How Do I Strategically Default on My Mortgage?

First, you need to be absolutely sure that it is more convenient for you as a borrower to walk away from your mortgage. This involves some calculation; you need to determine whether the outstanding amount owed on your mortgage is greater than the total value of the mortgaged property. You should consider hiring a specialist to help you complete this calculation. If your current property is determined to be "underwater," you could consider strategically defaulting on your mortgage.

Note that some states, such as California and North Carolina, are "no-recourse" states, meaning that lenders cannot attempt to recover the defaulted mortgage debt through your personal estate. In these jurisdictions, your other assets should be safe if you strategically default on your mortgage. However, if you are in a state that allows recourse for lenders, like New York, your lender may seek repayment for the full amount of your loan using your personal assets to cover the difference between your mortgage amount and the value of your house.

Regardless of whether your property is located in a recourse or no-recourse state, you should take into consideration how deliberately defaulting on a debt may affect your personal credit score. As you can imagine, defaulting on a mortgage is not going to reflect well on your credit score, regardless of the reason for default.