St Louis Mortgage Refinancing Loans May Not Be Available For Walk Aways
Fannie Mae may be given legal rights to sue to the fullest extent of the law those
who have blatantly refused to pay their home loans when in actuality they had the money to do so.
Statistics show that approximately 2.5 million foreclosures occur each year. And at this moment, about 11 million households owe more on their home loan than what their house is worth.
The term strategic default has come about as a direct result of these consumers refusing to pay their home loan mortgage and not wanting to seek alternative options due to their situation. The final surprise will be on these home buyers because Fannie Mae plans are not funding these people for at least seven years.
In addition, many of the lenders who have been victims to this reckless behavior are seeking what legal experts call deficiency judgments. This is a court order requiring a borrower who has defaulted on their mortgage to pay any unpaid portion of the home loan after a foreclosed or seized 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.
And as regards the ability for future borrowers who have purposely defaulted on their current mortgage to attain another government-sponsored home loan?
Well, let's just say for the moment that Fannie Mae made it clear in no uncertain terms that a new home loan such as a FHA loan would be extremely difficult for these "black-listed" ones to obtain.
Of course this would be the end result once it was proved that the homeowner refused to pay their home loan all because they were upside down on the value and that it wasn't due to being unemployed.
So how long could one be banned from doing business with Fannie Mae? Well at this point, Fannie would no longer buy or guarantee a home loan for about seven years.
Further data from the research firm CoreLogic shows that consumers who are slightly underwater or owe a little more than their homes are worth will most likely continue to pay their mortgages if they have the resources.
But borrowers on both a local and national level are more likely to walk away from their St Louis home mortgage loan when the home's value is at least 25 percent less than the original home loan amount.
If we go back to the month of March, about 31 percent of foreclosures were described as strategic walkaways which was compared to only 22 percent in March of 2009.
However, many are now questioning why it took so long for Fannie Mae to make these debtors finally owe up to their financial responsibilities?
And why should this ineligibility only last seven years? Should we not throw the proverbial book at these irresponsible fools who in essence helped cause the greatest collapse in the housing industry since the Great Depression?
The real problem started when homeowners began treating their house as an investment or A.T.M. instead of their family's home.
As a struggling nation trying to get back its financial strength, many experts are calling for the use of common sense and thus get back to the traditional viewpoint that a house is a home to live in and not our own personal A.T.M.
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 one has to ask: "If the mortgage walk-away issue is big enough for Fannie Mae to get this tough, then why is the Administration still trying to convince the American people that it's just not that big of a deal when in reality it is of panoramic proportions?" Only time will tell.
by: Floyd J. Tapia.
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