realtor - South Charlotte NC Homes for Sale

Katerina, this post was so informative that I just re-blogged it!  You made so many points that are well worth considering for any homeowner who is considering a strategic default.  Thank you!

May 12, 2010 04:40 AM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital

Katerina, good post!  So many people go into short sale or foreclosure mode totally uninformed as to the ramifications. 

May 12, 2010 06:35 AM
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

It sure is a mess. Not having been faced with this I can't honestly say what I'd do......

Patricia

May 12, 2010 06:55 AM
Lisa Moroniak
Keller Williams Realty | Northern Virginia | 703.635.0388 - Leesburg, VA
SFR - Short Sale & Foreclosure Certified
I can't get enough of fresh information on short sales...thanks for continuing to keep us all in the loop Katerina (I apprecaite that sharing your wisdom takes time away from selling)!
May 12, 2010 07:20 AM
Rick Dixon
Christensen Financial Inc. - Marietta, GA

Excellent reading.  Unfortunately, the public and homeowners are being bombarded with all kinds of conflicting information, as well as disinformation. 

Along with the 60 Minutes segment on Strategic Default, Roger Lowenstein, a New York Time Magazine contributor, wrote an article for the magazine that was published on January 10, 2010 titled "Walk Away From Your Mortgage!". 

I do not know how many subscribers the NY Times magazine has, but you can bet millions of people have read this article.

Until there is consensus throughout our society on what should be done and how to handle the current housing/foreclosure/financial crisis - mass confusion will continue at every level.  Foreclosures have moved from a homeowner/bank problem to a social problem...

May 12, 2010 07:32 AM
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Katerina, I don't recall them mentioning to speak to their REALTOR(R). They do reference trying to talk to the bank about lowering their payments. The problem in these individuals' cases is that they *can* still make payments, *don't* have hardships, and *have* other assets -  they just don't think it makes financial sense to keep paying a mortgage on a property that has lost so much value -- even though they can do so, so they may not qualify to short...

May 12, 2010 07:55 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Katerina. Funny how 60 minutes just got around to reporting on this. We've been talking about strategic defaults on AR for several years now.

Startegic defaults are certainly a viable solution for many folks. And walking away has it's advanatges for some as well. Especially those that may not be worried about their credit or have a low threshold for stress. Of course all we can do is give them the pros and cons and them they have to decide what will work best for them.

May 12, 2010 11:36 AM
Bob Willis
Berkshire Hathaway HomeServices California Properties - Orange, CA
Orange County & L.A. County Real Estate Agent

Great post.  The young man on 60 Minutes did not have a hardship, and said that they could continue making their payments.  I suppose there have been some short sales without a hardship, but it definitely makes it more difficult.

May 12, 2010 12:04 PM
Tamara Inzunza
Realty One Group Capital - Alexandria, VA
Close-In Alexandria and Arlington Living

I have noticed that when it comes to real estate, 60 Minutes is not the one to follow.

May 12, 2010 02:24 PM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Bob- We have not found that to be the case. In fact, we have closed every single one of our investor owned short sales and every single one of our affluent strategic short sales. We love working in the luxury market and the banks want to get those off their books also. Katerina 

Tamara- I don't watch 60 minutes nor do I believe anything any more on the news so that is why I go and do my own research:) 

May 12, 2010 02:31 PM
Sybil Campbell
Fernandina Beach, FL
Referral Agent Amelia Island Florida

Katerina and Nestor ~ I totally agree with you. Unfortunately someone very close to me lost their home to foreclosure rather than selling it short sale.  I'm sorry to say that they did not ask for my advice.

 

May 12, 2010 04:46 PM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Sybil- I am very sorry that they did not talk to you. This is very sad, but it is also a lot of bad and wrong information getting spread everywhere. It does not hurt to try to do a short sale compared to a foreclosure. Katerina

May 12, 2010 06:10 PM
Bernadine Hunter, SFR, ACRE
Keller Williams Greater Columbus Realty - Pickerington, OH
"Finding Solution to Your Real Estate Needs"

There is so much misinformation going around about short sales. The best advice I can give is consult an attorney that specializes in the field as well as a Realtor that has experience. Different states have different laws governing the practice.

May 12, 2010 10:46 PM
Mike Linkenauger
Jacksonville, FL
Short Sale Specialist Network

Great post.  And when a homeower performs a strategic short sale, they can also buy ALOT of time in the property before they have to sell it also.

May 13, 2010 02:30 AM
Jesus Sotelo Carrillo
Capitol Real Estate Group - Visalia, CA

There are some many views and ideas for a strong discussion about this topic. Some home owners are not candidates for a short sale and the next best thing is to walk away but this is a very complex issues. Exactly what impact it will have is still to be seen.

May 13, 2010 10:32 AM
Toula Rosebrock
Diane Turton, Realtors, Forked River, NJ - Lacey Township, NJ
Broker/Sales Associate, Realtor, Lacey Township,

Hi Katerina:

I guess many of us saw that 60 Minutes episode....

Great information and advice you've shared here (as always).

May 16, 2010 03:42 AM
Courtney Cooper
Cooper Jacobs - Seattle, WA
206-850-8841

hmm I missed that but have been reading about it all over the place.  Really crazy!

May 17, 2010 07:35 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

This is a lot of information and has a things for a seller to have to make an intelligent decision. Shorts sales are certainly the main stay right now and this is a good read.

Oct 01, 2011 02:10 PM