PEOPLE ARE GETTING FED UP AND WALKING AWAY FROM THEIR HOMES – STRATEGIC DEFAULTS V. BUY AND BAIL

Strategic Defaults or “Buy and Bail”?  What do you call it when you walk away from your home after the lender refuses to do anything meaningful as far as loss mitigation?

There is a new wave of happenings in the loss mitigation marketplace.  When a loan servicer or lender fails to modify a loan (especially loans that are upside down and in need of principal reduction) some buyers are deciding to blow off the lender and just walk away from the property.

Well of course the lenders are up in arms about this financial preservation strategy (as I learned in contract law many years ago, this is the concept of “efficient breach” wherein sometimes it is simply in ones best interest to breach a contract).  Of course the rules change when the efficient breach is perpetrated on the mighty banks.  To them this is “mortgage fraud” or “buy and bail” or “unethical” or “immoral.”

What banks fail to realize is that if they would provide MEANINGFUL MODIFICATIONS WITH ALL THE TAXPAYER FUNDED BAILOUT MONEY THEY RECEIVED PERHAPS PEOPLE WOULD NOT BE BAILING OUT ON THE LENDERS.

IF THE LENDERS (AND THEIR INVESTORS WHO INVESTED IN THE SECURITIZED LOANS) DO NOT WANT TO PROVIDE MEANINGFUL LOAN MODIFICATIONS BECAUSE THEY ARE SEEKING TO DO WHAT’S IN THEIR BEST INTEREST, SHOULD THEY REALLY BE SURPRISED THAT BORROWERS AND HOMEOWNERS ARE PROTECTING THEIR INTERESTS BY PURSUING WHAT SOME WOULD CALL A “STRATEGIC DEFAULT” STRATEGY.

Now, before you exercise these types of strategies, it would be wise to consult with a foreclosure defense lawyer to discuss your options, review your situation, and to analyze whether or not there is any liability in this regard.  Whether or not something is immoral or unethical is a different question than whether or not something is illegal and can result in civil liability.  Have your case reviewed.

IN THIS MARKETPLACE IT SEEMS THE TIDE IS SHIFTING TO AN EVERY MAN AND EVERY COMPANY FOR THEMSELVES APPROACH REGARDLESS OF THE IMPACT THAT MAY RESULT TO LOCAL NEIGHBORHOODS AND PEOPLE THAT ARE NOT IN DEFUAULT.  WHO IS TO BLAME IS A QUESTION OF WHICH CAME FIRST, THE CHICKEN OR THE EGG.