Strategic defaults or foreclosure hell?

According to NBC’s Today Show this morning, “strategic defaults” on mortgages may be a good business decision for home owners who have seen their property values decline. It was reported that 18% of all defaults are for strategic reasons. The story weighs some moral and ethical issues in “walking away”, but leaves the viewer with the impression that those who have walked away get a certain peace of mind in doing so.
Here’s the story:

(if embedded video does not load, follow this link)
Just after I watched the story, I opened my RSS reader to a new post, Collection Agencies Buying Up Foreclosure Debt, by my friend, cutting-edge real estate blogger Tom Royce of The Real Estate Bloggers.  This is a must read for those contemplating  a “strategic default” or those who are in the foreclosure or short sale process for financial reasons.

Just walking away and claiming your “peace of mind”  does not necessarily release you from your financial obligations.  While most feel that the banks just say, “oh well,” and write off the mortgage,  it seems that without proper releases, defaulted mortgage debt is collectible.  Collection agencies are buying up the debt for pennies on the dollar.  If you have ever dealt with a collection agency, you know that they will do anything they can to get the money out of you.  Your peace of mind could be shattered when the endless collection calls begin, when your wages are garnished, and your credit is further tortured by a morass of bad reports from the collectors.

Bottom line, in my opinion, get good legal representation for yourself  if you are being foreclosed or voluntarily walking away.  Make sure there are releases on all mortgages, primary and secondary and that they are properly filed.
And remember that peace of mind today may be foreclosure and collection hell tomorrow.

Thanks for coming back. Please leave a comment. You may want to subscribe to my RSS feed. You may also enjoy my Memphis, Social Media & the World Blog

No related posts.

Tagged as: collections, foreclosure, short-sales