Strategic Mortgage Foreclosure Defined
Making a decision is difficult in this circumstance.
Tons of people tell you one of the worst days in their life was hearing the words foreclosure. The comprehension of possibly losing a home is scary. Hundreds of thousands of individuals are coming to terms with the position of being one of the homeless in our nation. This means finding a solution to an immediate disastrous issue.
Banks holding the mortgages comprehend the percentage of people in a position to buy a home outweighs those under foreclosure. This means the only buyers are people who have actually lost a house to this impossible state of affairs. It’s a catch twenty two situation. Therefore, they have designed one possible alternative, strategic foreclosure. This is an approach to postpone or defer the process.
How We Got Here
The extremely high rates of individuals in this position today are the result of a variety of factors. Job losses not unforeseen, perpetual and increasing unemployment, major medical expenses not covered by health insurance resulting in less spendable income, unforeseen emergencies exhausting savings accounts and living the American way of life which is all about credit and bill me later. Billing me later is wonderful if capable of paying. The problem comes in when the payment possible is only the minimum. The minimum is never enough. This means a couple of hundred dollars takes years to pay off with interest attached.
Many Americans didn’t anticipate a future where they would care for their aging parents at home while having grown children still in the house. There wasn’t a crystal ball indicating a future for the baby boomer generation refusing to retire and make way for the next generation of workers. If there was such a crystal ball it certainly would have predicted many Americans would see their 401(k) accounts drop to almost nothing before they needed the income.
Having a balance of zero after years of blood, sweat and tears produces retirement age workers with a financial need to begin a second career. If anyone saw these things, they certainly would have seen strategic foreclosures in the future of home ownership.
In general there are an enormous variety of things occurring simultaneously which account for the majority of this particular situation. In the history of the nation there has been no other type of crisis such as this. Only the Great Depression comes close. With this in mind imagine attempting to find a solution to the issue.
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Lenders Have Some Responsibility
One of the most interposing factors have been no regulation of lenders in the mortgage industry and how no one saw or wanted to see the road ahead with the choices made in the booming real estate market. Although homeowners are accountable for paying the monthly mortgage, lenders have to answer for not having the safeguard of lending responsibly.
Who would have imagined American taxpayers would foot the bill for errors made by tons of the largest banks in the United States. Things certainly would be different if not for the terrible business sense and decisions. All of these things have affected citizens of our United States and one of the things we hold most sacred, our homes.
The Inevitable is happening
Strategic foreclosure begins with the anticipation the inevitable is coming and not being able to do anything to stop it. Therefore, you make a strategic choice of a last ditch effort to save the family home. It begins with the creation of a plan of action for a different future than the one imagined when signing on the dotted line for proprietorship.
Accepting fate occurs after all of the savings is gone and the college funds for the children have dried. There really isn’t much left to work with. Borrowing from friends and relatives is a short term solution. In fact, most people find friends and family incapable of helping in this regard. They are barely keeping their own heads above water and are unable to afford two mortgage payments, yours and theirs. However, there is one thing to do in order to keep a roof over your head and those of your family.
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There is an increasing trend among Americans in the real estate industry or market accepting foreclosure as the fate of their dream of home ownership. Home ownership has literally been transformed from a dream to a nightmare for so many Americans in every neighborhood across the country. Strategic foreclosure is preparing you for the inevitable and making a plan of action.
What is the Process?
Strategic foreclosure means making a plan to delay or stop the process. Tactics for strategic foreclosure include dragging the legal process out long enough to collect a couple of months of mortgage payments in the bank. By doing this the hope is the current situation causing the delay changes or improves. For instance, possibly an unemployed person finds a job, health circumstances improve or similar states. Having a couple of months in the bank to pay after delay puts a bright spot in a dark place. If there are plans for conditions to change in the near future, dragging out the legal process helps.
Some individuals attempt to negotiate with the mortgage lender on the terms of a short sale. Bankruptcy is another legal process which stays foreclosure dealings. Bankruptcy is a drastic option countless persons face in this instance. This is a measure which not only changes your housing situations, but all other aspects of your life as well. Investigate this possibility wisely before continuing.
The Ultimate Decision
After deciding to concede to foreclosing in a property tons formulate a decision to abandon the home before being asked to leave in order to try to rescue what is left of a once great credit score. Even though the credit score you started the mortgage with is not anywhere near the end results. For some the two are poles apart while others see the possibility of revamping it in a short period of time.
There are a few other rarer motives for mortgage possessors or titleholders who decide to follow the steps of a strategic foreclosure. For example, if those persons unable to make the balloon payment due on a mortgage decide through this process it is possible to stay a couple of extra months within a residence saving the monies that would be used for mortgage payments for other strategic foreclosure purposes.
One of the new politically correct terms being used in the foreclosure market of the twenty first century is strategic foreclosure. Strategic foreclosure, short sale, jingle mail and walking away are a few of the terms being heard in the down sliding real estate market today. Strategic foreclosure is not swindling the mortgage industry. What happens after you hear term foreclosure as it relates to your home?
The Rest of the Plan
Use money saved as down payment
Savings accumulated from missed housing payments is capable of being used as a down payment for the purchase of another domicile. Generally attempting the buy another residence presents its own issues. Additionally, the terms are terrible because of the blemish on your record. In fact, most discover they are eligible only for rent to own deals. Though, if the down payment is large enough there are mortgage lenders willing to bet on you. This is especially true for those with a stellar payment record until recent months.
Foreclosure does affect the ability to procure another loan for a dwelling for many years to come. However, if you move to obtain another mortgage before foreclosure occurs, it’s a rather moot point. Another option for using savings is for moving expenses from a home owner to a renter. Renting a new one before credit is totally trashed is very important. This info is right up there with bankruptcy for something you don’t ever want to ever see as part of your credit report since many landlords are doing credit checks prior to renting out property.
After a property has been abandoned owners generally return the keys to the lender via the mail. This is where the term jingle mail comes from, keys jingling in the mail. Unfortunately, foreclosure is a devastating experience for some and they react in ways that are sometimes unbecoming such as destroying the property inside and out. Some people have also removed everything that isn’t nailed down such as fixtures or plumbing.
This has become such a routine plan of action for so many people, professional organizations have cropped up. A new business venture has begun where professionals teach you how to walk away from a mortgage with as much positive going for you as possible.
Professionals want to become part of your strategic foreclosure. This advice does come at a price. Prices vary based on the services provided. There are websites and articles all over the web sharing other tactics not as qualified and sometimes considered questionable as to whether they are legal, such as stall tactics and processes to draw a foreclosure out for months and years.
The majority of homeowners don’t want to con the lending system more than anything they would like to make their mortgage payments and keep their home. By the time strategic foreclosure occurs it’s too late. They need to know what they will do after foreclosure occurs.
What it is not
Strategic foreclosure is not “scamming” the government, lenders or others. It is making a design for what to do when you are faced with becoming a former homeowner. This article is not legal advice and all foreclosure information should be researched for your state because it does differ from state to state. Consider all options when developing a personal strategy.
Every day the media puts foreclosure in the limelight because of the epidemic proportions of people and families that are being affected by this crisis. Strategic foreclosure is basically having a plan in place before the inevitable happens. Whether that plan includes locating another residence, recovering your income through another employment prospect or trying to discover ways to work with your lender to locate an answer to an enormous problem, strategic foreclosure is the politically correct way to plan what to do after you lose your home.
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