More than ever, the messages are being shared for homeowners who are considering retiring from their mortgage obligations.
The Federal National Mortgage Association, better known as Fannie Mae recently announced that she will penalize borrowers who voluntarily give up their mortgage payments and default, even if they can afford it, because their home’s value has fallen below the amount they owe. at the bank. Fannie Mae, in an effort to deter these so-called “strategic flaws”? said it would prevent borrowers who have given up on getting “a new mortgage guaranteed by Fannie Mae for a period of seven years from the date of foreclosure.” Of course, the rules only apply to homeowners who have the capacity to pay and choose not to.
At the same time, in California, state lawmakers are debating a bill that would protect homeowners who strategically default on debt collectors. The California State Senate passed a bill earlier this month that would prevent lenders from seeking recourse for the borrower’s original mortgage amount. If the borrower subsequently refinances and takes money out of his equity in the home, the homeowner would be responsible for what he borrowed above the original loan amount. The legislation is still pending and has not yet been considered by the California State Assembly.
Although media reports have noted the increase in strategic defaults as the US real estate market tries to recover, the exact number of intentional home foreclosures is hard to come by. A Morgan Stanley analysis released in February estimated that these defects accounted for about 12% of all foreclosures in the United States.
Critics argue that the California bill prompts homeowners to step down. At Black Enterprise, we’ve indicated that it’s almost never a good idea to engage in a strategic default. (See “Don’t go away, Ã¢ â¬ ?? April 2010 issue) The repercussions are too strong.
John Simons is Editorial Director and Personal Finance Editor at Black Enterprise.