There are many reasons one might decide to walk away from his or her home, like a decrease in the home’s value or a significant life altering event (such as a divorce or death in the family). In such situations, simply abandoning the home and the mortgage along with it can seem like a reasonable solution. However, this practice, commonly referred to as strategic default, comes with substantial risks.
The Downside of a Strategic Default
Strategic defaults ultimately end in foreclosure, and thus present a slew of concerns for a homeowner after the fact. For instance, one’s credit score takes a serious hit after being foreclosed on. Rebuilding credit after walking away can take up to seven years, even for those who have been very careful with their money in the past. Bad credit can make buying another home next to impossible, and that’s not all. In states like Florida, a lender that forecloses on a property has the right to seek a deficiency judgement, which (if granted) would require the homeowner to pay the deficient amount. Lastly, a foreclosure on one’s record could also pose a threat to rental and job prospects down the line.
There are also unique risks that you simply cannot plan for. The recent case of Gary Warren is a great example. Warren and his wife bought a home together in Weston back in 2006. They later divorced, at which point they both moved out and the home went into foreclosure. However, that foreclosure was never completed, and last month it was revealed that a 44-year-old man had nearly claimed the home as his own. Compton R. Maycock-Beckles Jr. had lived in the home for at least a year, and even tried to gain ownership of it by using false documents. Luckily, the squatter didn’t use the house for criminal activity, which could have easily been the case. Regardless, the whole mess could have been avoided had the homeowner not abandoned the home to begin with.
Alternatives to Walking Away
The temptation of walking away from a home and mortgage might be strong, but seeking other alternatives will prove to be the best course of action in the long run. Staying in the home while it’s in foreclosure is usually the best option. In the event that the borrower absolutely has to leave, the home can instead be rented out. For those who want to keep the home, preventing the foreclosure altogether is possible with the right approach. Refinancing the loan or seeking a modification can make the payments more manageable, removing the reason for the foreclosure in the first place.
Walking away from your home is not advisable, and the consequences almost always far outweigh any benefits. If you are struggling to make payments on your mortgage or simply don’t want to be tied to it any longer, call our team today for the guidance you need to make the right decision for your situation. A Miami foreclosure defense attorney is always here to answer your questions.