Many people today are calling about mortgage defaults and their desire to protect good properties from bad properties. Real estate bought during the boom years is now underwater and it is no longer possible to maintain the mortgage payments on this property. However properties bought in other geographical locations or many years ago frequently can be saved. The banks are not very cooperative in this area and few banks are working with the borrowers. Answers are not forthcoming and solutions seem to be impossible to obtain.
The good news is that due to the huge volume of defaults, the banks are not doing a very aggressive job of collecting. What is known for sure is that if nothing is done, then the bank will attach all of the good properties you may own in order to cover the deficiencies on the bad properties. In addition they will attach cash and brokerage accounts. So, if you do nothing it is 100% sure that they will attach assets.
If an asset protection plan is put into place, then the banks are very unlikely to pursue the other assets due again, to the huge volume of defaults they are dealing with. So, if you do something it is no longer 100% sure that the banks will attach assets. All of this must be done by keeping the fraudulent conveyance rules in mind.
We have had great luck in this area and we are not aware of any client who as lost their good properties after we have worked on a properly done and legal asset protection plan.
The judicious use of limited liability companies, family limited partnerships, and asset protection trusts in this area can do wonders. Friendly liens can also accomplish tremendous things when properly utilized.