The Strategic Defaulter Next Door

This is a guest post from Howard Bono.  He is the founder of the Financial Revival Group.  Howard and his company consult underwater homeowners to explain all of the options you have available.  You can go to his website to download a free Ebook “3 Emotional Barriers Homeowners with an Underwater Mortgage Face”.  They also offer a free 15 minute phone consultation to discuss your particular situation.  You can make an appointment by calling 425-259-2600.

A lot has been discussed recently about people who choose to stop paying on a mortgage.  In our society we like to name these groups and assign characteristics to all of its members for whatever reason.  Now we have a new group to vilify, Strategic Defaulters.  They are your friends, your neighbors and at some point maybe even you.

Strategic defaulters have been given a very bad rap from the banking community, the government and even the media.  They have been painted as greedy, I’ll get mine anyway I can, types who don’t care about anyone or anything but themselves.

We are led to believe that this group is responsible for the fact that the housing collapse is not already over.  I encourage you to think again.   Strategic defaulters are not a danger to your community, the banking system, our economic way of life or world peace.  They are people just like you who are doing the best they can against a stacked deck. 

If you bought a house or owned a house in 2007 it had a value at that point in time.  Let’s say $300,000.  You made financial plans based on the value of that investment.  You may have changed your lifestyle to accommodate the costs of that investment.  Working more overtime or forgoing some other things in life for it.  In any case you made those decisions based on a number of factors.  I am not going to judge your motives or your decision making process.  It’s not my call and as I said, I believe people are doing the best they can with what they have to work with.

So today you find yourself with the same asset and the same costs but with severe changes in the value.  Your house is worth about 2/3 of what it once was.  This depends on your area, but overall 2/3 is a pretty good average.  In this example, your house is now worth $200,000 instead of the $300,000 it was just a few years ago.  As a side note, exactly what did you do to make that happen?  The answer is nothing.

I contend that the banker’s bad investments and the governments “help” has created this.  Not you.  That doesn’t mean you are off the hook though.    You made your plans based on the factors at the time and factors change.  We were raised to make the best of a bad situation and work through it.  Now may be the time to take a look at that  belief system.

Here is the stacked deck part.  You may not be able to get the overtime you once did or you may not have a job at all.  That house may not meet your needs because your family is different.  Maybe the house is too small because the kids are bigger.  Maybe it is too big because they are gone.  In any case, you are stuck.  You can’t sell it for what you owe on it.  You can’t pay it off.

So you are out of options to try to make it fit.  What do you do?  If you could cut out everything in your life including eating (I am not making this up) and be able to make your house payment, you are doing what the banks expect.  If you can make the payment and for whatever reason you decide not to, you are a strategic defaulter.

The challenge you face as a strategic defaulter is that you think you will be judged by everyone.  You won’t be.  The people you care about and care about you, understand.  The outside forces are desperately trying to make you the bad guy.

(Insert expletive here) do whatever you have to do to protect yourself, your family and your financial future.

We have identified nine options that the underwater homeowner has available to them.  Strategic Default is only one of them.  Before you take any action, you need to investigate all nine of these options.  There are only a handful of places you can go where you can discuss all of these strategies at the same time.   Don’t look at some.  Look at all of your options.  Get several opinions then trust your instincts.  There is life on the other side of this and those who take action are winning.


About Safe Haven Credit

I don't much like the pompous attitude of the credit bureaus and the damage they have caused consumers and businesses, so I like to rant about it here...
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