SOURCE: RH Reward

Responsible Homeowner Reward

April 08, 2010 09:00 ET

RHReward.com Asks: Is Strategic Default 'Good' for Homeowners? Negative Equity and 'Underwater' Mortgages Drive the Decision for Many, but Think Carefully Before You Do It

RUMSON, NJ--(Marketwire - April 8, 2010) - High unemployment, a tough economy and a bad housing market have caused thousands of Americans to consider something they may never have thought of five years ago -- strategically defaulting on their mortgage or, in other words, walking away from their homes.

But is that a good decision?

"Obviously, individual circumstances vary -- but there are consequences for consumers who take this drastic step and there are alternative concrete steps they can take now to see if it can be avoided," said Jason MacRae of RHReward.com. "While we do not encourage strategic default, we do believe that homeowners should arm themselves with as much information as possible before making an important financial decision like this."

First, the consequences:

  • Foreclosure will inevitably result in harm to a borrower's credit rating, according to Experian.

  • In addition to possibly making it more difficult or expensive to obtain loans or financing in the future, securing a government-sponsored mortgage will not be possible for at least five years and perhaps seven years after the date of foreclosure for the FHA, Fannie Mae and Freddie Mac, according to MortgageLoan.com. 

  • There may even be tax issues to consider if the action triggers debt forgiveness on a mortgage that was refinanced to pay off credit card debt or other non-housing purposes, according to IRS guidelines.

Second, the action steps needed to determine a homeowner's options:

  1. Contact your mortgage lender directly to see if you are eligible for homeowner relief programs they sponsor.

  2. Determine whether you are eligible for government-sponsored homeowner relief programs, including the Home Affordable Modification Program (HAMP), or programs run by the FHA, Fannie Mae or Freddie Mac.

  3. Go to RHReward.com to determine your eligibility for the Responsible Homeowner Reward, which offers eligible borrowers a cash reward for staying current on their mortgage payments. 

About RHReward.com

The Responsible Homeowner Reward is a unique program which aims to give responsible homeowners an alternative to strategic default. By providing a cash reward for timely mortgage payments, the RH Reward gives back to homeowners who are working to live up to their mortgage obligations. RHReward.com is an operating unit of Loan Value Group LLC. For more information, go to RHReward.com.

Contact Information

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