Negative-Equity Causing a Non-Stoppable Rise in Strategic Defaults

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Homeowners will continue defaulting on their mortgage payments in 2009 and well into 2010.

We as a society have taken on too much debt. Until this debt works itself through the financial system we will continue to see pain

Despite the recent positive news in the California Housing Market, higher priced real estate is expected to continue to plummet, according to Hannah Fliegel, credit restoration specialist, who added that the high unemployment rate and lack of consumer spending will make the bottom difficult to predict.

Fliegel invites homeowners concerned about their current situation to a free Mortgage Options Workshop she will chair on Saturday, October 24, 2009, from 10:00 a.m. at the Corte Madera Recreation Center. In addition to Fliegel, guest speakers will include Dan Sturm, Attorney at Law a specialist in "lien stripping" and David Smadbeck, a realtor who will discuss short sales. Lien stripping is a proven strategy for borrowers who have large second mortgages and credit card debt.

While many are focused on the credit crisis, Fliegel sees the amount of debt to be the financial calamity. "We as a society have taken on too much debt. Until this debt works itself through the financial system we will continue to see pain," said Fliegel.

"What I find astonishing is the enormous amounts of strategic defaults in the pipeline," adds Fliegel. Homeowners can make the payment but choose not to because of negative equity, meaning a mortgage that is larger than the value of the home. Homeowners keep saying that their credit will recover faster than the equity in their home or investment properties.

This is evidenced by recent Fitch reporting that "cure rates" for prime and ALT A borrowers have fallen collectively to 5.0%. This means that when most high end borrowers miss a single payment, approximately 95% of those families are choosing to stop making payments. These folks are choosing to strategically default.

Recently, Meredith Whitney, formerly Chief Economist for Oppenheimer indicated on CNBC, that home values will continue down another 25% nationally. This translates to a potential 30 - 40% downward spiral in overvalued California homes, particularly the high end homes. It certainly appears to be the case, the lower priced homes are being absorbed quickly based on affordability and the government sponsored tax credit.

Other options that will be discussed at the upcoming workshop include: Refinance, Loan Modification, Short-Refinance, Hybrid Short Sales, Loan Audits, Deed-in-Lieu, Cash for Keys, and more.

Fliegel counsels homeowners and real estate investors who are concerned about their credit rating. "There is a little known strategy to protect a consumer's credit rating," adds Fliegel. The borrower must send the lender a Qualified Written Request prior to defaulting on their mortgage payment. If the lender does report the "late payments" on the consumer's credit reports the lender must remove the reported late payments and pay penalties, due the borrower. "The legal system in this country is beginning to understand that homeowners have been put at risk because of Predatory Lending tactics," says Fliegel.

R.S.V.P. for the workshop at: 415-927-5072. All attendees will receive a copy of Fliegel's new E-Book.

Contact: Hannah Fliegel
415-999-9348 Phone


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