It seems that Fannie Mae is ready to crack down on homeowners who have decided that strategic default was the way to go. If you ask a Boston real estate lawyer, strategic default is when a homeowner can pay the mortgage on a home but the homeowner decides to walk away from the mortgage anyway.
The new Fannie Mae policy against strategic default includes block out period of seven years from the date of foreclosure for a new Fannie Mae backed mortgage loan. Even then, Fannie Mae did concede that some borrowers who have extenuating circumstances may be eligible for a loan sooner rather than later.
It is all in hopes that homeowners have an open dialogue with Fannie Mae before it comes to actually doing a strategic default. Terence Edwards, executive vice president for credit portfolio management stated, "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."
It seems like more Boston homeowners will get the advice not to strategically default on their homes from their Boston real estate lawyer. In fact, Scott Van Voorhis from the Boston Globe calls strategic default, "reckless and selfish behavior" that "burns" him up. It seems like this behavior has hit its peak so far. Approximately 20 percent of foreclosed homes are due to strategic default.
Another incentive that a Boston real estate lawyer may give you to avoid strategic default comes from a threat of Fannie Mae taking defaulters to court in order to recoup the outstanding mortgage debt.
So before you think about strategic default, talk to a Boston real estate attorney today about foreclosure alternatives such as deeds in lieu, loan modifications, or even a short sale.
- Strategic Foreclosure: Just Walk Away? (FindLaw's Boston Real Estate Law News Blog)
- Considering A Short Sale? Deeds In Lieu Are An Option Too (FindLaw's Boston Real Estate Law News Blog)
- Find A Boston Real Estate Lawyer (FindLaw)