Find the right lawyer now

Walking Away from a Mortgage

Find a Local Real Estate Lawyer near You

Walking Away from a Mortgage

Walking away form a mortgage is a term for when a homeowner simply abandons payments on their mortgage. While this may not necessarily be an illegal act, it may come with some serious consequences, and as such, is generally unadvisable. However, many consumers end up walking away from a mortgage every year, due to the inability to keep up with payments. 

There may be some instances when it may be acceptable to walk away from a mortgage, such as if the homeowner discovers that the mortgage was actually presented to them through a scam or through mortgage fraud. However, even so, it’s usually best to obtain legal representation, and formally get out of the contract before abandoning the mortgage. 

What Are the Consequences of Walking Away from a Mortgage?

Ceasing mortgage payments will put you in “default” status with the mortgage lender. This can lead to consequences such as:

  • Negative impacts on credit scores (the lender will usually report mortgage defaults to credit bureaus)
  • Foreclosure: Walking away from a mortgage will typically result in a foreclosure proceeding, in which the mortgage lender obtains a lien on the property title. On the other hand,  various foreclosure alternatives may exist if you choose to continue working with the mortgage company
  • Tax consequences: Unpaid debt is treated as income for tax purposes. Thus, even though you won’t be making anymore payments, you may still be taxed on the missed payments
  • Civil liability: The lender may simply sue you and attempt to reach other assets of yours in order to make up for the missed payments

Thus, one needs to understand the various effects that will happen upon walking away from a mortgage. While it may seem like a short-term solution, it may lead to more legal issues to deal with in the future. 

Do I Need a Lawyer before Walking Away from a Mortgage?

Knowing how and when to walk away from a mortgage can help you avoid unnecessary expenses and legal woes. You may need to hire a qualified real estate lawyer if you need assistance with any types of mortgage or real estate issues. Working with an attorney early on can help save you avoid legal issues down the road. Also, your lawyer can provide you with legal representation if you need to participate in a real estate lawsuit. 

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 05-16-2018 11:51 PM PDT

Law Library Disclaimer
  • No fee to present your case
  • Choose from lawyers in your area
  • A 100% confidential service
What is LegalMatch?

We've helped more than 4 million clients find the right lawyer – for free. Present your case online in minutes. LegalMatch matches you to pre-screened lawyers in your city or county based on the specifics of your case. Within 24 hours experienced local lawyers review it and evaluate if you have a solid case. If so, attorneys respond with an offer to represent you that includes a full attorney profile with details on their fee structure, background, and ratings by other LegalMatch users so you can decide if they're the right lawyer for you.