New legislation may be coming from Capitol Hill which will allow Fannie Mae to take legal action against mortgage owners who refused to make their house payments although they were fully capable of doing so.
The amount of foreclosures that was projected to occur in 2010 would be at least 2.6 million. What is worse is that approximately 11 million owners are severely underwater as far as their homes are worth according to mortgage lending experts.
The real problem lies in the fact that these consumers are committing what is now called a strategic default. They feel that they are totally blameless even to the point of not having to workout some type of payment plan.
Fannie Mae feels differently about these homeowner walk-aways and will may allow these ones access to government funds for up to seven years.
There will be lawsuits filed against homeowners who have in essence committed lending fraud due to refusal of payments by a majority of these disgruntled lenders.
Any court order or winning lawsuit will force the buyer to pay any unpaid amounts or balances that are left after the house is sold.
But as expected, there will be limitations as in California. A lender will only get a court order for a deficiency judgment on a home used for refinancing but not as a purchase loan.
But what about the possibility of these homeowners who knowingly defaulted on their mortgage loan not being able to attain government sponsored loans in the future?
Sit back and think about the mortgage atmosphere when and if Fannie Mae rigidly upholds this new policy and eventually says no to every homeowner who needed a FHA home loan but would not qualify due to refusing to pay their past mortgage obligations.
Even politicians are outraged at what is being called a "strategic default" or the abandonment of a home to foreclosure and not because the payments were unaffordable.
The main reason for these defaults is because the home buyer became upside down on their home loan. In other words, the mortgage loan is larger than the value of the residence.
How long will this penalized borrower be in financial limbo? Well, according to Fannie, they would not buy or guarantee another home loan for these fraudsters for seven years.
The decision on whether a homeowner will continue to pay on a house where its value is now below what the loan amount is depends on how much the house is upside down.
However, if the home value falls more than 25 percent under the current home loan amount, more and more consumers are simply walking away or committing a strategic default on their home mortgage loan. And this is happening on a national basis.
March 2010 saw about 31 percent of foreclosures as strategic walk-aways which was compared to only 22 percent in March 2009.
However, many are now questioning why it took so long for Fannie Mae to initiate such a plan to make these debtors finally owe up to their financial responsibilities.
And then there are the hardliners who feel this housing punishment should last longer than seven years. Why? Because they feel the mortgage collapse was a direct result of these irresponsible home buyers in addition to the less than stellar lending requirements.
But what many experts are saying is that there was a sharp rise in this conscious trend for individuals who no longer viewed their house as a home but instead saw it as an investment or cash cow.
Thus, it is probably time that these greedy homeowners who thought nothing of refinancing their homes to the hill should be held accountable and taught a valuable lesson that one's home is for living in and not for entertainment or investment purposes.
But the losses may continue to mount for these homeowners. Fannie Mae plans on taking additional legal action by seeking deficiency judgments from these ones who walked away from their home loan payments.
But many ask: If the mortgage walk-away issue is big enough for Fannie Mae to get this tough, why is the Administration still trying to convince the American people that this immoral stance is not a big deal when in reality it is of panoramic proportions? Only time will tell.
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