What Is?

What is a Strategic Foreclosure? A Strategic Default?

A “strategic foreclosure” or a “strategic default” happens when a homeowner decides to quit making mortgage payments as a wealth-protection strategy. The homeowner doing a strategic forclosure may be almost broke, or may have substantial financial assets. A strategic forclosure or strategic default should be distinguished from bankruptcy or BK.

Either way, the homeowner realizes that they have a house whose value has fallen and is significantly below the remaining balance on their mortgage. Their monthly payments have become out of line with the reality of current real estate values.

In many states, there is no legal penalty for “walking away” from a house and letting the bank forclose on it. The buyer’s credit score will take a substantial hit, but that will be erased automatically in a few years. Many persons with forclosures in their past find that they are able to purchase another home fairly quickly, and at a much lower price than their original house.

In other words, a Strategic Foreclosure is a way to get a fresh financial start after a housing crash.

To learn if a Strategic Foreclosure is right for you, click the tabs (at the top) to visit the other informational pages.

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