Articles Posted in Strategic Default

The number of underwater mortgages in Florida has reached a crisis level. One report indicates 45 percent are in that category, which has led to strategic defaults, short sales and foreclosures in Miami.

Homeowners simply cannot be asked to continue making payments on houses that aren’t worth the price. An underwater loan is one where what the homeowner owes is more than the value of the house. Florida has been hit hard because of plummeting housing prices, based largely on the glut of foreclosures throughout South Florida.
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In many cases, a person may consider a strategic default, which means simply walking away from the house — mailing in the keys, in an effort to save face. This is a decision that must be made with great thought and planning and advice from an experienced Miami foreclosure defense lawyer.

The reason for this is that banks can attempt to come after the homeowner for the difference, called a deficiency judgment. While banks won’t say which homeowners they attempt this on and which they don’t, some experts believe people who have walked away from investment homes or whom they believe could actually afford the house are targets.

If a judgment is levied against the homeowner, they would be on the hook for the difference between the loan amount owed and what the house sold for at auction after foreclosure.

Another option is a short sale. However, a short sale requires help from the banks, which may not be willing to work with a homeowner. In a short sale, the homeowner finds a buyer for the house and then brings the amount that person would be willing to pay to the bank for negotiation. The goal is to get the bank to agree to that purchase price and sale — and in the process relieve the homeowner of the remaining debt.

In either case, there is a risk involved and in both cases, it’s almost guaranteed that the motivation for the move is an underwater mortgage. If successful, however, these moves can pay off greatly, as getting out from an albatross of a home can be important.

According to creditsesame.com, 45.1 percent of homes in Florida are underwater in their mortgage and another 4.2 percent are near underwater, meaning they are in negative equity or within 5 percent of being in a negative equity position.

That means that 1,970,756 homes are underwater and another 182,389 are classified as near underwater. That puts Florida as one of only three states where more than 45 percent of homes are underwater.

In Nevada, 60.4 percent of homes are underwater and in Arizona, 48.7 percent hit the mark, according to creditsesame. But Florida has far more homes underwater than either of those states. In fact, Florida’s underwater homes equal twice that of both states combined.

Only California, with 2.06 million homes underwater, has more than Florida nationwide. Florida is clearly in a different position that any other state because there are so many vacation and speculative homes here. This has put our state in a perilous position.

And this has not only affected the homeowners whose houses have gone into foreclosure, but also those that haven’t. Foreclosures affect everyone, even those making monthly mortgage payments.
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Financial experts believe that many homeowners may be considering a strategic default as they have incurred big loans, have little equity and are “upside down” on their mortgages. It appears they would rather walk away than wait for the real estate market to turn around in a decade or longer.

Fighting a foreclosure in Miami is one way to stop the banks from taking your home away. But many others are considering a strategic default in Miami as a way to fight back.
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Strategic default means the homeowner simply mails the keys to the bank and walks away from the loan. Typically the reason for this is the mortgage is under water, meaning the homeowner owes more than what the house is worth. What has become a reality more recently for homeowners is that the real estate market in Miami won’t be turning around for years or decades.

However, considering one of these exit strategies does have consequences. And a deficiency judgment in Miami is one of them. As Miami foreclosure defense lawyers have seen, banks have become more aggressive when it comes to deficiency judgments.

That is when the bank comes after the borrower for the difference between what is owed on the mortgage and what the house is sold for at auction. Given how much prices have dropped, banks have gotten more and more aggressive in pursuing borrowers who walk away.

According to a Washington Post article, experts believe that those with jumbo mortgages may be the next in line to default, as banks are anticipating that happening. Those with big mortgages, good credit scores, but little equity fit the criteria.

Moody’s, the ratings agency, recently put out a study that found homeowners with jumbo mortgages are now at a “greater strategic default risk” than any other type of borrower. Because many are stuck with persistent negative equity, they are likely to walk away rather than be stuck in a market hit by real estate deflation.

FICO, the credit score agency, estimates that 30 percent of all defaults are strategic. Considering there are 12 million or more mortgages underwater, people simply stopping making payments even though they can afford them is a “growing problem.”

While people likely understand what’s going on in their local real estate market, the article opines that many may not know the consequences — including triple digit credit score hits, which can make getting another loan difficult for several years. But a deficiency judgment is typically the bigger issue at hand.

Especially in markets with larger fluctuation in prices in the last five years, of which Miami is at the top of the list, a deficiency judgment can be crippling. If a person took out a loan for $450,000 for a house that is now worth $250,000 and the family walked away and is now renting, how could they be expected to pay back $200,000?

That is something that requires legal counsel to help you understand the risks and prepare a strategy for fending off the banks when they start calling and sending threatening letters and e-mails. If you are considering strategic default in Miami, consult with an experienced foreclosure defense lawyer first.
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A recent report by CoreLogic states that 10.9 million U.S. properties had negative equity, a leading cause of foreclosure in Miami.

Many people have been thrust into a difficult position because banks loaned out money for investment homes to people who couldn’t really afford the payments. Once those people defaulted on the loans when the market collapsed, everyone was in trouble.
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Now, foreclosures clutter neighborhoods throughout Miami and South Florida and the values of homes have plummeted. Investors and first-time buyers snatch up houses that once sold for six figures but are now going for low five-figure numbers. Many continue to struggle with underwater mortgages. For people who must move for work, they are in a tough position. They can’t sell their homes, so they fall into foreclosure.

All of this has left many homeowners in a difficult position and in need of advice from an experienced Miami foreclosure defense lawyer. A foreclosure isn’t a foregone conclusion, as banks have the responsibility of proving who owns the note on the home and whether they have legal authority to actually foreclose. Many areas of a foreclosure must be challenged in order for a homeowner’s rights to be upheld.

According to the CoreLogic report, 22.5 percent of all residential properties with a mortgage were in negative equity by the end of 2011’s second quarter.

More than 2.4 million borrowers had less than five percent equity, which is called near-negative equity. Together, those two numbers accounted for 27.5 percent of all residential properties with a mortgage. Nearly two-thirds of homeowners are paying higher, above-market interest on their mortgages while they are in a negative equity situation.

According to CoreLogic, Florida ranks third in homeowners with negative equity, behind only Nevada and Arizona. According to the research, about 45 percent of all homeowners have negative equity, while another three percent have near negative equity.

While the statistics show that negative equity is on the decline, it’s likely because more homes are going into foreclosure and being taken away. The homeowners are choosing to walk away from their homes that may take decades to regain value and therefore the negative equity rates are falling. It by no means indicates that the market is getting better.

Strategic default is a risky move, but can work out for some homeowners if the situation is right. This means making a decision to stop making the payments and accepting the possible consequences, such as a default judgement.

A short sale is also an option in cases like these. If your house is worth far less than the loan you’re paying on, renting it isn’t plausible and you have little equity in the house, a short sale may work best for you. This means you find a buyer and offer the bank what the buyer is willing to spend and, in return, the bank drops the difference owed.

There are many options is cases of homeowners who are drowning in debt or who have a house that is far more of a liability than an investment at this point. Consider your options with an experienced Miami foreclosure defense attorney.
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A staggering number of homeowners consider strategic default each month as nearly 1 in 4 owe more on their homes than they are worth, the Huffington Post reports.

Consulting a Miami foreclosure defense attorney is the best course of action when dealing with an underwater mortgage in South Florida, or when considering strategic default or trying to stop foreclosure in Miami.
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As we continue to report on our Miami Foreclosure Lawyer Blog, the unfair, unethical and illegal practices of banks are finally coming back to haunt them. Homeowners can negotiate from a position of strength, whether it’s seeking to stop foreclosure or a move to reclaim your property or win a monetary settlement.

Dealing with a deficiency judgment is one possible outcome of strategic default. Consulting an experienced real estate lawyer in Miami is the best course of action when considering your options.

Nearly 11 million homeowners are dealing with an upside down mortgage. Still, many resist walking away from a home — which would be a logical financial decision — out of fear, shame, courage or morality. If only banks operated under the same ethical code, the real estate market would never have suffered a catastrophic collapse.

The Huffington Post followed 48 people who made that tough decision. After a year, only 8 are still paying their mortgage. While almost all of them took personal responsibility, most were also frustrated by banks that routinely lost paperwork and showed little interest in reaching a compromise.

Some spent years trying to get a decent modification or arrive at a deal for a workable short sale. Most were universally frustrated by banks at every turn. Many banks used the threat of a ruined credit score to bludgeon their so-called “customers” into submission. One homeowner said his credit score dropped less than 100 points — a hit, to be sure, but still salvageable.

Many have lived in their homes rent free for a year or more while the banks foreclosed. Others, not realizing that was an option, have moved out. Most get gigantic bills in the mail from banks and mortgage companies — even after being forced to walk away because those same banks refused to meet them in the middle.

More than one pointed out that it’s as if the banks still don’t get it after all this time. One bank suggested a couple apply for a modification — they had been doing so for a year. They applied anyway and were rejected.
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The New York Times reports that credit is beginning to flow again as the nation slowly climbs out of the recession sparked by the unprecedented crash of the real estate market.

As we prepare for a New Year, getting your credit back on track is a worthwhile goal. Consulting a Miami foreclosure defense attorney is a good first step. Banks and their law firms are being investigated for wrongdoing from coast to coast. The odds of successfully fighting foreclosure in Miami have never been better. In other cases, fighting a deficiency judgment or negotiating for the removal of black marks from your credit report may be possible. In still others, a monetary settlement or a fight to reclaim your property may be possible.
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Credit card offers are surging again after virtually drying up during the past three years. Even riskier borrowers who would not have received credit just months ago are being made new offers for credit. However, the days of everyone being “preapproved” do not appear to be returning. Banks are being choosier and are setting strict terms to guard against a renewed onslaught of loses.

With the offer of credit comes the opportunity to begin repairing your credit score. By dealing with your real estate issues, you will be tackling the elephant in the room. From there, repairing your credit rating will be a matter of moving forward and getting on with your life in a responsible manner.

But it’s a case of buyer beware: many of the cards come with higher interest rates and annual fees.

Lenders are looking beyond credit scores in extending this new line of credit. Things like registering on a jobs website could be a sign of differences in the payment abilities of two people with similar scores. The digital age is allowing for ever-increasing amounts of data to be collected on consumers. Dealing with real estate problems and rebuilding your credit scores are positive first steps toward reclaiming your life and the future financial well-being of you and your family.

Signs of strategic default — property owners who made bad real estate bets and simply walked away — may earn a borrower a second look. First-time defaulters, who had been good risks but ran into trouble during the recession because of job loss or other reasons, may also be getting a second look.

The absence of available credit in recent years has apparently stoked the appetite of consumers. Credit card companies report about 4 percent of those propositioned with offers have submitted applications — that is about 10 times the traditional response rate.
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Desde Miami hasta Beverly Hills, los mas adinerados estan abandonando sus propiedades en foreclosure y simplemente se retiran de lo que consideran una mala inversion, segun reporta el New York Times.

Segun continuan reportando nuestros abogados defensores de Miami, los propietarios del sur de la Florida que buscan ayuda para sus foreclosures, tienen un gran numero de opciones. Pero el sopesar los riesgos y las ventajas de una modificacion de prestamo, una llamada venta corta o un incumplimiento estrategico, debe ser hecho con el asesoramiento experto de un abogado que se especialice e bienes raices. Los bancos, y aun el gobierno, tratan de hacer sentir culpables a los duenos de casa, personas trabajadoras, para que se mantengan en propiedades que valen mucho menos de lo que ellos deben. Mientras tanto, los ricos, y sus abogados, simplemente abandonan esas propiedades y se marchan a enfrentar los retos que les ofrece un nuevo dia.

Ya sea su residencia principal, una segunda casa o una propiedad de inversion, los propietarios mas adinerados han dejado de pagar sus hipotecas a un ritmo mucho mayor que el resto de la poblacion. El Times reporta que mas de 1 de cada 7 duenos de casa, con prestamos de un millon de dolares o mas estan seriamente atrasados en sus pagos de hipoteca. Este reporte sugiere que los acaudalados estan abandonando esas propiedades a proposito, como harian con cualquier otra mala inversion.

Tal y como reportaramos en nuestro Miami Foreclosure Lawyer Blog, el incumplimiento estrategico ( decidir abandonar la propiedad), y las ventas cortas ( venderla por menos de lo que se debe por ella) presentan sus propios riesgos para los duenos. Si el banco decide procurar una sentencia por deficiencia, el propietario puede encontrarse debiendole al banco la diferencia entre el balance de la hipoteca y lo que se obtuvo por la venta de la propiedad subastada .Buscar el asesoramiento de un abogado en Miami con experiencia en foreclosures es la mejor opcion para proteger sus derechos y su bienestar financiero a corto y largo plazo, para usted y su famiia.

NYT Los que mas incumplen sus obligaciones hipotecarias son los mas adinerados – Negocios – Bienes raices – msnbc.com.pdf
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From Miami to Beverly Hills, the rich are surrendering homes to foreclosure and simply walking away from what they view as a bad investment, the New York Times reported.

As our Miami foreclosure defense lawyers continue to report, South Florida homeowners looking for foreclosure help have a number of options. But weighing the risks and rewards of a home-loan modification, short sale or strategic default is best done with help of an experienced real estate attorney. Banks, and even the government, are attempting to guilt-trip hardworking homeowners into keeping homes worth far less than what is owed. Meanwhile the wealthy, and their lawyers, are simply walking away and living to fight another day.
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Whether it’s a primary residence, second home or an investment property, the rich have stopped paying mortgages at a far greater pace than the rest of the population. The Times reports that more than 1 in 7 homeowners with loans of a million dollars or more are seriously delinquent. The report suggests that the wealthy are purposefully dumping properties just as they would a bad investment.

As we reported on our Miami Foreclosure Lawyer Blog, strategic defaults (choosing to walk away) and short sales (selling for less than what is owed) present their own risks. If the bank chooses to pursue a deficiency judgment, a homeowner could be left owing the difference between the mortgage balance and what a home sold for at auction. Seeking the advice of an experienced Miami foreclosure attorney is the best option to protect your rights and the long-term financial well-being of you and your family.
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In Miami and South Florida, Strategic Defaults are on the rise. Homeowners stop paying their mortgage and fight the foreclosure with an experienced defense attorney. They stay in their homes for years. There is no rush for a loan modification or shortsale. They know the dangers of a deficiency judgment but know there is a way out. One thing for sure, its only a strategic default if you have a strategy with experienced defense counsel.

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Many Banks and TV Pundits place blame for the mortgage foreclosure crisis squarely on the homeowners. How dare a delinquent borrower in Miami or South Florida try to stop foreclosure by hiring an experienced foreclosure defense attorney?

Well, Jon Stewart of the Daily Show on Comedy Central recently filed an excellent report on how badly the Banks are taking advantage of us since getting billions of taxpayer bailout dollars. Banks cannot claim the moral high ground on this issue.

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c

Lenders dealing with foreclosures and short sales in South Florida and across the nation are expected to file a barrage of lawsuits seeking to recoup losses from homeowners, the Miami Herald reported.

An experienced Miami foreclosure defense attorney should assist buyers dealing with a short sale or foreclosure. Without a written agreement from your lender, you are exposing yourself to the possibility of being slapped with a huge judgment for outstanding mortgage debt — the difference between what your house is worth now, and what you owe on the mortgage. Get an experienced Miami real estate attorney and make sure you protect your financial well-being by seeking a waiver of such deficiency judgments. Otherwise, a short sale may help the bank, but won’t help you.
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“It will be a dramatic problem because the borrowers will not know it’s coming,” Frank Alexander, a law professor at Emory University in Atlanta, told the Sun-Sentinel. Florida law gives banks five years from the date of a sale to file a deficiency judgment and up to 20 years to collect. Lenders can garnish wages, make claims against a borrower’s assets and use other means of collection.

While such deficiency judgments were rare before the housing meltdown, so were foreclosures and short sales and borrowers frequently had few assets worth chasing in an attempt to collect. But, with the advent of strategic default, banks are finding borrowers often walked away with significant assets and the bill collectors are suiting up for action.

A recent survey found more than 4 in 10 homeowners said they would consider walking away from a property with an underwater mortgage — meaning more is owed on the home than it is worth in the current real estate market.

Other homeowners at high risk of collection action include those who ransacked or damages properties in foreclosure, either out of spite or for a profit.

Mortgage companies typically won’t pursue homeowners who negotiate in good faith, or those who default because of job loss, health problems or other unforeseen circumstances, according to the Herald’s report. But don’t take the lender’s word for it; work with a qualified and experienced attorney to get it in writing.

Even if the mortgage companies don’t pursue collection action, they can sell the debt to a collection agency at a steep discount, and the debt collectors will come calling with all of the aggressive and disruptive tactics that they employ.
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