eatmoremeatnow t1_j9tveed wrote on February 24, 2023 at 3:03 PM

Reply to comment by ArtificialOP in Pimco-Owned Office Landlord Defaults on $1.7 Billion Mortgage by downboat

A strategic default is when you have a loan on an asset but the loan costs more than that asset is worth so you stop paying the loan. With you not paying your loan it frees up money to do other things.

Example: If you have a $500k loan on a house that is worth $400k you stop paying your mortgage and live rent free for a year (while they evict you) to build up cash. Then rent a house across the street and wait a year or two and then buy another house and do it again.

ArtificialOP t1_j9tvo1z wrote on February 24, 2023 at 3:05 PM

Thanks

Wouldn’t you just get sued and get your wages garnished?

Exano t1_j9txijn wrote on February 24, 2023 at 3:17 PM

Yeah cause your people. The trick they use is to be a corporation people.

eatmoremeatnow t1_j9txkyj wrote on February 24, 2023 at 3:18 PM

Nope.

When you take a loan out for a house you secure it against the house.

You go through a formal process with the bank, which can take years and you hand the keys back to the bank.

Traditional_Button34 t1_j9ue55t wrote on February 24, 2023 at 5:05 PM

Yup and your credit tanks for 7 years and you can't buy anything anyways. Turning your business into a corporation is the only way to avoid that. There's downfalls to that too...especially for businesses with only 1 guy working.

eatmoremeatnow t1_j9ug52y wrote on February 24, 2023 at 5:17 PM

Fannie and Mac allow for a new mortgage after 3 years if you have a 10% down payment.

After 7 years it all disappears like it never happened.

1970s_MonkeyKing t1_j9wimwn wrote on February 25, 2023 at 1:40 AM

Couldn't do that in my area. People are so land hungry stupid here they pay for insider information on any 2nd in a row missed payment or unpaid property tax so they can buy the loan or ask for courthouse steps property auction. Fuckers.