What is Strategic Foreclosure?

Jingle mail, strategic foreclosure, and walking away are just a few new terms for a growing trend in the American real estate market. Life happens. There are many reasons why people face foreclosure today. Job losses, medical expenses, emergencies, and a mountain full of debt can cause people to get in over their head. Perhaps they bought a house too big for their pocketbook. They may have decided to do an adjustable rate mortgage and can no longer afford the payments. The amount of foreclosures in this country has grown at a rapid rate.

So, what is strategic foreclosure? Strategic foreclosure is when you know the inevitable is going to happen so you decide to take advantage of the situation. Foreclosure is going to happen. You know it. So you decide to drag it out and collect a few months of mortgage payments. Perhaps you begin negotiations with the bank. You may start the process of bankruptcy to stall foreclosure proceedings. Once you have banked that money, you abandon the property before a foreclosure can mar your credit score.

There are a few reasons why people will do this. Some people will use it as a down payment on another house to try and beat the system. Foreclosure can affect your ability to get another mortgage for years to come. If they get a mortgage before foreclosure this becomes a non issue.

Others are just looking to be able to rent a new place before their credit is trashed. Many apartment complexes and landlords are now running background checks before a lease can be signed. If a foreclosure shows up, it could hinder your ability to get a mortgage.

Once they have abandoned the property they mail the keys to the mortgage company. This is why the term jingle mail was created. Some have even gone as far as to trash the home or strip it bare of everything of value before leaving.

There are several websites available now that will help you walk away from your home. A quick search on Google shows a plethora of information on foreclosures as well as stall tactics and methods to drag out the foreclosure process.

Foreclosure is becoming a more common occurrence these days. It's more in the limelight and a large amount of people can say they know someone who has foreclosed on their house. I'm not saying it's right. I'm just saying it happens.