I have advised many people, based on today’s market, to walk away from their homes or other investment properties otherwise called “Strategic defaults”. However, many clients are reluctant because they feel it may have major affects on their professional lives or their credit. However, I believe the advantages of walking away from an upside down house far outweigh the negative consequences. First, a typical foreclosure process takes years and during this process a borrower is not required to pay his mortgage. Therefore, a borrower can use this money that they are not paying their Bank to pay off other debts, invest in a business opportunity, place toward retirement, or use as rent to find another place to live. Recently, I received a phone call from a client who hired me over 18 months ago to help him with a foreclosure. This client decided to stop paying his mortgage. After a long fight, he did lose his home to foreclosure. Several months after the foreclosure the client told me that his life can best be described as “business as usual.”
He recently was hired with a new company making more money than he was before. The job application asked him about prior foreclosures, and he answered truthfully. The foreclosure was not an issue during his job interview for his new job, nor had any other prospective employer raised the issue during his job search. He said that people with foreclosure on their credit report were no longer seen as fiscally irresponsible as it is relatively common in these days especially in South Florida.
This client has also been receiving credit card solicitations and recently purchased a car and got a car loan. He wasn’t able to get the best interest rate but he was able to get a decent interest rate. He was able to qualify a new car loan only a few months after his foreclosure. Overall, the client stated that the stigma of foreclosure was much less than he expected.
He recently was hired with a new company making more money than he was before. The job application asked him about prior foreclosures, and he answered truthfully. The foreclosure was not an issue during his job interview for his new job, nor had any other prospective employer raised the issue during his job search. He said that people with foreclosure on their credit report were no longer seen as fiscally irresponsible as it is relatively common in these days especially in South Florida.
This client has also been receiving credit card solicitations and recently purchased a car and got a car loan. He wasn’t able to get the best interest rate but he was able to get a decent interest rate. He was able to qualify a new car loan only a few months after his foreclosure. Overall, the client stated that the stigma of foreclosure was much less than he expected.
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