Homeowners Should Think Twice if Considering a ‘Strategic Default’

Dennis Norman

Last month I wrote about a new policy implemented by Fannie Mae that would “lock-out” borrowers from getting a Fannie-Mae insured loan for 7 years if they did a “strategic default” or otherwise did not act in good faith and were foreclosed upon. In a nut shell, the borrower that Fannie Mae is targeting here is the borrower that has the financial ability to make their payments, accept a loan modification or other “work-out” from Fannie Mae but instead chooses just to walk away from their home and letting the lender foreclose.

In addition to locking out borrowers from a new loan for 7 years Fannie Mae has also made it clear in a recent announcement that they will “take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans“. Obviously, they can only do this in those States that allow a lender to sue a borrower for a deficiency but if you live in one of those states are are thinking of doing a strategic default on a Fannie Mae insured loan, you may want to think twice. Or at least be sure you get appropriate legal advice first and explore other options that are available to you.

Fannie Mae said that this month (July) they will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

 

 

Don’t miss these posts!

We don’t spam! Read our privacy policy for more info.

🤞 Don’t miss info like this!

We don’t spam! Read more in our Privacy Policy

Leave a Reply