Strategic Default in Irvine
Maybe It's Time to Walk Away from Your Mortgage
Suppose you invested money in the stock market and invested in a company
at $50 a share. You were hoping to see the stock increase in value, but
after a period of time you watch it begin to decline. At what point do
you decide that it is time to sell and limit your losses? In most situations,
a prudent investor will decide to sell the stock before it drops too far,
in order to limit his or her losses and move on to other investments.
The same is true of real estate. While purchasing a home is often a transaction
that is overladen with emotion and dreams of providing a place for your
family to build a stable life, it is still fundamentally an investment.
Like other investments, real estate purchases sometimes go sour.
This is exactly what has happened to more than a quarter of homeowners
in the United States. Millions of individuals and families across America
are paying large amounts of money for home mortgages which are "underwater,"
which is to say that they owe more on the mortgage than the property is
worth on the real estate market. Not only are they stuck with a large
mortgage payment which is out of proportion to the value of the property,
but many years may pass before they will begin to accumulate any equity.
This is especially common in California, where nearly one out of three
homeowners has an upside-down mortgage. While a large percentage of these
homeowners are dedicated to keeping their homes if at all possible, many
are simply fed up with watching a large portion of their income be absorbed
by an excessively expense mortgage payment which will not provide them
with any return on investment in the foreseeable future.
Strategic Default Explained
A recent survey conducted by JZ Analytics found that 32 percent of American
adults would be comfortable with the idea of carrying out a
strategic default. This course of action is commonly referred to as a
walkaway because it involves giving up on the mortgage and moving on. It is also called
jingle mail in allusion to the image of mailing the house keys to the bank as a way
of surrendering possession. Whatever you choose to call it, strategic
default may be the best option for you. It will not prevent a foreclosure,
but it may allow you to remain in the house for several months while the
bank prepares to carry out the
foreclosure. During this period, you can use the money you would normally use for
your mortgage to pay off other debts and to prepare for your move.
Since California is a "no-recourse" state, the bank will not
be able to sue you for the deficiency on the loan after foreclosing, so
you will not have to worry about being held liable for the remaining loan
balance. Strategic default is not a way to prevent foreclosure, but for
many people it is the best available solution for limiting their financial
losses and moving on from a mortgage that is more costly than it is worth.
To learn whether this is the best option,
contact Peter Rasla & Associates, P.L.C. now for a
consultation with an Irvine attorney that is adept in
bankruptcy and other
debt solutions. .