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strategic defaultConsciously or knowingly ceasing to make mortgage payments is called strategic default. There are many people that knowingly stop paying the mortgage because they cannot afford to continue to do so, and there are others that opt to stop because they believe that this might accelerate their short sale or their loan modification.

Borrowers need to understand the consequences of their actions. Late mortgage payments impact your credit score and thus, they also impact your future ability to borrow.

The Home Affordable Foreclosure Alternatives (HAFA) program has specific guidelines, which often allow for a short sale when the borrower is current on the mortgage. Additionally, short sales can be completed for short sale sellers that have not missed a single mortgage payment. For more information on the HAFA program, visit

Some homeowners also stop making their Home Owners Association (HOA) payments. This can often be a short sale deal killer. Short sale lenders do not like to pay the seller’s unpaid HOA balance and often will only allocate a small amount of money for HOA document and transfer fees. Most experts advise short sale sellers to continue to pay the HOA dues whenever possible.

Whether to continue to make the mortgage payments or HOA dues is a personal decision that can only be made by the borrower. Understanding the consequences of the late payments can often help to make a more informed decision.

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The answer to this question does not have any clear cut and dry answer.  There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale.  Much will depend on the circumstances that led you to foreclose; generally it can take anywhere from two to seven years.  Of course it also depends on how you have maintained your credit AFTER the foreclosure.   According to most lenders, you will need to re-establish a credit score of at least 580 to qualify.  My suggestion is to contact a reputable and knowledgeable lender or mortgage broker.  They can review your current situation and offer advice and services on repairing  your credit.  Also, there are many on-line resources that can help you take the right steps.  Some services are free and others charge a monthly/annual fee (try doing a Google search then check for feedback on the provider).

Finally, consider asking your real estate agent for properties where seller financing is available.  Often buyers may benefit from less stringent qualifying and loan payment requirements and more flexible rates on a home that otherwise might be out of reach.  These loans are often short term with the idea that within a few years, the home will have gained enough in value or the buyers’ financial situation will have improved enough that they can refinance with a traditional lender.

Sonja Bush

Broker Associate – DRE #01904399


The Village at Mammoth

661.979.9000 cell

[email protected]

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