What Every California Homeowner MUST
Know About “Strategic Defaults

Our office has been receiving numerous requests lately on the subject of …


A strategic default is when a borrower stops paying on a loan obligation, not because they can’t afford to pay it, but because they decide it no longer makes economic sense. Usually, this is because their home is worth so much less than the balance due on their loan that they fear they are simply throwing good money after bad.

Can You Relate?

Here’s one actual e-mail I received recently (sender’s name withheld) that perhaps best illustrates the dilemma that many of you are facing:

Dear Jeff,

We spoke a few weeks ago. I am paying my mortgage, but would probably like to do a “STRATEGIC DEFAULT” beginning in the near future. Would you be able to counsel me through the process?

There are issues such as sending the appropriate “do not call” letters, how to handle the “various letters” I get in the mail, how to “best protect myself” from liability (i.e., the foreclosure paperwork would hopefully fall into the one action rule zone rather than a deficiency judgment), etc.

I have tried the modification route and a short sell sounds like a nightmare as well. It seems as though the strategic default is my best bet as I have to do something. I am under water (25%).

With no hope on the horizon and no help from the lender in site, can you help me?

I am looking at how to best proceed and definitely would like professional support.


Client Name (Withheld)

You’ve tried the modification route and you’re fed up with the runaround, the delays, the repeated requests for the same documents you’ve already given, the constant turnover in new agents, hanging on the phone for hours waiting for the right person, telling the same story over and over.

A short sale doesn’t sound any better. A months-long process where any buyer that may be interested today could disappear by the time your lender approves the sale…if the lender approves the sale. And brokers hate them because it means more work for less money and more uncertainty. You’re at your wit’s end.

No wonder the “strategic default” is probably the hottest topic among real estate owners and investors right now. It’s all over the TV news and newspapers.

The Problems

There are two big problems with the media hype and coverage so far. First, most of it focuses on the “morality” angle of this “exit strategy” (asking the rhetorical question “is walking away from your mortgage immoral?”).

But this isn’t a philosophy class. This is your life.

The stakes are high and it’s dangerous to make this crucial decision based on emotion. As the Wall St. Journal wrote last week: “increasing numbers of homeowners are abandoning their nests for… emotional-and sometimes irrational-reasons. It turns out that many of the Americans defaulting on their mortgages are doing so out of anger, fear or despair rather than making a purely sensible decision about their best financial interests …” (emphasis added).

You’re an investor. You’re accustomed to analyzing your real estate investments and making big decisions-when to buy, when to sell, when to hold ’em, when to fold ’em-rationally. This is your single most important decision about perhaps your single biggest financial investment. Now, more than ever, it’s important you make this decision based on a clear understanding of the legal and financial consequences of “walking away” so you can finally break your cycle of indecision and decide what makes the most sense for you.

Second, the media tends to discuss this issue superficially, in just a few minutes and soundbites and on a broad, national level. But you must understand the unique legal consequencesunder California law for defaulting on your home loan. Those consequences can be extremely severe. You need a full understanding of those consequences before you “just walk away”.

Third, it’s all so confusing.


Order this highly informative, educational HOME STUDY COURSE where you canfinally sort through all the confusion and clutter. You can finally get the answers you need to make your decision. You can feel confident that your all-important decision is well-reasoned.

This HOME STUDY COURSE is designed to give you the unbiased information, tools and understanding you need to make an informed decision and one that’s right for you. A decision that could cost or save you hundreds of thousands of dollars and literally change your life (for better or for worse). It will not try to talk you into or out of doing a strategic default.

Here is just some of what you will learn:

Here’s what you will learn in this information-packed HOME STUDY COURSE:


1. What exactly is a “strategic default”?
2. Why the pressure driving your strategic default decision will likely get much worse before it gets better, when that pressure may start to subside, and what impact that has on your decision-making process.
3. The single most important question you must answer before you decide to strategically default on your loan…and how to get that answer before this webinar is over.
4. The minimum “upside-down” loan to value ratio you should be at before you waste time even considering a strategic default.
5. The other options you should consider before pulling the trigger on the “doomsday” strategic default.
6. A detailed, understandable discussion of what federal and California loan modification programs can help you today (including a discussion of HAMP, HAFA and principal reduction possibilities).
7. Is that light at the end of the tunnel or an oncoming train?: What California and federal programs are “on the horizon”, when will they be available and how to determine if they will help or hurt you if you can hang on for “a little longer”.
8. What happens if you change your mind after you strategically default-what can you do and when is it “too late”?
9. How to compare the pros and cons of a strategic default and a short sale.
10. How to compare the pros and cons of a strategic default and a deed in lieu of foreclosure.
11. The “right” way to do a strategic default.
12. How long you expect to be able to stay in your home once you stop paying your mortgage.
13. Under California law, what a lender can and cannot do to you (including a discussion of the “one-action rule”, deficiency law and whether your lender can come after you after you default).
14. Can lenders automatically take your assets or is there a legal proceeding?
15. Do you have a defense to a deficiency judgment?
16. How does the lender collect on the judgment?
17. Are lenders going after deficiency judgments?
18. What impact a strategic default will have on your credit.
19. How long it will take to repair your credit.
20. Future Shock: The impact of a strategic default on your ability to get credit cards and loans in the future.
21. Doing the Math: How to crunch the numbers and figure out whether you’re better off financially by walking away or staying put.
22. The federal and California state tax implications of a strategic default.
23. How those tax consequences compare to the federal and California state tax consequences of a foreclosure, a short sale, and a deed in lieu.
24. What to tell the bank when they call.
25. Under California law, how your situation changes if you have multiple loans on your property.
26. How much you can save by renting, taking into account the loss of any tax deduction on your mortgage interest.
27. Your risk of being having your bank sell its rights to pursue its claims against you to a collection agency.
28. How long until you can buy a house again.
29. How to stop your lender from harassing you.
30. How to repair your credit as quickly as possible.
31. Whether you should also strategically default on your property taxes or homeowners’ association dues.
32. The impact a strategic default could have on your other existing loans.
33. How to tell if your loan is “recourse” or “non-recourse” and what’s the difference?
34. What special rules apply to you if you’re in the military.
35. The “deadbeat” dilemma: How to analyze rationally the “moral” and “ethical” issues involved, including your “responsibility” to your community, your neighbors and the country, and keep it all in perspective as you make this critical decision.
36. Your fast-track to recovery: How to maximize your profits when you rent.

What Are People Saying?*

It’s not enough to just read about a training course like this one; you have to hear how it actually works when applied to real-life situations. Here’s what others are saying about this home study course and training information:


“I have been struggling with the decision on what to do with the two investment properties which are “cash eating alligators”. The webminars helped me to put the pieces of the puzzle together when analyzing the legal, tax and credit report issues/consequences involved in making the best decision.

The information I received during the webminar and the answers to my questions specifically, was exactly what I needed. The cost of the webminar was a tiny fraction of the expenses I would have incurred if I sought advice (in three different areas: legal, tax, credit) from each professional individually. I finally felt like I moved the burden off my shoulders.

Thank you!”

Natasha Pederson, Foster City, CA

“Your webinar is the only guidance we have gotten that put all aspects and consequences into one package. Now, we believe we have the necessary tools to make a decision on our unique situation.”

Scott and Kim R. of San Ramon

“Comprehensive, understandable, and usable content.”

Jean-Marc Landau

“Very informative and presented in a clear easy to follow format.”

Deb Miller, San Francisco, CA

“An informative and balanced presentation — takes emotion out of the decision to default and let you decide based on the numbers and facts.”

Nick, San Ramon, CA

“It was a relief to know that my circumstances are not unique (owning an investment property which is severely underwater, but not having an obvious financial hardship) and that considering a “strategic default” is a viable alternative.”

Carolyn Lacy, Lafayette, CA

“The quality and thoroughness of the material covered is quite exceptional and well worth the small fee that I had to pay. I came away feeling more focused than before with a much better idea of the pitfalls and need to really get expert help instead of assuming that I know it already.”

L.K., Windsor, CA

“The Webinar presenters not only stated the facts of Strategic Foreclosures, but also gave their opinions and examples of how they play out in the real world.”

Bob Berry, Novato, CA

“I recently watched “Before You Walk Away,” your 2010 webinar about strategically defaulting on a mortgage. The three-day webinar also examined other options to consider rather than defaulting i.e., HAMP loan modification, short sale, Deed in Lieu, Chapter 7 and Chapter 13 bankruptcy. From your webinar, I got a strong sense about how some of these strategies can be linked together to allow homeowners to SAVE their money as well as choosing the right path to walk down. I was especially appreciative of getting sound advice from various professionals, shall we say, in the sub-areas, such as reestablishing credit, mortgages applications, rebuilding credit, paradoxically, through bankruptcy etc.”

Identity Kept Confidential Per Request

Home Study Course Content Details

The first three hours are 100% content, jam-packed with strategies, checklists, formulas and action plans to help you make your decision. The fourth hour will be answers to questions that were posed by actual attendees.

Your Only Investment

Tap into all this training, Q&A session and all these bonuses for just $247, of which some (or all) of this fee may be tax deductible. So, do consult your tax adviser to make sure.

Your BONUSES For Buying Today!

BONUS #1 All who buy today get our “D.I.Y. Mortgage Relief System” for FREE! (Retail Value: $247).
BONUS #2 A “Do Not Call” letter form that complies with the Fair Debt Collection Practices Act! (Retail Value: $100)
BONUS #3 Free one-on-one consult with a lawyer to address your specific questions (up to 15 minutes)! (Retail Value: $100)

If you were going to get these professionals on a conference call for this length of time to get this same information, it would cost you thousands of dollars. Your decision, whatever it is, will save or cost you hundredsof thousands of dollars.Z

Here’s How To Order!

(Some or all of this may be tax deductible; please consult your tax adviser.)

OUR 100% 30-DAY SATISFACTION MONEY BACK GUARANTEE: If you are not satisfied for any reason, simply notify us in writing within 30 days after the seminar and we’ll give you a 100% refund. This does not constitute a guarantee, warranty, or prediction regarding your results. This is only a guarantee that you will be satisfied with the content of this educational event.


Jeff Lerman, Series Manager for IEISOnline.com
Jeffrey H. Lerman, Series Manager
Jemic Enterprises, LLC,
a Delaware series limited liability company,
Investor Education Institute Series
Lerman Law Building
802 B Street, San Rafael, CA 94901
Tel (415) 454-0455