Miami Strategic Default Lawyer
Sometimes, the wisest thing to do in a difficult situation is to throw in the proverbial towel, as alien as it may be to many people’s attitudes. This is definitely the case for many homeowners, who continue to pay mortgage payments on a home that has lost all value. Instead of tossing money into something that may never yield a return, many homeowners are choosing what is referred to as a strategic default. Strategic default may wind up saving you money in the long run, but it can take a deft and experienced hand to do it properly without winding up running afoul of civil law.
What Is Strategic Default?
A strategic default is when a homeowner simply decides not to make any more mortgage payments, even though they might be able to – that is, they might have the money to do so. This can seem counterintuitive, but in truth, there are situations where taking this step can be of great help. One major reason is that in Florida, there is little incentive to help a debtor until they officially default – without defaulting, an account still seems collectable to most lenders. Default is an official signal that the remainder of the person’s balance may not be forthcoming.
There are positives and negatives to making such a decision, and the ultimate outcome for any one person will depend on their specific situation. For example, a homeowner with solid credit may be able to withstand the ultimate hit to their credit rating and still manage to get a decent rate on, say, a new home, or an automobile, while someone with less solid credit would have severe issues after a strategic default. Florida is also what is called a recourse state; if you default and the property is worth less than what you owe, your lender can obtain a deficiency judgment against you. Someone with fewer assets would have a very hard time satisfying that judgment.
There are obviously consequences to defaulting on a mortgage, not least of all that you will lose the property. In addition to that loss, plus the drop in your credit score, you will likely face some legal wrangling. Since Florida is a judicial foreclosure state, a foreclosure begins with a lawsuit being filed against you. Even if you strategically stop paying your mortgage, you will want to contest the suit or at least work with your lender to modify your loan, since not contesting anything will give the lender everything they desire.
Also, be advised that while there is a statute of limitations on foreclosures (generally five years), it is not as clear-cut as the statute of limitations on most causes of actions generally is. A 2016 case called Bartram v U.S. Bank, N.A.established that in Florida law, a lender is allowed to file a second foreclosure action on the same matter if the first one is involuntarily dismissed (that is, dismissed over the plaintiff’s objection, either with or without prejudice). This means that if there is some fault in the foreclosure case that prevents it being filed, the lender will not be barred from filing another foreclosure case. The court held that dismissal of a foreclosure simply “returns the parties” to their pre-foreclosure states. Thus, the lender can file again, which must be a consideration if you are debating strategic default.
Contact A Miami Strategic Default Lawyer
Because a strategic default is such a relatively momentous decision, seeking experienced legal help is important. The Miami strategic default lawyers at Nowack & Olson, PLLC will work with you to help answer your questions about your options, and help guide you through the procedure if you do decide that default is the best option for you. Contact our offices today to schedule an initial consultation.