Legal strategies for dealing with overwhelming mortgage debt include negotiating a loan modification or filing bankruptcy to stop foreclosure and regain financial footing. During the severe economic downturn of recent years, many homeowners have considered the implications of simply walking away from a mortgage if they do not want to keep a home.
Strategic default gives rise to many complex legal issues that are best understood in consultation with a debt relief and bankruptcy lawyer. However, a recent study looks at the decision-making process employed by homeowners facing underwater residential mortgages, and found an important role being played by social media.
Rather than recite the common-sense economic factors that underlie strategic default, the study, published by the Research Institute for Housing America, set out to examine the behavioral basis of homeowners’ decisions to stop making mortgage payments. The authors employed statistical models to predict both general incidents of mortgage default as well as the prevalence of strategic default, viewing the latter through the lens of epidemiology and noting its “contagion” effects.
A few of the key findings:
- The main factors behind general defaults include divorce, illness, unemployment and declining home prices
- American homeowners are increasingly aware of their equity position as borrowers and the possibility of strategic default
- Influential members of society such as media pundits have had a strong effect on individual decisions to stop making payments on a mortgage
- Social media makes for a much faster dissemination of the practical realities of default, and this can have a potent effect on regional real estate markets
There are as many comprehensive debt relief strategies as there are individual debtors, whether they are burdened by an underwater mortgage, medical debt, credit card bills or other monthly payments. A foreclosure attorney can explain the importance of customized solutions leading up to and including Chapter 7 and Chapter 13 bankruptcy.
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