Fannie Mae to Charge Strategic Defaulters, for Everything

Okay, Fannie. So we get to clawback all of that undeserved executive compensation, right? And we can sue any shareholders who profited from the taxpayer funded bailouts?

Fannie Mae to Charge Strategic Defaulters, for Everything
http://www.housingwire.com/2010/06/25/fannie-mae-to-charge-strategic-defaulters-for-everything?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29&utm_content=Google+Reader">Housing Wire

Fannie Mae (FNM: 0.3871 +1.87%) is sifting through borrower data to determine who is strategically defaulting and who is not after announcing more efforts this week to crack down on those who walk away from their homes. And if the GSE 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 GSE said. 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.

Those who Fannie Mae and its servicers deem strategically defaulted will not be able to secure a Fannie Mae-backed mortgage for seven years after the foreclosure and could face legal action in order for the company to recoup mortgage debt.

Fannie will base its assessment of who is and who isn’t walking away from their home on income verification, information on the borrower’s credit report, and borrower documentation related to the disposition of prior mortgage loans, the spokesperson for Fannie said.

http://www.housingwire.com/2010/06/25/fannie-mae-to-charge-strategic-defaulters-for-everything?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29&utm_content=Google+Reader">more...

:sarcasm:

Let Fannie Mae go out of business.
It is not as they or the other monsters (AIG/Morgan/Cit/BoA/GS) are serving and good purpose.

I don't think they or any other banks should've been bailed out initially.

When Lehman and Bear Stearns fell, I saw this as a badly needed corrective measure. After those two fell, Citi/BoA/AIG/GS/Morgan would all falter and the bad debts would have been brought down to their real value, $0! The only error was that the corrupt elected official stepped in to help their campaign donors/future employers.

and why it's a big deal for all of us to keep them there. While I think they need to be nationalized to get the speculative banker bums out and kept under close watch by the GAO, eliminating them is not the answer and will end the possibility of home ownership in this country for all but the super rich.

Don't like seeing your house lose value? Kill the mortgage banks Fannie and Freddie and see it go for five cents on the dollar that you paid.

Personally, I'm all for going after spoiled yuppies who are defaulting because their mortgages are temporarily under water and not because they are unemployed, ill, injured, or widowed. It's a stupid and selfish strategy and should never be rewarded by letting them get away with it.

the true cost of housing is 95% lower, yet, you want to keep them in place?

and you need to read something besides the libertarian rubbish out there.

Those folks are lying to you.

Wiki has a good discussion of what Fannie Mae actually accomplished when it was set up and why it's important to keep it there. Start there.

You said that without Fannie and Freddie, home prices would collapse to 5% of their current value.

"strategic defaulters"?

:shrug:

they spell out the consequences. What is in a mortgage contract to prevent someone from defaulting, declaring bankruptcy, or whatever if they're underwater?

If Fannie can't handle people walking away from their loans and taking the legal consequences, then Fannie simply made mistakes and should have chosen their loans, contracts, or terms differently.

I've never had a mortgage, so maybe I don't understand about how this works.

has a contractual obligation to make the payments. Just because the house is held as collateral doesn't mean it's a fair trade to default on the loan. Some loans, after all, have no collateral.

Bankruptcy was created to protect people who can't pay their creditors. Strategic defaultors have no such protection and deserve none.

Fannie Mae, actually, doesn't make any loans. They only purchase mortgages written by other companies, which gives them only indirect influence on the individual mortgages.

The language of "fair", "deserve", etc., sounds like people have some sort of moral obligation to help their creditors.

But when the big corporations run numbers to see if they should default on a loan, they are not thinking of such things. Only, "Will this make our executives richer in the long run."

So if homeowners are expected to be more ethical than their creditors, they're always going to get screwed, on average, in the long run.

Anyway, I know I don't understand the issue with these mortgages, but I'm hoping that Fannie isn't mailing out "What would Jesus do" bracelets to their loan-holders.