How Strategic Default Works

How Strategic Default works and what it means are often discussed but rarely understood so let’s make it easy. Strategic Default is a foreclosure alternative where you stop making mortgage payments that you can otherwise afford as part of an overall plan to avoid foreclosure and improve your finances through reduced or eliminated payments.  Read About All of Your Foreclosure Options

There are two options to start the Strategic Default process –  contacting the bank from the start to let them know what you’re planning and why or waiting for the bank to figure it out on their own. Of course if you decide to contact the lender from the start don’t tell them that you’re formally declaring Strategic Default just focus on your financial problems and the remedy you’re hoping for.

Full Discussion of Strategic Default to Stop Foreclosure

There are advantages to each of your timing options with the hope under option one that working with the lender from the start  leads them to actually help you or at least not pursue a Deficiency Judgment. Not exactly Christmas morning. With option two, the benefit of delaying contact with the bank translates to time and money as the longer the Foreclosure Process continues the more money you’ll save on housing costs.

Regardless of when you actually speak with the bank, DON’T BE INTIMIDATED and don’t let anyone question the morality of your decision. Banks have no moral standing whatsoever to question your ethics or integrity because you’re making a decision that’s in your best financial interest, which is what banks do every day. The difference is that your banks’ never ending quest for short term profits has severely damaged the US economy while you’re just trying to keep a roof over your head.  Read About the Nationwide Foreclosure Settlement and Why the Banks Won Big Again.

Because Strategic Default is not a stand alone remedy, use the specific methods outlined in  SaveTheCave.com  on Foreclosure Loan Modification , Short Sales and Deed In Lieu of Foreclosure to compile whats needed to convince your lender to give you what you want. Using letters from our Sample Documents, put together a professional looking package including evidence that your mortgage is underwater and by how much and be sure to send the materials to the actual owner of your loan rather than the loan servicing company who may have no real interest in helping you. Is Your Mortgage Underwater?

If you’re asking for a Foreclosure Loan Modification by having your principal reduced to fair market value, make sure the bank knows that you’re much more likely to make affordable future payments and that eventually your investment will pay off for both sides.  In addition to avoiding the time and expense of foreclosing on your house, the housing market improves overall meaning banks make more loans and we can all get back to enjoying life and family rather than just trying to survive.  Don’t Let Foreclosure Stress Control Your Life

If you want permission for a Short Sale without the risk of a deficiency judgment, let the bank know that your credit score has already taken a hit and you have nothing to lose. Tell them in clear and unambiguous language that if they don’t agree to a short sale, they’ll face a long and expensive Foreclosure Lawsuit with nothing to gain but adding more property to an already bloated real estate portfolio. Banks only want to make money and don’t like holding excess property with ongoing maintenance, tax and insurance costs so use this knowledge to your advantage.

Related Content:

Short Sale Sample Hardship Letter

Florida Foreclosure Process

Sickness Linked to Foreclosure Stress

 Photo by Danilo Rizzuti

 

 

Strange But True Foreclosure Stories

The recent foreclosure crisis has resulted in numerous disclosures of illegal and unethical actions by banks, loan servicing companies and many lawyers representing these companies that would have been hard to believe years ago but now seems to be more the rule than the exception.  Read About the Recent Nationwide Foreclosure Settlement.

As a result of these practices Strange But True Foreclosure Stories continue to pop up.  In the most common example, how would you feel if your bank’s mistake resulted in the loss of your home and then a second bank  sues you after your lost your home??  In an all too common foreclosure story you’d think there was protection from the second foreclosure lawsuit but you may be wrong! Be sure to read our discussion on Who Owns Your Mortgage and Why Care.

In many other cases former owners have been sued more than 15 years after selling their homes and paying off the mortgage.  Elizabeth Bolinger, who currently lives in a retirement home in Port St. Lucie, Florida was shocked and traumatized when she was served with a foreclosure lawsuit for property she sold in 1996.  The bank’s only explanation was that mistakes were made by the law firm handling the case but no apology was forthcoming.  Defending Foreclosure Lawsuits.

In a similar case, Cathy Hammers was abruptly awakened on the Saturday night following Thanksgiving when she was served with a foreclosure lawsuit for a home she sold in 1994.  When Hammers tried to contact the law firm handling the case she was rudely told to hire a lawyer and then disconnected.

Don’t Let Foreclosure Stress Control Your Life

In yet another twist resulting from the broad scope of foreclosure mistakes, one home was sold twice in one week.  Real estate investor Marjorie Oster was driving by the home she had just purchased in a short sale when she saw someone cleaning the pool, a lawn service cutting the grass and a pest company setting up a tent for termites none of which she had asked for or authorized.  Turns out that the work was done by the “other new owner” who bought the property a week earlier.  Once again the bank blamed the law firm but did nothing to fix the problem.  Tips to Get Your Short Sale Approved.

Finally, in the most bizarre story to date, a homeowner who bought his home for cash and never had a mortgage on the property was sued in foreclosure for a mortgage that didn’t exist.  Jason Grodensky didn’t receive an explanation or an apology, but how could the bank ever explain or justify suing someone who wasn’t even in their records!?  Blame the Banks – Foreclosure is Not Your Fault.

All true, all strange and unfortunately much more to follow.  Stay tuned and we’ll have lots more stories for our blog followers.

Do You Have Your Own Foreclosure Horror Story? Share your story with our readers by offering your own post and you”ll probably find  that other homeowners have the same or similar experiences!

Related Content:

Foreclosure Options

How To Avoid Deficiency Judgments

Importance of Mortgage Insurance to Stop Foreclosure Sales

Sample Foreclosure Documents and Letters

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