Strategic Default for an “Underwater” Mortgage

Many Californians saw their homes go "underwater" in the recent recession when real estate market values plunged throughout the state and the nation. California was one of the hardest hit areas in the country as home values decreased dramatically, often as high as 30 or 40 percent. For many Californians, the loans on their homes exceeded the current market value of the home. That meant these homeowners lost money every month in high mortgage payments that could never be recovered in a return on their investment. Thus, the term "underwater" was coined in the real estate industry.

For many homeowners, this is an untenable situation. One solution to this problem is called a strategic default, or a "walkaway" in which the homeowner gives up on the mortgage and moves on. It involves voluntarily turning the possession of one's home back to the mortgage lender. Such an action does not prevent a foreclosure but it does give the homeowner several months in the home without paying the mortgage while the bank prepares the foreclosure. This can give the homeowner a chance to catch up financially by paying off other debts and making preparations for moving on to other living arrangements. In California, your mortgage lender cannot sue you for the deficiency on the loan after a foreclosure; this means you don't have to worry about any liability for the remaining balance on your mortgage. A strategic default may be your best option in handling a mortgage that is more expensive than it's worth. Other options are also available, such as a loan modification or short sale.

Bankruptcy and Debt Relief Law Firm in Irvine, California

For those who are underwater in their mortgages, finding the best option that suits your situation can be done with the help of an attorney who is well-versed in foreclosure defense. The law firm of Peter Rasla & Associates, serving clients in and around Irvine, offers competent and dedicated legal help to those facing financial distress, whether it involves foreclosure, repossession, wage garnishment, creditor harassment, or other problems associated with unsecured debt and / or insolvency.

Find out what your options are for handling your debt situation. Get your questions answered and your concerns addressed by a skilled and experienced legal professional who handles these types of situations on a daily basis. Whether your case involves a Chapter 7 or Chapter 13 bankruptcy or bankruptcy alternatives, this firm can give you the guidance and support you need. Contact the firm to arrange for a free consultation about your debt situation as soon as possible. The sooner you begin to take appropriate steps, the faster you will move forward into a better financial future.