
photo credit: The-Lane-Team
REALTOR® magazine reports that Fannie Mae is going after homeowners who choose “strategic defaults”. A strategic default is one in which the homeowner is able to pay but decides not to. Usually this is due to them being “underwater” (the value of the home dropped below the amount of the mortgage). In some cases the owner decides to just walk away and let the bank have it back.
Homeowners who choose such a move will be ineligible for a Fannie Mae backed loan for the following 7 years. The fact that Fannie Mae backs about 75% of the loans originated means that you could be blocked from buying if you walk away from your home just because its value dropped.
Furthermore, in states they are allowed, Fannie Mae is going to seek deficiency judgments against homeowners who walk away. I read a recent blog about a REALTOR’s® client who did a strategic default and ended up having to rent a house in the same neighborhood for more than their house payment was in the beginning.
If you are one of the thousands of people underwater in your home, think twice before you decide to walk away. It may not be as simple a decision as you believe.

