According to a study conducted by the Kellogg School of Management. When the study was released it was estimated that 26 percent of current defaults were strategic in nature.

This is a trend that is picking up speed. The more negative equity you have the more likely you are to strategically default. According to the study by Kellogg School of Management, about $100,000. in negative equity is the tipping point where people will start to strategically default.

Is it tempting for you to just leave the keys on the table and get out from underwater? Does the option of renting for the next 4 to 5 years look pretty appealing to you right now?

• Have you discussed your situation open and honestly with your real estate attorney who really understands the mortgage default law in your state?
• Have you discussed the ramifications of your decision to walk away with your certified accountant who understands the IRS code regarding foreclosures?
• Have you discussed your goals of what you want to accomplish with your strategic default with your Realtor® who actually closes on short sales that are strategic defaults?

If you have not looked at all your options- then please explore them before making a fast decision just because everyone else is doing it or just because you may have been sold some bad information.

A strategic short sale may be an option for you.

You may be able to negotiate down the balance you owe to a very small amount on which you can then execute a small promissory note for. Some homeowners have been able to get strategic defaults approved by offering pennies on the dollar of what they owed.

Strategic short sales on first loans are most often easy to get negotiated to approval.

HELOCS are another story- that is when you took out a home equity line of credit after you bought your house and then you used that money to buy cars or trips or pay for college tuition or to buy other properties. HELOCs are held in secondary position and there is not much benefit for them to foreclose on you.

So they most often will charge your loan off after you don’t make payments and then sell that debt to collection agencies who will seek to collect from you for a very long time.

Different states have different rules but in general the credit reporting agencies will leave that charged off debt on your credit report for 7 to 10 years. But the kicker is that when the time is near to get it released the collection agency sells the debt to another collection agency who then starts the process all over again.

How long can you hide from them? What state do you live in and how do your credit laws protect your assets or not in your state? Something to think about.

But you can negotiate a settlement with your HELOC and then that will wipe out the major part and the only part you will be now paying on and be liable for is the part you negotiated the debt down to. You are going to be asked to do that very same thing when the collection agency takes you to court to get a judgment against you. Why not take care of it now to avoid all of that hassle and stress later on down the road?

If you do a short sale and you are late on your payments only because your lender told you to be late in order to complete your short sale and you are doing the short sale because you are moving to another area for a job- FHA may allow you to buy a home right away.

Most homeowners who go into foreclosure will be able to buy another home in about 5 to 7 years but FHA will not approve your loan until you take care of your judgments. Have you thought about that?

If you do a short sale you can get an FHA loan or a Fannie Mae loan within about 2 to 3 years conservatively speaking. There are a lot of other differences in getting a future home loan after a foreclosure and after a short sale. You may want to visit the Fannie Mae website to find out more.

Nothing in this article is to be construed as legal advice. Please seek the advice of your attorney. I am not an attorney and I am not giving you legal advice.