New Pew Study Finds Many Americans Think It’s Okay to Default on an Underwater Mortgage: Evaluating Your Options

Posted By on December 29, 2011

The Pew Research Center is one of the country’s most respected research firms, and here at year end, many are listening to what Pew is  reporting regarding Americans’ take on the foreclosure crisis and people not paying their mortgages.  What has Pew discovered?

In answers to a Pew survey, thirty-six percent (36%) of Americans said it is okay for someone to stop making their mortgage payments, and that’s true even if the home owner can afford to keep paying their mortgage.  That’s over one-third of the country saying there’s no stigma to strategically defaulting on your mortgage.

Over at RealtyTrac, another year-end report reveals that Florida ranked second-highest in the country for the number of foreclosure filings in the month of November, with 24,739 properties filing foreclosure in November 2011.  The same report predicts that 2012 will see a new “wave” of foreclosure filings – as well as short sales.

Taken together, Floridians owing homes with real estate values lower than their mortgage notes are seeing lots of people in similar situations defaulting on their notes, waiving the white flag and letting the bank go ahead with foreclosure, and they aren’t getting second looks at the grocery store or PTA for doing so.  Is it socially acceptable?  More and more so, according to Pew.

However, there are consequences to defaulting. Strategic defaults should be carefully considered before you join the club.

First, you lose your home.  The home where you’ve had birthday parties and watched past Super Bowls; the place where your kids learned things like riding a tricycle or a bike; the place where you thought you’d leave when and if you decided to sell for a profit.

Second, it’s not an easy road to live with strategic default.  It is not easy to play Chicken with the Bank – with all their notices and phone calls and demands – while taking whatever financial benefit living rent free month after stressful month provides.  You know you have to leave, you’ve stopped paying on the mortgage.  So, living in a home while in strategic default is not happy, satisfying way to live your life.  It’s tough.  It’s stressful – extremely stressful on everyone in the family.

Third, you have legal risks to consider.  Big things like not only having your foreclosure on your credit history eventually but also having the possibility of another lawsuit brought against you by the bank years from now – suing for the deficiency balance left on the note that the home’s sale price didn’t cover.

Meeting With a Florida Real Estate Lawyer to Consider Your Options Is Important in This Economic Climate

Maybe you don’t want to think about going to court, it’s not an option for you.  That’s understandable.  However, it is not wise for anyone in Florida who owns a home or condo not to consider what their legal rights are, and what legal options Florida law offers them.

Instead of calling a “foreclosure defense attorney” (most of whom are not transactional attorneys) in preparation for a courtroom fight, consider contacting a Florida real estate attorney who does transactional work, who knows how to negotiate deals (short sales etc…) and who has closed deals involving lenders. (Some Florida attorneys wear both hats.)

A Florida real estate lawyer or Florida short sale attorney – a lawyer who has experience with transactions and making deals as opposed to one who defends lawsuits – can be very helpful to Florida homeowners.   These Florida real estate attorneys can review an individual situation and provide their unique insight to help the home owner determine things like:

  • Is a short sale right for them;
  • was their real estate properly valued when it was appraised (appraisal fraud is a real issue in Florida)
  • examine the loan transaction itself, including the closing documents (are the mortgage documents legally sufficient and does the lender have the right paperwork in order to pursue a foreclosure, or is there fraud involved like robo-signing?)
  • is this lender known for being open to loan modifications? If so, what are the steps to go about it and what can the homeowner expect to happen?
  • is this lender known for being friendly toward short sales?  If so, what can the Florida home owner expect from a short sale?
  • is this lender going to be willing to forego a deficiency if the house gets sold by the home owner?  How can this be negotiated so the home owner doesn’t have a deficiency lawsuit hanging over his head in the future?

Most Florida real estate attorneys and short sale lawyers charge reasonable rates and are happy to talk with you over the phone or meet with you face to face so you can decide if hiring a lawyer will be helpful and if he/she is the right one to help you.  Legal expertise is always important; but for anyone owning a home in this chaos, help and support from a Florida real estate attorney can be invaluable.

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