Today's KCM Blog Post: "Walk Away and Fannie Mae Will Chase You Down"
Walk Away and Fannie Mae Will Chase You Down
Many lending institutions are beginning to take action against those who decide to walk away. Fannie Mae, according to an article in Housing Wire, announced:
Borrowers who are determined to have the ability to make their monthly payments but walk away from their homes will not be able to secure a Fannie Mae backed mortgage for seven years after the foreclosure.
Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt.
The actual Fannie Mae announcement quotes Terence Edwards, executive vice president for credit portfolio management at Fannie:
“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”
In a subsequent article it was reported:
If Fannie Mae determines someone strategically defaulted, then they say they will hold the borrower accountable for all associated costs of getting the house back on the market, in areas that lawfully allow deficiency judgments.
Often when a home forecloses, Fannie Mae brokers and contractors discover vandalism and missing appliances and fixtures when they ready the home for resale. The cost of making those repairs and replacements will be included in the determination of the deficiency amount, a Fannie Mae spokesperson said, in addition to the difference in the mortgage balance and the proceeds from the foreclosure sale.
What does this mean to you?
Considering a strategic default? Know the ramifications before ‘walking away’ from your mortgage obligation.
