High End Luxury properties are not immune to being over-leveraged. Suppose you had a property that was 150% or more underwater but you kept making payments in order to avoid foreclosure. There are people buying houses in the neighborhood and they are buying for less than the balance of your mortgage. You’ve tried reaching out to your lender for some sort of a loan adjustment, like a loan modification or better, a principal reduction. You are told that you don’t qualify for the loan modification because you’re not in default and that they don’t do principal reduction.
What can you do?
Why Strategic Default is a Dangerous Game
So what’s the problem with doing a strategic default? The problem with strategic default are many. For one thing there will be a big ding on your credit score, this stops you from getting any credit that would fix the problem in the first place. Then there’s the threat of foreclosure, in some states like California and Texas it doesn’t take that long for the lender to call the loan due and out you go.
intentionally stopping payments in order to pressure the lender into modifying their loan.
Many owners in this situation will consider a strategic default-intentionally stopping payments in order to pressure the lender into modifying their loan. While this might seem like a good idea, a calculated move, the risks are high:
- A significant credit score drop
- Lender threatens foreclosure
- Accelerated legal action (especially in fast-moving states like California or Texas).
And after all of that, there’s no guarantee that your lender will actually help you to avoid a foreclosure.
💡 Pro Tip: If you’re concerned about your credit taking a hit, now is the time to monitor your credit proactively. Use a trusted service like SmartCredit or check your FICO score regularly.
Government Programs: Limited but Worth Exploring
There are government-backed programs that are supposed to help homeowners in distress:
- HARP (Home Affordable Refinance Program). This program is for loans owned by Fannie Mae or Freddie Mac. HARP offers refinancing options for borrowers with high loan-to-value (LTV ratios. Eligibility is limited and the program is geared toward owner occupants-not investors or jumbo loan or commercial borrowers.
- FHA Short Refinance. Allows a new lender to refinance your mortgage and forgive up to 10% of the loan balance. While not a full principal reduction, it could help you to avoid going in default if you can qualify.
The different states have their own programs for their citizens, check your states programs before you do a strategic default. All of these programs are for homeowners, people who occupy their homes only, not for investors with or without tenants.
Of course, if all else fails and maybe you don’t want to keep your house you can always walk away right? Just sneak out in the middle of the night with two men and a truck….. Still not the best solution, you leave yourself open to too much liability. The least you could do is to call an investor to take the thing off your hands.
But What if You’re an Investor
The Good News is: There is another way, one that does not require you to be in default, doesn’t ding your credit and it works for investors, high-end luxury properties with jumbo loans and commercial property owners.
You could regain equity, save your credit and save thousands of dollars off your mortgage. Savvy owners in jumbo loans are using this very sophisticated method to get principal reductions, large chunk of mortgage falling away and they’re doing it without getting a 1099. While this is not a government program, it’s all done privately, it doesn’t cost them any money. There is no qualifying and everything happens very quickly anywhere from 15 days to 30 days. This type of loan adjustment is not a short sale or loan, you get to keep your property if you want to.
Introducing a private principal reduction strategy, a Short Refinance program that property savvy owners are using to cancel their debts and keep their property. t is a private, legal, free and easier way to get rid of the over-leveraged situation. This way you avoid a short sale, no 1099, or FICO score drop. This works if you are an investor or homeowner. It also works on commercial and investor-owned residential properties.
🔍 Want to see what you’re eligible for? Use a free refinance tool like to compare offers instantly.
📄 Note: These programs are typically only for primary residens, not investment or commercial properties.
🔍 Need to Analyze Your Property or Portfolio First?
If you’re trying to decide whether to walk away, refinance, or restructure, you need real data. I recommend:
- 📊 PropStream – Run comps, analyze equity, and evaluate potential exit strategies.
- 🧠 PropertyRadar – Powerful data insights on property ownership and mortgage situations.
Both are used by professional real estate investors—and you can try them for free.
Don’t Walk Away. Take Control
Whatever you do, don’t give up. Walking away might seem like the only option, but it opens the door to too much problems and unnecessary stress. Instead, consider a smarter option.
This strategy is used by savvy investors and high-end homeowners to regain equity, reduce monthly payments, and reposition their real estate portfolios. It’s not a loan modification, short sale, or government program. It’s a privately negotiated principal reduction that works with your lender—not against them.
- No default required
- No credit damage
- No income or hardship qualification
- No 1099
- Works for owner-occupied
- Works for investment properties
- Works for commercial properties
📦 Thinking of Walking Away? Don’t Pack Just Yet
Sure, you could sneak out in the middle of the night with two men and a truck… but that’s not the best exit strategy. Before you call the movers:
🛒 Check out my Amazon storefront for moving prep kits, real estate books, and credit recovery tools.
🏘️ Want to Reposition the Property Instead?
You might not need to sell at all. Many investors are opting to reimagine or reposition their properties using interior design simulations to increase value before resale or rent:
🖼️ Try Homestyler to create 3D layouts, floorplans, and staging virtually.
Don’t Walk Away
Take Control
Introducing a private principal reduction strategy, a Short Refinance program that property savvy owners are using to cancel their debts and keep their property. t is a private, legal, free and easier way to get rid of the over-leveraged situation.
This way you avoid a short sale, no 1099, or FICO score drop. This works if you are an investor or homeowner. It also works on commercial and investor-owned residential properties.
This is a powerful financial tool for those who want to preserve their credit, protect their assets, and exit overleveraged positions with dignity and control.
Quick Disclosure
Some of the links in this post are affiliate links. If you click through and make a purchase or sign up, I may receive a small commission at no extra cost to you. I only recommend services I personally use and trust.
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