Take the guy who drives like a maniac and cuts you off and then gives you the finger for driving too slow.
Or what about the person that gets back the wrong amount of change from a clerk at a store or fast food place? You know, they gave the clerk a $10 bill and the clerk gives back $15 in change or something like that, then instead of correcting the mistake, they keep the money and call the clerk stupid when they get out of the store. Further, they are proud they got the money. Is this wrong?
Today I went to see a young man have his first amateur fight as a boxer. I know him and his father from my working out at Wild Card Gym in Hollywood. I had a mid-life crisis, joined the gym and fell in love with the sport.
I went to East L.A. to a little boxing gym named "Eddie Heredia's" to watch Terry Bodine have his first fight. He won by TKO in the first round and it was very impressive. He was beyond joyful as he leaped up on the ropes with fists extended in victory. I was so happy for him.
What really moved me was that prior to all the fights taking place, the announcer (former Gold Medalist Paul Gonzalez) asked everyone to rise and sing the national anthem!
Granted, the guy could not sing, but every one of the 100+ people rose and sang with passion and respect. The day was about young men competing and playing by the rules and appreciating what they have. I was impressed with the entire afternoon and all of the participants. I have been boxing now for 3 years and am still learning the discipline of what it takes to get in that ring!
Over the past few years a select group of Savoy investors decided to take advantage of the economic turmoil and go into strategic default. My definition of a strategic default is the deliberate act to defraud a lender. Now why would anyone want to defraud a lender with laws that if proven, could include jail time? The simple answer is greed.
In the commercial/industrial real estate world, this is happening on a small basis. But it is rampant in residential real estate, where up to 30% of all homes in default are strategic. The purpose of a borrower and Savoy investor to enter into the world of strategic default is to renegotiate the current loan to a lower rate, possibly a reduced principal adjustment, or break an onerous loan and refinance without penalties. Another more personal reason would be to show weakness in equity to get out of a costly divorce or other personal gain.
Now I’m not giving legal or marriage advice here, so keep cool. I’m also not suggesting that you as a property owner, home owner or interested party enter into the strategic default game, as you could get stung!
Another game the really creative defaulter will do is to enter into strategic bankruptcy in order to wipe out the creditors and reset their financial position. This can buy time while the owner continues to draw income from property, while not paying the mortgage. Again, I am not suggesting that you stop paying your bills and go bankrupt.
There is a single asset for real estate bankruptcy that has many pitfalls and the lenders can be tough on those types of borrowers that try to delay a foreclosure. Bankruptcy is supposed to entail filing a plan to reorganize and turn a profit at some future date. If the property is owner occupied, what is going to be the difference with a bankruptcy? Probably nothing, and the judge is going to void the asset from the bankruptcy.
There are some expert Bankruptcy Attorney's that can guide you through the maze should you need to consider delaying a foreclosure and reorganizing your portfolio. Here are a couple of reputable attorneys that I know: Sara Chenetz: 424-239-3464; and David Kupetz: 213-626-2311.
So, is a strategic defaulter a bad person doing good, using all the laws at their disposal to improve the bottom line? How do you feel about a person or company that uses default as a tool to get out of paying their bills? What if they are really wealthy and are just using a tool to defraud the banks?
I’ll let you decide.
