Baby Boomers - Information to Help You Decide For or Against a Strategic Mortgage Default
As the likelhood of continuing waves of foreclosures in 2010 increases, America is seeing a dramatic increase in the rise of strategic mortgage defaults. That is, homeowners who make a conscious decision to walk away from their homes. They arrive at this juncture for a variety of reasons - financial survival, inability to continue paying the mortgage, or even a flat business decision that their "upside down" home has become a bad financial investment.
Whether to walk away from your home has become a burning issue among many Baby Boomers whose savings have been hit hard by the recession and equity evaporation. If you are contemplating a strategic mortgage default, it is best to learn as much as possible and weigh the consequences - both pro and con - of such a decision before taking that step. A list of current articles is provided here to help you in that task:
Whether to walk away from your home has become a burning issue among many Baby Boomers whose savings have been hit hard by the recession and equity evaporation. If you are contemplating a strategic mortgage default, it is best to learn as much as possible and weigh the consequences - both pro and con - of such a decision before taking that step. A list of current articles is provided here to help you in that task:
- Understanding Strategic Defaults
- Demanding that Homeowners Make Good on Underwater Mortgages Is the Height of Moral Hypocrisy
- No Help in Sight, More Homeowners Walk Away
- Duplicity in mother-of-all mortgage walkaways
Are strategic defaults a moral issue or a business decision? You decide. Walking away, however, does carries repercussions:
- It's a black mark on your credit score for seven years.
- In many states, first mortgages are "non-recourse" loans, so the lender cannot get a deficiency judgment against you for the unpaid balance on the note. However, home equity loans (HELOCs) are almost always recourse loans. If you have a second mortgage on your home and walk away, the second lender could (but may not) pursue a deficiency judgment or turn the unpaid amount over to a collection agency.
- There are tax consequences for loans if the proceeds were not used for home improvement, repairs, etc. So, if you used a 2nd TD to buy a car or boat, you owe taxes on that portion of the proceeds.
My advice for Baby Boomers? Talk to a CPA and/or attorney before making the decision to walk away from your home. DO NOT talk to the lender(s), as this will just raise a red flag and add to your stress. Understand your options and consequences. Then make the best business decision for your circumstances.




Good and informative blog post...
Thanks for the post....
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If you decide to write a post on foreclosure prevention and resources please let me know. Would love to feature it on one of my blogs. Thanks
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Now we know who the sensbile one is here. Great post!
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