Just a few short weeks ago, Fannie Mae issued an outright threat to homeowners in this country by creating a new rule that would punish anyone who stops paying their mortgage and walks away from their home, what's referred to as a "Strategic Default". Fannie Mae calls their new rule the "Seven-Year Lockout Policy for Strategic Defaulters."
Although homeowners may believe that they have no power against the bankers, Fannie Mae's recent actions clearly indicate that they do. It's their new rule that shows just how homeowners have scared the heck out of Mortgage giant Fannie Mae.
On Fannie's Website, Terence Edwards, Executive Vice President for Credit Portfolio Management has the following to say about the new rule: "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." And then he went on to say: "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."
To all Florida homeowners considering a Strategic Default; the way I see it is that Fannie Mae, the FAILED mortgage giant, who is a substantial part of why we are in this mess to begin with, is going to need BILLIONS in taxpayer dollars to bail them out. You are the taxpayers, isn't that enough of a loss for us to take on their behalf? Not only do they want us and our children to contribute their future tax dollars to bail them out, we are to take a loss on our homes.
All this nonsense and threats surrounding "Strategic Default" are ridiculous. Why, when it only creates what everyone is already faced with "foreclosure". And if Fannie Mae and the banks were so concerned about the impact of foreclosures on our communities, we wouldn't be in the situation we're in today, would we?
I hope that you'll forgive me for laughing at Fannie Mae's concern about how foreclosures will affect our communities. I've represented hundreds upon hundreds of Florida homeowners in loan modifications, short sales and foreclosures and I haven't seen Fannie Mae lift a finger to help a single one of them. Banks are abusing homeowners left and right, every single day of the year, and where has Fannie Mae been?
How does a "Strategic Default" harm our community? Either the bank will foreclose and resell it at the current market or "IF" you're allowed to short sale the property it may sell for a little more, but then again it may not sell in which case it will end up in foreclosure anyway.
So here's more of what Fannie Mae had to say on their Website:
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, 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.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.
So let get this straight… a Deed in Lieu, or a short sale… are just fine, but a strategic default is bad for borrowers and bad for communities. Do they hear themselves? How is a short sale or a Deed in Lieu of foreclosure better for the community?
In the first paragraph above, they are saying that they're going to go after deficiency judgments in states that allow deficiency judgments? Well, good for them. But, does that mean that they won't go after deficiency judgments in states that allow them if the borrower simply attempts, in good faith, to work it out with his or her servicer, but fails? No, as a Florida Foreclosure Defense Attorney I know firsthand that they will.
And they're going to ask the servicers to "put forth recommendations" as to who should be pursued for a deficiency judgment? The same group of companies and individuals that have proven that they cannot be trusted to follow rules, keep promises, or tell the truth. I suppose they will also be the final word as to whether or not the homeowner attempted to work it out in "good faith," as well.
So what was the threat anyway? Oh, those homeowners that Fannie Mae or their servicers deem to be strategic defaulters won't be allowed to get a Fannie loan for 7 years, but the "good faith" people… which I would guess are those who agree to whatever their servicer demands, might get one in two or three years. First of all, who is thinking about getting another loan in 2-3 years? No one I know. But even more to the point, what in the world would make Fannie Mae think they'll even be around in seven years?
Homeowners aren't the ones failing to act in good faith, it's the banks. No one is walking away from their home because they weren't willing to make a good faith effort to find an alternative resolution by working with their bank. It is the banks that bullied and made people feel poorly, and in general proved beyond any doubt that they could not be trusted. It's in response to this treatment that homeowners have chosen to hire a foreclosure defense attorney and strategically default.
Even with the threats of Fannie Mae, their servicers and the banks, homeowners are still considering a "Strategic Default", why you may ask; because just like Fannie Mae and the big banks, homeowners would also like to tailor their own economic bailout by taking matters into their own hands. They are hiring Florida foreclosure defense attorneys and fighting for their families' economic future.