There are a lot of half truths about Strategic Default. Here is my story about our Strategic Default in Ca.

We purchased our first home in 2004 for $300k. It was 80 miles from where we had previously lived and preferred to stay; however, homes in that area were in excess of 500k. In 2007 we knew the market was headed down and didnt want to be stuck so we put the house up for sale. No offers. We did a home equity refi and got 70k cash out while we still could and stashed the money away. In 2008 we purchased 2 vehicles while our credit was still good and we purchased a foreclosed home in the area we always wanted to live for $270. We then simply walked away from the 300k house which was only worth 120k.

Due to California laws we knew the lender on the 2nd mortgage would sue, so we filed for BK and were granted a Chapter 7.

We used some of the 70k to make repairs to our new home, put in a backyard and pay for our BK. The rest we kept in the bank for emergency reserves since we no longer had access to any credit.

Three years later our credit scores are back in the low 700 range, we have a bigger, nicer home and it is in the area we always wanted to live.

Do I feel guilty? NOPE!! The banks made business decisions and so did we.

Our credit recovered very quick with both a foreclosure and BK.

If you end up renting research your local area. We have a friend who lost 2 homes in this downturn and has no problem renting. There are so many vacant homes in Southern California landlords will take what they can get.