We are considering a Strategic Default on vacant land we purchased in North Carolina (Ocean Ridge Plantation). We bought in 2005 and did an interest only loan with a balloon that came due in 2010. We then did a modification agreement to do the same thing again from 2010 t0 2013. The land (which we purchased for 125K...with 13K down) is now worht probably $60K. So we are paying interest only to lock in a price (in essence) that is twice the value of the land. If we do a strategic default....in North Carolina...can they come after us for the rest of the money? We have already paid about $60K in interest....and virtually no principle. Stupid....but seems even stupider to continue. We are willing to take the hit to our credit rating...but are not willing to be chased down to pay $110K for something worth half that.
State/Country relating to question: North Carolina
We have not tried anything. But we are open to other otions if they present themselves.
What state do you reside in?
We reside in Colorado
The good news and the bad news is - a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. Deficiency judgments are referenced in North Carolina General Statutes, Chapter 45, Article 2B §45-21.36.However, the good news is- the mortgagor has the right to prove the fair value of the property as a defense to any deficiency based on the sale price.So you have the ability to reduce the deficiency judgment to the extent the sale doesn't cover the fair market value of the property.So, given the facts you presented - I would walk away and get appraisals of the property's fair market value to CYA in this. Then, to the extent the sale doesn't cover the FMV - that would be the extent of your liability.
20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
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