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J.Hazelbaker
J.Hazelbaker, Attorney
Category: Legal
Satisfied Customers: 4385
Experience:  Attorney and small business owner with 10 years experience in the general practice of law.
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What is the strategic default mean

Resolved Question:

What is the strategic default mean?
Submitted: 5 years ago.
Category: Legal
Expert:  J.Hazelbaker replied 5 years ago.

J.Hazelbaker :

Hello. Thank you for using JustAnswer.

J.Hazelbaker :

A strategic default occurs when the property owner decides to stop making payments despite having the ability to make them.

J.Hazelbaker :

This occurs primarily where the property is "underwater", that is valued less than than the debt that remains owed.

Customer:

Yes that is exactly what our situation is.

J.Hazelbaker :

It's "strategic" only in the sense that the debtor decides to stop paying for an asset that isn't worth what it used to be.

J.Hazelbaker :

It doesn't mean that there won't be consequences for the decision.

J.Hazelbaker :

It can, however, be the best situation when paying the debt will be detrimental to the debtor/debtor's family.

J.Hazelbaker :

I can also be a method of getting the attention of the lender and forcing them to deal with you, which they often don't do these days unless you are several months behind.

J.Hazelbaker :

The goal would be to force the creditor/lender to accept a deed in lieu of foreclosure or a short sale.

Customer:

Exactly, we tried to contacted them and asked them to help us but they are ignoring us. We know this is because we are not behind on our loan.

Customer:

I am a very slow typer.

J.Hazelbaker :

That's no problem.

J.Hazelbaker :

If you have specific questions about this please feel free to ask.

J.Hazelbaker :

Please also let me know the state the property is located in.

J.Hazelbaker :

I might not be able to get back with you tonight, but I will first thing in the morning.

Customer:

So should we contact the mortgage company. We live in Georgia.

Customer:

Thank you for responding.

J.Hazelbaker and 11 other Legal Specialists are ready to help you
Expert:  J.Hazelbaker replied 5 years ago.
Yes. You should contact the mortgage company and tell them that you want to negotiate a deed in lieu of foreclosure. This is where you simply sign over the rights to the property and they avoid having to foreclose. They should also agree to waive any right to "deficiency", which is the ability to sue you for the difference between what the property sells for and the loan balance.

Sometimes, however, where the property is still worth something and it can sell quickly, the mortgage company will be willing to skip foreclosure, waive deficiency, and pay you to get out quickly. This is called "cash for keys". The payments I have seen recently ranged from $1,000 to $5,000.

Let me know what questions you have about this.
J.Hazelbaker and 11 other Legal Specialists are ready to help you