Strategic Default Monitor – How To Strategically Default

Reader's Questions and Answers

Welcome to our Reader's Questions and Answers. Below you will find links to questions from our readers with answers from our team. Keep in mind that we are not a substitute for a qualified and reputable legal or accounting professional. Especially since regulations and laws apply differently depending upon where you live. In the context of strategic default each homeowner's circumstance is unique and requires in depth consideration and planning. We are confident that reading this section will put you on the right path towards making the best decision. The identity of all our readers will be strictly protected. We will never provide, in any way, our reader's information to any third party.

MD Is Concerned About Her Family's Future And Is Considering Strategic Default
I came across the term 'strategic default' recently while researching the idea of letting my home go into foreclosure. I am not a homeowner struggling to pay my bills, I have excellent credit and not very much credit card debt.  I was looking for a way to avoid bankruptcy if possible.

I purchased my home about 7 years ago.  I was a single mom of 2 young boys and my tiny, 2 bedroom ranch made perfect sense for us at the time.  I planned on making improvements over the years and being able to some day sell my home and make a profit.  However, we are now desperate for a bigger home and unfortunately owe more than I could sell it for.  I have talked to representatives with HARP who say that because I have no trouble paying my mortgage that they can't help me. I have talked to my mortgage servicer and they can't help me either.  I would not qualify for a short sale, deed in leiu or even to refinance

PA Seeks Direction In Order to Reduce His Anxiety
[I] have read alot about it. I don't think i would qualify for a short sale as i have income, but bank only wants to lower interest for five years on a loan that is $100k underwater. I hate the abandoned neighborhood and the house is falling apart even though it was built in 2003. AZ is a non-recourse state. I am current on 1st mortgage there is no second. I need to find somewhere to live.

2.) How long does "freddie Mac" (serviced by wells fargo) take to evict you once payments are stopped?
3.) should i occupy the home until evicted?

I am nervous, worried and frankly afraid. I am a disabled single dad with NO-ONE to help me. I am confused in spite of my reading about what to expect. Please respond as I am fairly desperate. I don't know if I have asked all the right questions or considered all of the possibilities yet. PLEASE HELP! Sincerely, PA...READ MORE

MRA Wants A Strategic Default Plan
Hi. My husband and I are thinking about walking away from our home. We live in Illinois and purchased our home in 2005 for $157,000. In December of 2006 we got a 2nd mortgage HELOC of $18,000. Maxed that on credit card debt and medical bills. In January of 2010 I lost 10% of my pay because of the recession and my husband would work over time all year up until then too. So we lost all that money as well. We were very dependent of his OT. We fell behind on our 1st mortgage. The most was 3 months behind. Finally in November 2010 we got approved and accepted a loan modification on our 1st mortgage with BOA and our principal balance was lowered to $145,000 and the payments we were behind were forgiven. I never notified my 2nd bank HELOC or ever fell behind on payments with the 2nd loan...READ MORE

JSW is Concerned About His Future Finances So He Can Protect His Family
Hi, I bought my current home in August, 2001. I have made each and every payment on-time the entire time I have owned the home. I have exceptional credit (850 FICO). I have tried to sell the home 3 times. At present, it is listed for sale. I have it listed $7,000 below what I owe on the mortgage and I have no takers. Sadly, it backs to a busy road and has a small backyard. However, it is well taken care of -- almost new -- and considerably upgraded. I just can't seem to sell it. I don't even think I could get someone to buy it even at $200K. And now, it looks like Romney is going to win the election and repeal the mortgage interest deduction. I currently take $35,000 in deductions just in mortgage interest alone. Even with his so-called cuts, it will be a huge tax increase for me. I can't afford it. I'm already supporting my parents and my brother who is currently out of work...READ MORE

KO Wants A Plan To KO Bank of America For Not Responding to a RESPA Request 
I recently ordered and read your book and I have a few questions particular to my situation. I hired a loan modification company about six months before I ran out of credit to juggle, in order to make my mortgage payments. The loan modification company has done a good job working for me and they are not what this email is about, I just mention it to explain my current circumstances. I now have not made a payment for almost a year. The loan modification company has been consistently working with the bank's loss mitigation department, which is why the bank has not begun the foreclosure process. It's been the bank's lack of action to come forward with a loan mod offer that has taken so long. Then in May of this year I worked with a guy who's house in Reno has lost over half of it's value since his purchase in 2006. He used to be an accountant and had been reading about the derivative and MERS mess with mortgages. He was very angry in the fact that the banks had sold off loans once to Wall Street, continued to collect mortgage payments after the derivatives had crashed and then received bail outs from us tax payers on top of it. Now his house is worth less than half of what he paid all because of the bubble the banks and politicians created...READ MORE

RH Wants To Protect His Daughter's College Fund From Strategic Default
I would like to do a strategic default, however, I'm concerned that BOA will be allowed to take my daughter's college fund, which is only $17,000, and also pursue me relentlessly for years. Is this true for residents of North Carolina? Our home, which we paid $385,000 for three years ago is now worth $290,000, which is less than we owe. We can just about afford to stay and pay all of our bills but this could change if our income goes down even slightly...READ MORE

AR Wants To Protect His Retirement
Enjoyed your book, but it doesn't address retirees walking away from a home. What assets can a bank pursue if I'm retired & walking away from a home I own in NJ? I've been told retirement money (401K, pension, social security, bank accounts) are Teflon from all except the IRS. Is this accurate? Please clarify...READ MORE

KC Is Prepared to Strategically Default But Not Sure
I read your website on Strategic Default and would like to put forth our situation to hear your opinion. We purchased a condo during the condo conversion craze in So. Florida in 2005. Purchase price for a 2/2 in a highly sought after area was $178,000. We put 20% and did a 7 year libor interest only. We pay our taxes separately each year...READ MORE

JA Wants To Buy Another Home First Then Strategic Default On The Current Home
My wife and I currently live and own a home in Oregon. It's small and we are ready to move on. We owe about what the house is worth so selling it has not worked. Due to our income and low debt we have qualified for a home loan on another house and plan to buy it and move there. We would rent out our current house, and if we run into any financial trouble, just stop making payments on the rental and focus on keeping our new primary residence...READ MORE

Clueless Is Concerned About What The Lender May Do If She Pays Off A Loan From Her Parents While Pursing A Short Sale On Her Underwater Home
Hello. My husband and I are currently in an "underwater" mortgage. Our loan was for $262,000, which we have paid down to $253,000. The general consensus of realtors, is that we should be able to get between $215,000 and $220,000 for our home. Our mortgage is with Bank of America. We hare hoping they will forgive this amount and allow us to complete a short sale. My question is in regards to a savings account that we have...READ MORE

Walking Away From The Old To Start Something New
I have a house in Michigan that I have owned for 10 years as a primary residence. My company is relocating me to Pennsylvania. I have a first mortgage that is $120,000.00 and an equity line of credit balance of $38,000.00. I have had a couple mortgage brokers out to the house, sent out by the relocation company, that have come up with a $50,000.00 number on my house. Basically $108,000.00 upside down on my house. I have a short window to find a new place to live and do something with my house. Obviously I'm not coming up with the difference to make the Michigan deal go away...READ MORE

Underwater In Phoenix
In addition to my primary residence in the Bay Area, I have 3 rentals, 2 in Phoenix and one in San Diego, an inheritance which is free and clear. As a single unemployed woman paying 3 mortgages, with declining earning power offset by inflationary prices, I feel trapped, overwhelmed and weighted by paying into a black hole - - I will be dead before I see this as a positive investment. It doesn't make sense to me to keep paying, but I am so frightened to lose my 800 credit score and for unseen consequences down the road..READ MORE

BB Wants To Know How To Handle Second Liens
Hi my name is BB and I live in Nevada. I have owned my house for 10 years and Zillow gave its value as about $221,000. I have a first of $217,000 and a second of $224,000. I am thinking of either going into foreclosure or trying a short sale. In either case the first would get paid and the second would not. I also own two rental properties that are worth more then I owe...READ MORE

JH Seek Advice For Her Son - How Do You Start The Strategic Default Process?
My son has a home in Davenport, Florida which he paid $189,900 for in 2005. It is now worth about $70,000 according to a respected Realtor in the area. How can he start the "strategic default" process? He has a first and a second on the house and quit making payments on the first in October, 2009 and on the second in February, 2010...READ MORE

WW Wants To Know The Consequences From Walking Away From Old Home For A New Home
My wife and I have been trying to sell our home for nearly a year. We have had little or no traffic no matter how much I lower the price. We CAN afford the payments, it's just that the home has become way too small for our family size...READ MORE

8. Mr. D Is Lost In Mortgage Sea
9. CS In Oregon Needs Guidance
10. J Considers Selling Deed To His Property
11. JS Can't Pay A Student Loan & Sallie Mae Is Taking Her Tax Refund
12. Underwater and 90 Years Old
13. MK Doesn't Care About His Credit, He Doesn't Want To Owe Money To The Bank
14. KU, An Active Duty Coast Guard Member, Has A Home Defect. Should He Default?
15. LM Demands A Principle Reduction On A Ginnie Mae Loan
16. BD Wants To Walk Away But Unsure If It Affects Husband's Credit Score - posted
17. JJ Is A Senior Citizen Seeking To Protect His Wealth From A Bad Investment
18. LB Wants To Know What They Can Take From Their Home When Walking Away
19. GR Wants To Walk Away To Move Closer To His Parents
20. DF's Questions & Answers Is A Must Read!!!
21. PL Wants To Know If It Is Too Early To Strategically Default
22. SU Needs A Reputable Professional To Stop The Loss In Savings
23. KL Wants To Strategically Default In Colorado : Can The Bank Come After Him
24. BSE Wants To Walk Away from Two Properties in Vegas
25. TM Is In A Classic Strategic Default Conundrum...What To Do? What To Do?