When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn’t make sense: Her home was worth thousands less than the mortgage she carried on it.

The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it’s not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.

What Sakson did is called a strategic default, or a voluntary foreclosure, and it’s fast becoming a major challenge to the government’s $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business — it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson’s predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.

Make sure you read the rest of the article. We get a lot of calls everyday from people in this same situation. I would never suggest someone simply walk away from their home. If someone was to do a Strategic Default it should be for the benefit of completing a loan modification or a short sale. There are times when a bank will refuse to accept either of those options, unless the owner goes late.

If you are considering walking away from your home, or are running through your savings to keep up on your payments, please don’t wait to give us a call: (480) 389-5199 We can help you understand what all of your options are. Call us today.


Phoenix Real Estate: Could Senate Bill 1271 be re-reversed?

October 27, 2009

This just in from The Phoenix News Times: Banks Suing Governor over Reversal of Controversial “Anti-Deficiency” Law Remember when we wrote about a bill that could financially devastate homeowners facing foreclosure? Remember when they reversed the bill? Well, it might just be back. Last Monday, the American Bankers Association — which represents more than 70 [...]

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Phoenix Real Estate: Did We Hit The Bottom Of The Market?

October 27, 2009

It takes balls to call the bottom of any market. I think that there are too many homes facing foreclosure, too many Alt-A loans resetting, too much unemployment, etc. to be confident on where the bottom is. h/t to @timandjulie for the video.

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Live music @ Carly’s on 2nd & Roosevelt in downtown PHX

October 24, 2009

Live music @ Carly’s on 2nd & Roosevelt in downtown PHX Posted via email from thephoenixrealestateguide’s posterous

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Tempe Real Estate Snapshot For October 22nd 2009

October 23, 2009
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The Tempe real estate market is still giving sellers headaches. Here is the only real positive: Monthly Sales Days on Market is down quite compared to last month, quarter, and the last two years There are other positives (green arrows) but they seem so minuscule to me that you can’t really say anything is turning [...]

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Phoenix Real Estate Statistics October 22nd 2009

October 23, 2009

Here are some of the latest numbers for the Phoenix real estate market. For definitions please check out our Statistic Definitions & Explanations page. Here is what stood out to me: The total number of active listings is up for the month and the quarter, but WAY less then this time last year At the [...]

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Short Sales In Phoenix: Snapshot of Short Sale Statistics October 17 2009

October 18, 2009
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I am telling this to everybody I know. If you want to get your home sold, price it where the homes that are selling are priced. For Short Sales in Phoenix, the homes that are selling are priced at ~$87 a square foot. The ones that are listed? ~$97 per square foot. One a 2000 [...]

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