How Do You Do a Strategic Foreclosure?
The purpose of a strategic default or forclosure is to force the bank into action, and the primary means to accomplish that is to quit paying the monthly mortgage bills. You can do this without filing for bankruptcy.
Doing this, or course, will instantly mean more money in your pocket. It will also incentivize your banker to offer you a deal on your mortgage. Remember, your banker does not, repeat, does not, want to take over your house. He already has a whole portfolio of houses that he needs to sell.
The key word in strategic default is “strategic.” If you continue paying your mortgage until your life savings are depleted, that is not a strategic default. Strategic means strategy, a plan of action with a hoped-for outcome.
According to AZ attorney Mary Kinnsley, as interviewed on This American Life (see the Media page), “It’s not illegal to breach a contract, and that’s essentially what [strategic default] is, a Breach of Contract…Businesses do it all the time.”