This article in the New York Times discusses the increase in what I would call, "strategic foreclosures." Let's face it, to many people, making mortgage payments on a property that has dramatically decreased in value is simply throwing good money after bad. Condos that were purchased for $300,000 four years ago are, in many cases, worth half of that now. Homeowners are finding themselves in a situation where their potential equity in the home has effectively evaporated.
Here in Northern Illinois, we're seeing no decrease in the number of foreclosures. When I attend court calls in the chancery division, there are easily fifty-plus cases up on any given day. The problem is so profound that Freddie Mac has started setting up centers where homeowners can get help obtaining a loan modification. It is estimated that the Chicago housing market won't recover until 2013 at the earliest. (More on this in another post.)
Quite simply, it seems that we may be seeing another type of foreclosure in the near future -- the strategic foreclosure. I am already aware of a few based solely on anecdotal evidence, I am sure that there are plenty more out there. I wonder, however, how many are pursuing a consent foreclosure or a deed in lieu of foreclosure. Are they all simply defaulting and hoping for the best? Time will tell.
How can one better their chances for a consent foreclosure or a deed in lieu?