3 Reasons the Term “Strategic Default” Is Misleading in Bergen County.

In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of Americans would consider “strategic default”—another term for walking away from your mortgage—if they were underwater (owed more on their home than what it was worth).


Avoiding foreclosure in Bergen County should be the goal of anyone with difficulty, especially now. Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.

The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections.

That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:

1. There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.

2. The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.

3. A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.

While in the first quarter of 2011, more than 60% of the closed sales in Bergen County were distressed sales, that doesn’t meant they were sold foreclosures. Many short sales are included in this percentage. One should note that avoiding foreclosure is not only possible, it is probable depending on what stage you may be in. Short sales in Bergen County should be aided by an expert. A good point to remember here is that with time really isn’t on your side. While the Bergen County market is stable on the whole, one has to remember it’s a pocket game. Simply put, some towns are doing well and some towens are not doing well in Bergen County. See our market statistics on Bergen County and some local towns.

If you are underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.

If you have any questions about what steps you or someone you care about should take next, contact me today!