Taxpayer-owned mortgage giant Fannie Mae is targeting families by going after struggling homeowners who strategically default on their mortgage, the firm announced Wednesday.If you ask me, that sounds fair. Home purchases are a risk like any other investment, and while these people may have purchased their homes during the height of the housing bubble and now their properties are worth less then what they owe, I think that should a homeowner strategically default, Fannie Mae has every right to deem such homeowners as ineligible for future Fannie Mae-backed mortgages.
A default is considered strategic when homeowners have the capacity to pay, yet choose to walk away from their mortgage. The trigger, researchers say, is negative equity: When the value of a home is less than what the lender is owed on it, borrowers are more likely to strategically default.
About 11.3 million homeowners with a mortgage, or 24 percent, owe more on their mortgage than the home is worth, according to real estate research firm CoreLogic. Another 2.3 million have less than 5 percent equity in their homes. All told, about 29 percent of all homeowners with a mortgage are either underwater or very close to it. The firm estimates that the typical underwater homeowner won't return to positive equity until late 2015 or early 2016.
And Fannie Mae, an arm of the federal government and a big part of the Obama administration's housing policy, wants to make sure that if struggling families walk away, they suffer for it.
Homeowners who strategically default or did not work "in good faith" to avert foreclosure through other means will be ineligible for new Fannie Mae-backed mortgages for seven years. The firm said it will also pursue homeowners in court, seeking so-called "deficiency judgments" to recoup outstanding debt by seizing borrowers' other assets. Thirty-nine states do not limit the ability of lenders to recover what they're owed.
Thursday, June 24, 2010
Fannie Mae To Block Future Mortgages Of Homeowners Who Strategically Default
There was an article at The Huffington Post by Shahien Nasiripour titled "Taxpayer-Owned Fannie Mae Attacks Struggling Homeowners" that I thought was interesting. By the title of the article, one would assume that Fannie Mae was actively trying to cause some damage to innocent homeowners but here is how the article starts off: