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Posts Tagged ‘strategic default florida’

What is the Downside of Strategic Default

Below is a great question I just received on this blog and my response.

Question:

I am up to date on my mortgage. Under the water +60K
Got divorced, things are getting more difficult to pay but still making it
Credit score is excellent
I am approved to a buy a primary residence much cheaper than what I owe now and I will rent the one I am living by doing this will save like 40% of mortgage
If I rent the one I am living and don’t pay the bank I will eventually foreclose but will have saved some $
My credit will be affected for 7 years.
Crunching the numbers it makes sense to me.

My assets will be all on retirement savings 401k and IRA
What is the downside of this? Thanks.

Response:

This is a great question, and I suspect many people are in this type of situation. 

If you’re all set to purchase a similar home for less than you owe on your current home, the downside to defaulting on the home you currently have is that the bank forecloses (eventually), obtains a deficiency judgment against you, and collects on that judgment because/if you have assets.  The younger you are, and the more assets you have, the greater the risk.  The older you are, and the fewer assets you have, the less the risk. 

For instance, if you’re 60, and your only assets are the new home you’re buying (your homestead) and your retirement accounts, then the downside here is quite minimal – the bank probably won’t ever collect on the deficiency even if it gets one. 

If you’re 35 and have assets, the risk is greater.  In that scenario, you’d have 30 years left in the work force, so the risk of garnishing wages is higher (since judgments are good for 20 years in Florida, and you’ll undoubtedly be earning wages for many years to come).  However, even in that scenario, it’s quite possible the bank won’t pursue a deficiency, that you can settle the case without a deficiency, or that you could reduce or eliminate the deficiency through a bankrupcy. 

There is no right or wrong answer in this type of scenario – it depends on each person’s situation.  Hopefully, these generalities give you a good idea on how to proceed.

Mark Stopa

www.stayinmyhome.com

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Banks Keep Stealing – Why Keep Paying?

Below is an article written by MSNBC’s Dylan Ratigan, who makes a compelling argument for strategic default

The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the “people.” Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.

When Senator Durbin said “The banks… frankly own this place,” you realize it was not in jest.

Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.

And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.

If you are one of them, chances are you didn’t do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time. You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.

You didn’t cause this mess. They did.

Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.

Well, it is becoming time to take matters into your own hands… I suggest that you call your lender and tell them if they don’t lower you mortgage by at least 20%, you are walking away. And if they don’t agree, you need to consider walking away.

It probably doesn’t feel right to you.

That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.

But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and — get this — now even Fannie Mae execs want to keep you from exercising your rights.

But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they’ll push Jerry Speyer into “honoring his obligation” by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?

Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how “you’re supposed to meet your obligations, not run from them”? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?

And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping “teach the American people…not to run away” by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn’s? After all, at least you aren’t single-handedly putting 1,100 employees out of work when you walk on your mortgage.

As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying — your interest rate would’ve been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:

– Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage — the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don’t care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.

– No, you will not “hurt” your neighbors — certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.

– Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn’t a bad thing.

– Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.

– No, the banks won’t necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that’s a sign of illegal collusion or a monopoly. Let’s fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.

Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to “save” the economy without rewarding those most responsible for the damage.

Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.

But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn’t go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It’s time for the citizens to once again own this place.

Mark Stopa

www.stayinmyhome.com

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Strategic Default – real stories from real homeowners

The following is a comment posted on this website from a frustrated homeowner, in response to my blog about Strategic Default and Depleting Savings / Retirement Accounts.  I think the comment contains a powerful message, so I posted it here, below.

The entire comment is worth reading, but check out this sentence in particular:

I can see no reason for me to use the last few dollars of my savings after having depleted my retirement, in order to satisfy a bank that cannot and will not produce the note, has placed me in a mortgage that is impossible to maintain and illegal, and continue to pay for a property that by the preplanned ponzi scheme perpetrated by the banks, is continually decreasing in value.

If you’re in the position of having to deplete savings/retirement monies to pay a mortgage on a home that’s already underwater, I’d think long and hard about this entire comment and this sentence in particular.  As you do, bear in mind – these aren’t my words.  These are the words of a frustrated Florida homeowner.  Unfortunately, he’s one of many who have shared horror stories like this with me.   

 

I have tried for 4 years to negotiate with the servicer on my mortgage. Initially I asked them to waive the pre-pay penalty so I could sell the house without having to pay to do so. I was denied on the basis that the pre-pay penalty was 3 years at 3.5%. in 2007 the property values fell so drastically that I again asked my lender to recast the note and lock in the rate, since they had put me into a flex pay mortgage which I was not informed of until I noticed the principle increasing when I made what I thought was the required mortgage payment. They refused telling me I would have to requalify and based on my current working situation, being 1099 my income would not support the refinance, plus all the fees added on to a mortgage that was already higher than the value of the house.
In September of 2010 after almost depleting my savings and 401K. I again approached the servicer firstly requesting they produce the note, since in looking over my loan package, I had not been given one single copy of any document I supposedly had signed. All the documents were blank. They replied telling me I would need to submit a total of $185.00 for them to produce a note that I should have been given at signing. I refused. In october I received along with this letter requesting payment, a letter from the servicer, telling me my interest rate had dropped to 3.5% from 4.25% and the index had been reduced by half, yet my mortgage payment had increased by $115 per month! Immediately I called them assuming there had been a mathematical error. I was informed they had recast the note (as the docs which I don’t have indicate it can be done every 5 yeears) and shortened the term in order in increase the payment thereby increasing profitablility! I was completely outraged. I’m 60 years old and struggling to make a payment as it is and in reality I am no longer in any type of good health to maintain their property. Up to that point, I was current. I informed them I would no longer be making any payments as I had recast my budget and it was no longer financially feasible for me to be paying them for the privilege of maintaining their property. Henceforth, they could pay ME to maintain it or it could simply fall into disarray. I had been postponing moving back to Canada to take care of my aging mother and a sister who is terminal in the effort to take care of this house. Now I am moving back to Canada, I’ve rented the house, and I’ve strategically defaulted on my mortgage. I can see no reason for me to use the last few dollars of my savings after having depleted my retirement, in order to satisfy a bank that cannot and will not produce the note, has placed me in a mortgage that is impossible to maintain and illegal, and continue to pay for a property that by the preplanned ponzi scheme perpetrated by the banks, is continually decreasing in value.
I will need an attorney I am sure, and I will certainly call on Mark for this service. I am impressed! It is refreshing to see there are attorneys out there who truly defend and represent their clients and expect the letter of the law ot be adhered too.
Thank you for this blog..I will be calling your office on monday!

Mark Stopa

www.stayinmyhome.com

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Foreclosure courts – are they fair?

I had the opportunity today to interview with Bay News 9 in Tampa, essentially to give my opinions about the flaws with senior judges and rocket dockets.  The interview aired in Tampa and Orlando.    Here’s a link to the story, with video; the written version is below. 

Jacqueline Fell, the reporter on this story, did a really nice job showing the contrast between how judges view the foreclosure process and how foreclosure defense lawyers do.  Unfortunately, this debate isn’t going to end any time soon. 

ORLANDO – 

Foreclosure courts started in Orange and Osceola counties in July.  It’s money straight from the legislature to pay separate judges to hear just foreclosure cases. It’s helping keep the court system moving.  But some have said it’s helping banks kick people out of their homes faster.

Foreclosure courts were supposed to be the answer to the back log of cases at the courthouse.  But just a few months and thousands of cases later, it’s now heavily criticized by national media and advocates for going too fast.

Administrative Circuit Judge Fred Lauten was hearing a number of cases before foreclosure court started.  He said 10,000 cases in Orange and Osceola counties have been resolved since July, and it’s not moving too quickly. 

“There are days when I’ve heard 10 cases in a hour, and there are days when I may have heard 30 cases an hour,” Lauten said.

“In a particular morning, a judge could rule on 100 foreclosures between morning session and break for lunch. The next day, the judge may only get to 25 to 30 of them. [It] depends on what the issues are on the case,” Lauten said. 

Mark Stopa, who is one of the most outspoken foreclosure defense attorneys in the state, disagrees and said the foreclosure process is broken. “What happens is these rocket dockets and senior judges and everything just goes on a fast track, especially when homeowners don’t have a lawyer,” Stopa said.

When concerns of faulty paperwork made newspaper headlines, big banks put a moratorium on foreclosures to investigate.  But things are back up and running.

Lauten said it’s not the job of the judge to find the proper lending owner and so criticism shouldn’t lie within the courts.  “Any individual judge needs to decide the case based on what they hear in the courtroom, based on the evidence that’s presented before him or her and not based on something he might read in a newspaper or see on television,” Lauten said. 

Stopa is urging for government intervention, saying homeowners aren’t given a fair chance to voice their arguments.  He also continues to stress this process is so convoluted and complex that a homeowner shouldn’t go at it alone.

Stopa said getting an attorney for a year can be less than one month’s mortgage and could mean the difference in moving out or staying in your home.

Federal lawmakers are about to take a closer look at the judicial system’s role in the foreclosure crisis.

The House Judiciary Committee will hold a hearing next Wednesday.

A Florida congressman requested a hearing on the implications accelerated foreclosure courts have had on the rights of homeowners facing foreclosure.

Mark Stopa

www.stayinmyhome.com

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A terrific article on the Foreclosure Crisis – must read

I read lots of articles in the media about foreclosure, and this one may be the best I’ve ever read.  It’s a little crass, as it includes a few f-bombs, but put that aside and what you have is an author who does an incredible job of explaining the foreclosure crisis in a way that the typical American can understand. 

By:  Matt Taibbi, Rolling Stone

The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench. Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

The rocket docket wasn’t created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren’t exactly public. “The judges might give you a hard time about watching,” one lawyer warned. “They’re not exactly anxious for people to know about this stuff.” Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn’t be that bad. It isn’t Indonesia. Right? 

Read the rest of the article here.  It’s worth the read.

Mark Stopa

www.stayinmyhome.com

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Florida courts “clearing” foreclosure cases

This article by Kimberly Miller of the Palm Beach Post explains, in layman’s terms, how the judiciary views foreclosure.  For most judges, it’s all a numbers game – how quickly the judges can “clear” foreclosure cases.  As the article reflects, there is still a huge backlog of foreclosure cases in Florida courts, but senior judges and “rocket dockets” are chipping away at the backlog.  

This is a disturbing trend, one that should make all homeowners facing foreclosure realize the need for a competent foreclosure defense attorney.  Quite simply, without an attorney, your case might be lumped in with all the other cases that judges are all too quick to try to “clear” from their dockets. 

Here’s the entire article: 

Florida’s courts cleared 65,830 foreclosure cases in a three-month period beginning July 1, with 71 percent being decided in quickie hearings before the judge sometimes called “rocket dockets.”  According to a report released today by the Office of State Courts Administration, only 23 foreclosure cases went to trial statewide during the same time period.

The report, the first of its kind, was conducted between July 1 and Sept. 30 to measure how Florida’s 20 circuit courts are using a $6 million state allotment awarded over the summer to hire additional judges and staff to handle foreclosures.  Despite clearing 65,830 cases, 25 percent of which were dismissed for reasons that could include a completed short sale or deed-in-lieu of foreclosure agreement, the report found a backlog of 396,509 cases are still clogging Florida courts.

Lawmakers awarded the $6 million, in part, hoping that getting homes back onto the market will hasten an economic recovery.  “We needed a way to see how we are doing and identify reasons for delays or slowdowns,” said Kris Slayden, who oversees foreclosures for the Office of State Courts Administration. “This shows we are doing what we said we would do, reducing the backlog.”

Palm Beach County’s foreclosure court cleared the most cases in the state during the three-month period, wiping 9,846 suits from its system. About 70 percent of those cases were decided via summary judgment, with just one trial being held, according to the report. 

The concern among foreclosure defense attorneys has been that some senior judges hired with the state money would rush through foreclosures using summary judgments. A summary judgment is held in lieu of a traditional trial when the facts of the case are considered irrefutable. They are often allowed when the borrower is not contesting the foreclosure or represented by an attorney, having possibly walked away from the home.  “Summary judgment is a shortcut that should rarely be used,” said foreclosure defense attorney Tom Ice, of the Royal Palm Beach-based Ice Legal. “In foreclosure cases they are routinely filed and routinely granted. That’s a disturbing trend that there are so few trials.”

Ice said it’s even more of a concern in light of recent revelations that some foreclosure affidavits, which are used in summary judgments, are flawed or fraudulent. Beginning in late September, major lenders including Bank of America, Ally Financial, Inc., and JP Morgan Chase, acknowledged that some of their foreclosure paperwork would need to be re-filed.  “All you need is one issue of fact, such as dispute over note ownership, to get a trial,” Ice said.

Palm Beach County Judge John J. Hoy, who took over foreclosure court today, refused to comment for this story. Hoy replaces Judge Meenu Sasser, who is now hearing civil cases.

Palm Beach County, which is the 15th Circuit Court, received $646,540 of the $6 million, using it to hire two senior judges and six case managers to tackle foreclosures. The Palm Beach County Clerk and Comptroller’s Office received $403,000 out of a $3.6 million statewide allowance given to clerks’ offices to handle foreclosure paperwork.

Today’s report showed Palm Beach County had 46,438 foreclosures backlogged as of June 30. That fell to 36,592 as of Sept. 30.

The 19th Circuit Court, which includes Martin and St. Lucie counties, received $212,729 to hire senior judges, case managers and administrative assistants. As of Sept. 30, it had cleared 951 cases, but still had a backlog of 18,110.

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Strategic Default and Depleting Savings / Retirement Accounts

In recent weeks, an increasing number of prospective clients have met with Stopa Law Firm for an initial consultation about foreclosure even though they haven’t missed a mortgage payment.  A few years ago, that would have sounded crazy.  Nowadays, though, millions of Florida homeowners are tired of making payments on a home worth a fraction of what they owe.  Generally, these homeowners fall into two categories – those considering a “strategic default,” i.e. intentionally stopping payments even though they can afford to pay, and those homeowners who can afford to pay but are slowly depleting their savings or retirement accounts to do so.  It’s time that I blog about both scenarios. 

First off, everyone’s situation is different, and it’s hard to make blanket statements in a blog that apply to everyone.  That said, if you’ve been depleting your savings or retirement account(s) to pay your mortgage, then, unless you expect your finances to improve in the near future, it’s probably time that you re-evaluate your situation

For example, suppose you had $70,000 in savings/retirement in July, 2009, but in your ongoing attempt to pay your mortgage (and other necessary expenses), that number is down to $35,000.  If that sounds like you, then the first question I’d ask is this:

Do you expect your situation to improve in the near future? 

If the answer is “no,” and you’re going to continue depleting your savings/retirement at a rate of roughly $35,000 per year, then my next question would be:

What are you going to do when your savings/retirement runs out? 

Many smart, hard-working, well-intentioned clients have no answer to this question.  For most people, there is no answer.  What can you do when you run out of money and can’t pay your mortgage?  The next question I’d ask is:

Would it be better to stop paying your mortgage, and face a foreclosure lawsuit, now, with $35,000 in your pocket, or to continue paying your mortgage for another year, run out of money, and then face foreclosure? 

For most people, the answer to this question is clear.  I mean, if you’re going to (possibly) get foreclosed, isn’t it better to do so with $35,000 than with zero?  Heck, for that matter, wouldn’t it have been better to do so with that original $70,000?  Generally, the way I’d characterize it is this: 

if you realize a foreclosure lawsuit is inevitable, and it’s just a matter of when (not if) it comes, it may be better to stop paying your mortgage now, and face the problem sooner, with money in your pocket, rather than later, with no money in your pocket. 

After all, if you choose to give all the money to the bank in the future, you certainly can, but if you give the bank all your money and then get foreclosed, you’re never going to get that money back. 

At Stopa Law Firm, we’ve been giving advice like this for a long time.  In fact, I was in the news with this as far back as October, 2009 – here.  (While I don’t agree with everything that reporter wrote in that story, the point is clear – for some people, stopping payments is the right option.)  Anyway, now that Stopa Law Firm has hundreds of clients, I can’t tell you how many homeowners are thrilled with their decision to stop paying, save their money, and defend their foreclosure.  In fact, many clients have told us they wish they had stopped paying sooner.  Does that mean everyone should stop paying?  Of course not.  But:

if you realize you’re slowly depleting your savings, and you’re going to soon be out of money, what are you supposed to do – give your last dime to the bank and then get sued for foreclosure anyway? 

If you can accept the premise that some people should stop paying, the logical question becomes “why shouldn’t everyone?”  Many Florida homeowners are, in fact, considering a “strategic default” – intentionally withholding mortgage payments even though they can afford to pay because their house is worth so much less than what they owe.  The rationale is clear: 

Why pay $250,000 for something worth $150,000?  

At the outset, let me be clear.  Nothing in this blog is intended to encourage anyone to stop paying on their mortgage, particularly if they can afford to do so.  The decision to strategically default is complicated and must be evaluated on a case-by-case basis.

That said, I can totally understand if, after consultation with an attorney, a homeowner were to make the conscious decision to withhold mortgage payments on a home worth $150,000 with a mortgage balance of $250,000. For many homeowners, this is a perfectly leigitmate business decision. 

Contrary to what the banks want you to believe, there’s nothing immoral, unethical, or slimy about a strategic default.  A strategic default is, quite simply, a business decision – no different than those made by the banks every day.  Some people may disagree, but it’s not my job to enforce someone else’s version of morality – it’s my job to represent Florida homeowners. 

If you’re wrestling with the ethics of strategic default, consider two real-world world comparisons – one big, one small. 

First, suppose you buy a new, two-year cellphone plan with unlimited minutes, 24/7/365, for $100/month.  In so doing, you’re entering a contract, “promising” to pay $100/month for two years.  Now suppose in two months, a different cellphone provider offers the same plan for $50/month.  If you could get out of the first contract by paying a $200 cancellation fee, wouldn’t it make sense to do so, even though you’d be going back on your “promise”?  I think so, and I suspect most people would agree.  (After all, you’d have saved the $200 cancellation fee after four months with the new plan and every month thereafter would entail $50/month in your pocket.)  A situation like that is not driven by ethics or morality – you’re making a business decision – doing what’s best from a financial perspective.  How is that wrong?

If that example is too simplistic for you, let’s look at a big-business example of “strategic default” transpiring now, right in our own backyard.  The Tampa Bay Rays play their home games at Tropicana Field in downtown St. Petersburg.  They have a contract with the City of St. Petersburg to remain at that stadium through 2027.  The Rays owners, though, are frustrated with low attendance rates and want the team to move to Tampa.  (Anyone who knows the Tampa/St. Pete area knows the best place for a stadium would be in western Tampa – near where Stopa Law Firm has its Tampa office, actually, and not downtown St. Pete).  Moving to Tampa, though, would breach the Rays’ agreement with the City of St. Pete.

Gee, does this sound familiar?  A decision about whether to breach a contract for business purposes … that’s precisely the situation so many Florida homeowners are facing.  What’s fascinating to me, though, is that when the media talks about the Rays, it does so purely from a business perspective, yet when the same discussion is about homeowners, morality somehow enters the picture.  Why?  I realize some homeowners have a sentimental attachment to their home, and that’s their prerogative.  Aside from that, though, I see no reason why strategic default should not be viewed any differently than the cellphone example or the Rays’ stadium example.  The decision to initiate a strategic default is complicated, yes, but if it makes sense from a business perspective, why not?  That’s why I’d be shocked if the Rays are still in St. Pete as of 2027 – once the business dynamics get this awry, something has to give. 

For an interesting take on strategic default, check out this well-written article.

It’s unfortunate that our society is at the point where homeowners must decide whether to stop paying on a mortgage, whether it’s because they are slowly depleting their savings or owe more than the house is worth (or both).  That said, when banks took billions of dollars in bailout money, they did what was in their own best interests (by putting the money in their pockets and not giving loan modifications as was intended).  With that in mind, the question for me becomes:

If the banks can do what’s in their best interests, why can’t homeowners? 

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