During the height of Florida’s real-estate boom, property investors bought thousands of homes, hoping that skyrocketing prices would inflate their investment portfolio. Now, some are considering filing for bankruptcy protection.

A growing number of investors are making the decision to walk away from their properties and ultimately send their homes into foreclosure. Many investors who were hoping to quickly flip their investments are now left with homes that can no longer be sold for more than the mortgage debt. In some cases, these investors can’t even find tenants willing to pay enough rent to cover hefty mortgages. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, one of the states with the fastest rising rates of seriously delinquent loans.

Defaulted mortgages are defined as those 90 days or more past due or in foreclosure. But walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan. “A lot of these people can’t think clearly because the level of financial distress is so great,” says David Dweck, president of the Boca Real Estate Investment Club in Boca Raton, Fla., who is also a Realtor. “They’re hoping [that by taking this step], it’s going to work itself out.”

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For more information on this and other real estate matters, your first source for Palm Beach real estate should be licensed agent and long-time resident Caesar Parisi.

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