Carlsbad, CA (PRWEB) May 25, 2011

One of the most cited deterrents of deciding whether or not to foreclose or strategically default is the fear of a catastrophic and irreversible hit to one’s credit score, leading to an inability to rent, purchase a new car or home, or open a new credit card. After polling some of our 6,000 clients nationwide, YouWalkAway.com has discovered it’s a fear that may be blown way out of proportion.

Susan Edwards is a client of YouWalkAway.com, a company that walks defaulting homeowners through the foreclosure process. Edwards recently walked away from a property in Southern California. “Prior to missing our first payment, my credit score was 805,” Edwards stated “I checked it again in June after we missed the 5th payment and it was 680. At the time, it was commonly reported that the average foreclosure would lower your credit score about 150 points. I had assumed it would stay in that range for up to 7 years. I was wrong.”

So, what is Edwards credit score now? According to Edwards, after only 3 months following the foreclosure auction of her property, her credit is back up to 734 and climbing. Fortunately, the hit taken to her credit was not nearly as bad as most people, including those who claim to be experts, might have depicted.

Edwards is not the only YouWalkAway.com client to see her credit rebound so quickly. New York resident and YouWalkAway.com client Jodi Romanello has walked away from two investment properties in Florida. While she has never closely monitored her credit score, Romanello has yet to see any negative repercussions of a credit drop. “When I first skipped payments on my first foreclosure, CitiBank Diners Club abruptly canceled my card due to ‘undesirable changes in my credit rating,’” Romanello explained. “I got very upset because I hadn’t thought this would happen, but to my enormous relief none of my other cards did this. I have a high limit with American Express Gold, Visa, MasterCard and a lot of store cards, and Amex just renewed my card with an invitation to go Platinum.” Romanello continued to explain how she staved off the negative credit effects of two foreclosures, “I am careful to pay all other bills instantly when I receive them, I run no balances on any cards month over month.”

According to the study, credit cards, car payments and student loans are the most common forms of additional debt, with personal loans and medical loans rounding out the bottom. Surprisingly, only 23% of those surveyed have ever defaulted on any other debts. Many YouWalkAway.com clients have never even had a late payment on their record prior to strategically defaulting from a property. Although, 91% of underwater homeowners surveyed are facing other debts in addition to their mortgage, YouWalkAway.com has seen these recurring trends amongst many clients. Those who have handled the foreclosure strategically by closely monitoring their credit and other debt are fairing much better financially after the foreclosure.

Even borrowers who opt for a short sale have seen quick restoration of their credit. San Diego Real Estate Broker, Jeff Grant can attest to his credit recovering after a short sale of his investment home which was upside down by more than $ 200K. ?After my own short sale, missing a total of 8 mortgage payments, my credit went from 729 to 679. But it quickly recovered to 728 a year and four months later!?

Following in suite, Wynn Bloch’s house in Palm Springs, CA sold at foreclosure auction in March 2010. As a result of the foreclosure, her credit score fell just 45 points – from 780 to 735. “It didn’t hurt me really at all,” Bloch stated, “In fact, I was foreclosed upon last March and just bought a new house in December!” While it may be unlikely for all defaulting homeowners to purchase a home so quickly, 51% of YouWalkAway.com clients polled do wish to purchase a new home within 5 years.

In reality, many YouWalkAway.com clients are more than happy to shed the excess baggage of their underwater homes and downsize to a rental. Nearly, 100% of clients report saving money by renting, and 52% chose to rent a house smaller than their previous one. Jon Maddux, CEO of YouWalkAway.com explains, ?Eighty-one percent of our clients have experienced no issues renting after a foreclosure or short sale. Only, 18% were asked to provide a slightly larger deposit.?

As Susan Edwards shares, “I love being at our new house. I can imagine my dogs in the yard and our family sitting at the table for Thanksgiving. Funny,” she continues, “but I’m more excited for [my new rental] than I was when we bought this house. It really is a new beginning for us.” Edwards, Romanello and Bloch are not exceptions to the rule or lucky strategic defaulters who have fallen through the credit reporting cracks. They are living proof that if homeowners continue to keep on top of other debts and their credit scores, they can rebound much faster than initially predicted.

Maddux continues, ?There has been a lot of misinformation regarding the effects foreclosure has on one?s credit. More often than not, it is those who have an agenda to deter homeowners from walking away who use scare tactic phrases such as, ?Foreclosure will destroy or decimate your credit.? Due to the nature of how credit scoring works, I prefer to describe the effects of foreclosure as wounding one?s credit. Blemishes will heal on their own as long as one continues to keep other lines of credit current. Seeing it first hand with our own YouWalkAway.com clients, a homeowner?s credit will improve over time as the delinquent payments move further into the past.”

YouWalkAway.com has added a new product designed to allow clients to monitor their credit throughout and following the foreclosure process. The goal is to eliminate borrowers? fear of credit reporting by providing direct access to their scores and lenders. Simplifying the credit score is the first step to understanding how to improve one?s own credit and ridding oneself of debt. Within this new product, homeowners are able to fix credit report errors, negotiate good will corrections, or settle debts directly with click of a button. Credit and identity protection is also available with real time alerts. With continuous monitoring of all trade lines, borrowers can take a pro-active approach to improving their credit score and eliminating their debt.

YouWalkAway.com conducts ongoing surveys with current and past customers to compile data regarding their varying views on the foreclosure process and strategic default. Through polling, YouWalkAway.com has determined the most common kinds of debt that underwater homeowners are facing, as well as strategic defaulters’ views on credit, and the process of finding a home following the foreclosure.

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