06
Dec
10

The Dangers of Walking Away From Your Mortgage

The American Bankers Association recently informed homeowners about the consequences of strategic default, including the bank obtaining a judgement to pursue the homeowners assets, such as bank accounts, cars, and investments. 

According to bankrate.com there a four dangers which homeowners should be aware of :

1).  It may your credit.  Regardless of whether a foreclosure is because of strategic default or other circumstances, it still damages your credit.  Foreclosures remain on a credit report for as long as seven years.  The ABA says a foreclosure can drop your score by 100 to 400 points.

2). Difficulty obtaining a new mortgage.  According to Fannie Mae and Freddie Mac, they will not approve a mortgage for four years after a foreclosure, while the ABA says it can take three to seven years to qualify for a new mortgage

3).  Taxes are still due.  Although the Mortgage Forgiveness Debt Relief Act of 2007 offers protection for federal taxes a foreclosure through 2012, state taxes still may be due on unpaid debt.

4).  Deficiency judgement, a lender can also pursue the remaining debt from an unpaid loan by obtaining a deficiency judgement against the delinquent borrower, or it may work with a collection agency to recoup their losses.

When it comes to foreclosure there are a lot of decisions that have to be made so make sure you consult a professional.

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Jennifer Ferri, Owner

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