Distressed Homeowners Who Walked Away - Boston Real Estate Law News

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Distressed Homeowners Who Walked Away

I've talked about strategic defaults before. A strategic default is Boston real estate lawyer jargon for walking away from your mortgage.

Now, comes a new paper detailing the stories of 356 distressed homeowners who threw the keys at their lenders.

Figuratively speaking, of course.

While Boston real estate lawyers have generally been hesitant in advising distressed homeowners from walking away from their homes, so-called financial gurus have been singing the praises of strategic default to distressed homeowners.

And with all the voices screaming from every which way, coupled with the nagging voices of creditors, some distressed homeowners have handed over their keys and walked away from their mortgages.

But as the paper, published by University of Arizona law professor Brent T. White mentions, many of these distressed homeowners haven't thought their finances through before bidding farewell to their homes.

How economically rational is the decision to walk away?

Not very rational, thinks Brent White. These so-called financially rational decisions may have their root in heavy emotion.

And we all know what happens when you mix emotion with money. After all, it's often hype and greed that spur housing bubbles and financial meltdowns.

Some of these emotions are rooted in anger at the financial system. Other times, distressed homeowners feel hopeless.

What's even more interesting in Brent White's paper is the fact that many of the people who walk away from their mortgages often have high incomes and great credit scores. According to White, it's the anxiety caused by negative home equity that often fuels the decision to strategically default.

Distressed homeowners or those with negative home equity should call a Boston real estate attorney before handing over the keys to their home. While many financial experts claim that walking away from a mortgage is a smart decision, there are many legal implications involved.

Sure, short term relief feels good. But it could come back to bite you in the future.

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