STRATEGIC DEFAULTERS COMING FORWARD

By
Real Estate Broker/Owner with People first then business! Ran Right Realty Riverside, Ca BRE LIC #636943

More and more people who can afford to keep underwater homes are finally making the decision to walk away. Banks unwillingness to negotiate together with financial advisers reporting that it is near folly to continue paying on something that will never make sense has borrowers taking action

MAJORITY THINK IT IS A.... NO NO TO DO

A survey held recently polling people at random reported that over 90% dis-approved defaulting and walking away for moral and ethical reasons. However, what should be considered in the same breath is the remedy that all agreed to up front when contracting.

CONTRACT LAW GOVERNS...NOT MORAL LAW

The mortgage and its processes are governed by contract law which is specific on what will happen, why, and when. Therefore, if someone risks breach, that is one of their remedies as agreed. Bankruptcy court respects that and now the public at large may have to accept it too

THE BORROWERS WAY BACK

It can take 3-7 years to recover from a foreclosure starting from when you activate it. Until then, you are just dragging the process out. FHA will allow defaulted borrowers to re-enter the purchase market right after 3 years prompting borrowers to take action now...not later

EACH ONE TAKES THEIR LOSS

Investors, banks, and borrowers all agree that the original reasons that brought them all together no longer make business sense. The second option of re-visiting the terms to find better ground via re-negotiations isn't working either. Now, it appears that everyone must take their loss and move on

ECONOMY WILL BENEFIT

Perhaps the economy will recover from this thinking. I know that failure to bring about some change and just repeating or maintaining the current status quo isn't working plus it imitates insanity. This will never do

STRATEGIC DEFAULTER

Strategic defaulters still suffer from the decision to let go and in time, can re-enter the main stream for another go at it. The only comfort they have is that it is happening to so many people making it more of an epidemic instead of a personal affliction and it will help future Real Estate values

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Tags:
strategic default
walking away
borrowers
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banks
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Rainer
16,904
Jennifer Moran Foland
Keller Williams Realty Las Vegas - Las Vegas, NV
Las Vegas Homes, For Sale Summerlin NV

The strategic defaulter is becoming more prevalent in the Las Vegas market. People that told me 1-2 years ago they would never strategically default (mainly on moral grounds) are singing a different tune today. As their property values continue to decline and so many of their friends/family are making the decision to strategically default, they are deciding that it will be better for them in the long run to stragegically default.

Thanks for the post, great topic!

Oct 19, 2011 03:44 PM #1
Rainer
46,726
Lucien Vaillancourt
Native Sun Realty, Inc. - Jacksonville, FL
Jacksonville Florida Real Estate

Count me among the 90% who disapprove.  The home owner made a promise to pay.  Walking away is breaking that promise.  No one promised that the home they bought would increase in value or even maintain it's value.  Strategic defaults only serve to further reduce home values and put even more people upside down.  I would be upset with a neighbor who decided to walk away due to the negative impact on my own homes value.

Oct 19, 2011 03:46 PM #2
Rainmaker
1,285,878
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

Jennifer with Keller Williams Realty in Las Vegas reports....strategic default movement in her sphere of practice. It appears Jennifer that math makes itself known in the end...and humans must honor it

 

Lucien...a excellent comment taking in the moral ground argument. What I am learning is the deeper meaning of the statement...lead me not into temptation...but deliver me from evil....Lucien, there some tough decisions that pop up for humans as we travel. May grace and mercy guide us all as we navigate through them...

Oct 19, 2011 04:06 PM #3
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Rainmaker
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Richie Alan Naggar Author PEARLS SERIES of books

on LIFE and LOVE plus Real Estate too!
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