"Strategic Default" definition here
This morning I was reading this:
By the way Tim and Julie thanks for getting my brain started this morning ;)
My next-store neighbor recently moved out of their home, we didn't really suspect anything strange about it.
I soon found out and realized that their home had been purchased by the bank and now I'm concerned for a few reasons.
First of all, if I had known they were going to lose the home I could have done my best to get their home listed and hopefully sold for them with a Short-Sale.
Second, their home is almost identical to mine and will definitely affect the current and future value of my home.
After reading this article it made me question if this may have been their best option so for them worth it.
A Big Warning of Caution to the practice of Strategic Default is the following:
Utah (as well as 38 others) is NOT a "non-recourse state"!!!
The 11 non-recourse states are: Alaska, Arizona, California, Iowa, Minnesota, Montana, North Carolina, North Dakota, Oregon, Washington, and Wisconsin. NC
Meaning you can't just simply walk away from your obligation.
These are the risks:
1. A lender can sue a borrower for any unpaid amounts on a loan if the borrower defaults on a valid loan agreement. If a lender obtains a judgment for the unpaid amount, the lender or creditor may have the right to garnish wages, place a lien on a bank account or property.
2. If a lender agrees to forgive any unpaid loan amount, then under certain circumstances the portion of the debt that is forgiven may be considered taxable income.
3. A lender has the right to seize an asset that is secured by the debt after commencing a proper legal action. For example, a lender can force the sale of a property to satisfy an unpaid mortgage debt (foreclosure). A lender can seize business equipment or any other property that is pledge as collateral to secure the debt if it remains unpaid.
4. A credit score will be severely impaired for a certain period of time, thereby reducing the ability to obtain credit or a loan.
here are a few other great sources: (1, 2)
What do I think??? (If you agree or not, this is my opinion)
It definitely is frustrating to know that your home is not worth what you want it to be worth, but that is out of your control.
Is it a smart choice? It may be but do the risks outweigh the benefit?
Is it wrong? Is it right not to do what you've agreed to do?
What should you do? You can and should do what you believe to be right and legal.
-Phil Graves-
utahhappyhome.com
