Myth: strategic default is limited higher-income debtors. In our experience, clients across the income spectrum have considered and engaged in strategic default. Myth: strategic default is limited to investment properties. In our experience, clients have strategically defaulted on primary residences as well as investment/rental properties and commercial properties. Myth: lenders are eager … [Read more...]
Cash for Keys, Neither Simple nor Straightforward
March 31, 2010 By
As my partner, Rick Mitchell, outlined in "Cash for Keys?" walking away from a mortgage obligation is neither simple nor straightforward. As with short sales, 90%+ of our clients have other debts in addition to the mortgage debt that's addressed in a deed in lieu/cash for keys offer and those debts remain after a deed in lieu or other "mortgage fix." For these people, a deed in lieu is at best … [Read more...]
The Dark Side of Bank of America’s Mortgage-Principal Forgiveness Program
March 25, 2010 By
What a great news day for Bank of America when it announced it would offer mortgage-principal forgiveness worth about $3 billion to 45,000 borrowers. The jury is (literally) out on whether it will be an equally good day for homeowners who can't pay their debts. Why it's too soon for troubled homeowners to rejoice When people can't make their mortgage PAYMENT a reduction in principal doesn't do … [Read more...]
Cash for Keys?
March 25, 2010 By
The copywriter who thought up "Cash for Keys" did a good job. Unfortunately, the process isn't as simple as the catchy title implies. You don't simply hand the keys over to the mortgage company, take your $1000 to put down on an apartment and walk away. [important]Unless you file for bankruptcy protection, any time you sell or surrender your home for less than the balance due on the mortgage(s) … [Read more...]
Strategic Default: Part 1 of 3
March 23, 2010 By
"Strategic default" is a conscious decision by a borrower to stop paying the mortgage(s) on a real property even though the borrower can afford the payment(s). It can happen for a number of reasons and is not a decision to be made lightly or without education about the legal, tax and credit consequences. We have counseled clients about strategic default in these common scenarios: [note]The … [Read more...]
Debt Consolidation/Relief Part 2 of 2
March 8, 2010 By
In the first part of this series, we covered the misleading things that businesses advertise on television, radio and elsewhere for "debt consolidation" or "debt settlement" services. If you decide to enter into an agreement with a creditor, or want to fix a bad credit score keep these five things in mind. How to proceed with the agreement Get the settlement terms, in writing, from the … [Read more...]
Debt Consolidation/Relief Part 1 of 2
March 5, 2010 By
Hardly a day goes by without seeing on television, or hearing on the radio, a commercial for "debt consolidation" or "debt settlement" services. Often, the ad includes a statement to the effect that if you owe more than $10,000.00 in credit card debt, you have the "legal right" to settle for less. Further, we frequently see clients who have paid hundreds or even thousands of dollars to a debt … [Read more...]
Credit Report Disputes
February 19, 2010 By
People often call our offices for help cleaning up their credit reports. We suggest they use this letter, provided courtesy of the Consumer Credit Counseling Service of Orange County. We advise sending the letter to all three bureaus (Equifax, TransUnion, and Experian), by certified mail, return receipt requested, and including their SSN and full legal name in the re: line. Sample Credit … [Read more...]
Foreclosure Prevention Resources
February 11, 2010 By
To supplement our series for Distressed Homeowners, I found some resources to help preserve home ownership, avoid foreclosure, and protect against foreclosure and debt elimination scams. Before you work with a firm that claims it can help you "rescue" you from foreclosure be sure to familiarize yourself with: Foreclosure “rescue” and refinance fraud Fake “government” modification … [Read more...]
Who Defaults, and Why?
December 18, 2009 By
This month we've run a series for distressed homeowners and published NC foreclosure data. To round out our coverage on the topic I want to discuss a paper written by James E. Rogers of the University of Arizona's College of Law because it runs counter to what people generally believe is happening with people "walking away" from their mortgages. Professor Rogers says most homeowners continue to … [Read more...]