Foreclosure Increasingly Seen as Smart Financial Planning
When one thinks of financial planning moves, foreclosure isn’t normally at the top of the list. Much like 20 years ago no one would have put bankruptcy on a list of financial planning tools. However, bankruptcy has been considered a viable financial planning option in some circles for more than a decade now, even with the bankruptcy rules passed a few years ago. Now it looks as though foreclosure may be heading into the realm of financial planning as well.
Inman News offers insight into how foreclosure is increasing as a mortgage trend — and not just among the financially strapped:
Not only the social stigma, but also the financial pain of foreclosure has diminished. Landlords reportedly have put out the welcome mat for former homeowners despite their impaired credit. Everyone seems to acknowledge that even a foreclosure will drop off a credit report in a matter of a few years, and that then these walk-away homeowners will be ready and able to get new mortgages and purchase new homes. Expect them to do so just in time for the next upturn in the housing cycle.
In non-recourse states, lenders can’t pursue former homeowners for unpaid mortgage debt after foreclosure. And now that much of this forgiven debt can be excluded from taxable income, those who walk-away from a mortgage often can avoid the federal income tax liability as well. Not even the all-mighty Internal Revenue Service can touch these folks.
This probably isn’t going to do much for “economic stimulus.” If a home’s value falls, and the mortgage payments no longer seem worth the hassle, foreclosure is becoming the option of choice. It frees up the money used on a mortgage payment, and, much like cutting your losses from a poor investment choice, it cuts you free. Yes, it will show up on your credit score, but, like bankruptcy, it will eventually disappear.
Tags: financial planning, smart financial planning, home mortgage loan, mortgage foreclosure,
mortgage blog, mortgage trend, bankruptcy
February 12th, 2008 at 1:59 pm
[…] unknown wrote an interesting post today onHere’s a quick excerptWhen one thinks of financial planning moves, foreclosure isn’t normally at the top of the list. Much like 20 years ago no one would have put bankruptcy on a list of financial planning tools. However, bankruptcy has been considered a … […]
February 12th, 2008 at 2:39 pm
[…] Foreclosure Increasingly Seen as Smart Financial Planning When one thinks of financial planning moves, foreclosure isn’t normally at the top of the list. Much like 20 years ago no one would have put bankruptcy on a list of financial planning tools. However, bankruptcy has been considered a … […]