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Need to Reduce Debts While Preventing Foreclosure in California

Many distressed homeowners are hoping to prevent foreclosure in California and reduce debts.  This is becoming extremely critical for these families because the economy is expected to worsen as our nation’s largest stimulus spending plan begins to fade. The stimulus helped prop-up the stock market for a while, but stock prices are slipping again.  Making matters worse, the stimulus has increasing our national debt at a faster pace than we have ever seen.  The federal government and the G-20 nations needs to focus on reducing debt because these debt levels are destabilizing to our economy, which may actually cause more mortgage foreclosures in California.

US Must Reduce Debts

Our national debt already exceeds $13 billion, even before counting entitlement programs like social security.  This is roughly equal to the US’s annual gross domestic product (GDP) and roughly double the US’s debt-to-GDP ratio during the Reagan administration.  Because the stimulus was financed by issuing debt and expanding the money supply, it will be problematic for the US to create any more stimulus.  At the current rate of growth, our debt is about to surpass the US’s debt-to-GDP ratio in 1945, at the end of World War II.

More Mortgage Foreclosures California Appear To Be Unavoidable

This has important implications for homeowners who are having difficulties making their monthly mortgage payments.  As the stimulus wears off and banks are forced to wrestle with the growing backlog of unpaid mortgages, there will be many more mortgage foreclosures in California.  This will create pressure for prices to fall even further, which is likely to encourage even more strategic mortgage defaults.

Strategic Mortgage Defaults

This is a scenario that banks are hoping to avoid, and that the federal government is trying to prevent through a major marketing campaign of fear and guilt.  As the economy worsens, more and more families may feel compelled to choose strategic mortgage default to avoid depleting whatever remaining savings they may have.  


It is a simple question – would we rather save what’s left of our family’s finances or help save the bank? Despite what the government and lenders are telling you, strategic mortgage default is both moral and appropriate for over-burdened families.  Families live and breathe and need to be cared for.  Banks are fictitious entities that can be created and disposed of at will.  The answer is obvious!

Despite this obvious answer, the government and lenders are relentless in their campaign to keep homeowners paying-off these unmanageable levels of debt. 

Are More Mortgage Foreclosures (California) Inevitable?

It is estimated that more than 25% of all real estate is worth less than the mortgage balance.  If distressed homeowners find themselves in a losing battle to save their homes and credit, strategic mortgage default is the wisest of decisions because it is much better to conserve funds for other family necessities.  However, it does not have to mean that a foreclosures will result.

With the proper help, strategic mortgage default can be implemented in a way to prevent foreclosure in California.  For example, short sales are a viable strategy if capable assistance is used to ensure a successful outcome.

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