The current global recession and collapse of the real estate market has lead to a new trend of homeowners who can still afford to make payments but instead choose to default on their mortgages and find cheaper housing. With the housing market in South Florida devastated by the mortgage crisis and one of the worst foreclosure rates in the United States this new phenomenon could seriously affect the region’s economy.
Some homeowners in the struggling economy who have found that falling real estate prices have brought the value of their homes lower than the mortgage debt that they owe on their property, known as “underwater” mortgages, have responded to this unusual situation by simply trying to cancel their mortgages and move into more affordable homes.
Many of the debtors who choose to default on home mortgages don’t seem to consider or even realize many of the consequences of this action, especially that they are still responsible for paying the balance of their mortgage even in cases of default and that they cannot simply walk away from their obligations. They are liable to legal action from their creditors if they do not make their payments while actually having fewer legal options than some other debtors.
The threat of legal action is only one of several possible ramifications debtors face for voluntarily defaulting on a mortgage; other adverse affects include ruining their credit and facing the possibility of being forced into filing for bankruptcy to escape their obligations. If you would like to learn more about the issues related to “underwater” mortgages and homeowner’s options please refer to http://online.wsj.com/article/SB125902556993561567.html and if you have any questions or want additional information please visit us at Sidney Turner, LLC.
