Posted over 14 years ago

Fannie Mae to Crack Down on People who Walk Away from Homes

Fannie Mae is looking to create penalties for people who partake in a 'strategic walkaway' from their home or investment property. A strategic walkaway is when a homeowner is perceived by some unspecified standard to be able to afford a property yet chooses to allow it to go into foreclosure.

Fannie Mae is proposing to put a lending ban on the individual for 7 years and is looking to pursue legal action on to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. According to the Washington Business Journal, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Is anyone getting a warm fuzzy giving litigation control on Americans to the banking institutions that helped create this fiasco?

Comments (15)

The banks are also super low. They require home buyers to get an inspection done within 5 days of an executed contract - however they take a snail's pace to close the loan!

Alison Feliciano, over 14 years ago
Loans are cheap, but borrowers still can't get qualified. What difference does it make if the Fed drops money into the banking coffers if they won't lend it?!

Bryan Hancock, over 14 years ago
1 out of 4 American consumers now have credit scores below the level of qualifying for home purchases. The Traditional real estate market is shrinking and shrinking.

Tom Bukacek, over 14 years ago
I read that articles. it is interesting. ========================= <a href="http://www.sapiencebpo.com" rel="dofollow">bpo projects</a>

, over 14 years ago
I think this walkaway restriction is going to be the greatest opportunity for investment companies that can sell on land contract. We are building up our Movement now. 20 contracts sold in the last 15 days!!

Kevin Kaczmarek, over 14 years ago
Well they may be wealth now, but if their interest costs skyrocket with a foreclosure and they are hit with a large deficiency judgment their fortunes could change quickly.

Bryan Hancock, over 14 years ago
I read an article on the bulletins portion of this website talking about how the largest segment of people walking away from their loans are the 'wealthy'. They're starting to view their houses as businesses and if upside down, walking away.

Tom Bukacek, over 14 years ago
about time

Don Konipol, over 14 years ago
Dale - Ditto! Tom - I am with you as well. I have been in this industry for 20 years - I was trained when you needed good credit and $$ down. Well during that "artificial" economy when the BANKS created the 100% financial Stated/Stated loans - I was very strict on my Loan Officers that this was NOT a viable option - neither did I encourage them to sell the "Pick a Payment" Loans (as the Banks called it) - OPTION ARMS - UGH! Now as I have transitioned out of the Lending Industry (sort of - I still have clients that call me) - I am better able to explain things to the buyers that call us to arrange inspections what is going on in the market. I find it interesting that the banks are giving buyers 5 days to get an inspection done after signing contracts - yet they are as slow as you know what to issue a clear to close. Guys I can go on...I better stop. Great post Tom!

Alison Feliciano, over 14 years ago
Dale- great point. I haven't really been able to put a succinct finger on why this ruling upset me. James and Jason have great points, but this ruling bothered me. Your point is why- the poor guy is getting held accountable for the sins of so many others. Thanks!

Tom Bukacek, over 14 years ago
They should look at the Realtors, banks, appraisers, Title Companies and investors involved in fraudulent deals instead of the poor guy who gets stuck with the bills.

Dale Osborn, over 14 years ago
I agree with you James. The only problem is that the banks will probably extend this to people that couldn't really afford the home as well. They hate the fact that short sales are so abundant right now, even though they did in fact help to make this mess. I think this is just them lashing out, and I hope it doesn't go very far. Fannie Mae of all folks should probably just keep their g-d mouths shut through this "correction" and take the lumps they so rightly deserve for being such a big part of this. It seems like they want to be in business until it comes to the risk-taking and the intelligent decision-making.

Joseph Ziolkowski, over 14 years ago
I can understand the logic, but I don't like companies setting broad rules that are not well-defined. For example, how is the determination or who makes the decision to say that you should have kept your house in this situation?

Tom Bukacek, over 14 years ago
Make sense to me. I wouldn't lend my money to someone that didn't pay me last time.

Jason Wheeler, over 14 years ago
Strategic Defaults are completely wrong! And I am glad that some type of recourse will begin to encourage some to not strategically default.

James Ward, over 14 years ago