Fannie to disallow new loans to strategic defaulters
The bad-news: Fannie Mae reported today that they are establishing a new policy banning anyone who strategically defaults on their loan from obtaining a new Fannie Mae loan for seven years. Fannie Mae backs a large portion of residential mortgages in the US.
The really bad news: What exactly is a strategic default? Whether someone walking away from a mortgage/home is a strategic default depends on whether or not they are able to afford the loan. So who determines this? Now here is the really bad news: Your loan servicing company determines this. This means that Chase now has the power to threaten you with classifying your non-payment of your mortgage as a strategic default rather than due to hardship.
The good news: This Fannie Mae policy doesn’t really matter for a couple of reasons. First, if you default on a mortgage, it is not-likely that you would be able to obtain a new mortgage within seven years (when it goes off of your credit report) anyways. Second, at the rate they are going, Fannie Mae (and Freddie Mac) could be gone well before seven years comes around.
Don’t worry, be happy. With respect to your mortgage, make the decision which makes the most financial sense to you.
Foreclosure, Legal & regulatory | admin June 25, 2010
