Strategic default; I thought that I had heard everything. Another term has popped up, just as I thought that I had heard everything happening with defaulting mortgages and short sales; strategic default. A strategic default is walking away from a mortgage because the borrower believes that it’s in their best interests and not out of necessity.
There are companies that provide you with information on your defaulting status, and they know how many days you can stay in your house for free. They provide you with a letter to prevent harassment by the lender (this rarely prevents them from stopping). They will also connect you with a CPA and a lawyer; all for a fee. Their professional services, in assisting you to strategically default, are not included in this fee though. This is something that I provide for people free of charge, although I would never recommend this when you have the option of a short sale.
According to MSN news, a tendency to default increases when the number of foreclosures in a zip code increases. Houses under water by more than 10%, which in California are under water more than 20%, are seeing people walking away from them and strategically defaulting.
President Obama is giving California and four other states 1.5 billion dollars of the 700 billion (300 million per state) dollars of the Troubled Asset Relief Fund. This may sound like a lot to you and me, but it will not even cause a ripple in this sea that so many people are drowning in.
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