and follow you for longer than you've been led to believe
Just today, there is an article on one of the local news stations website's, that briefly touches on the idea behind a Strategic Default on a home. Throughout the short story, the writer urges those considering a strategic default to seek advice and gives some names and comments from those that can help. We at Round Table Realty and myself, as a Certified Distressed Property Expert (CDPE), couldn't agree more.
(link no longer active)
Fannie Mae, which backs over 50% of the mortgages on the US, has begun the process of cracking down on those that choose to 'walk away' from their homes.
In a press release, Terence Edwards, executive vice president for credit portfolio management at Fannie Mae, said “Walking away from a mortgage is bad for borrowers and bad for communities, and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”
What this means for strategic defaults is that you may be cutting yourself off from the majority of available future home loans for at least 7 years. That is also counted as 7 years from the time of foreclosure and with the glacial pace banks are processing foreclosures, coupled with the length of time it takes to make it through Florida's courts, you could be looking at closer to 9 years from the time you decide to make this decision. That is an awfully long time to go without being able to acquire a mortgage for a future home, and that's not all.
Many people in the real-o-sphere are under the impression that banks will not go after people for deficiency judgments. This may be true in states that preclude it, however, Florida is not one of them. Without negotiating with your bank, in good faith, and getting them to agree to this stipulation, in writing, the banks have a long time period allowing them to come after you for any deficiencies (If you do not have a CDPE working with you to help you through this, you should). I also had a conversation with another real estate professional who said that the banks recognize that they cannot come after 'you' right now for the deficiency because of the environment but when the economy recovers, 'watch out.'
Well, it isn't just the banks who are making the decision about whether or not to sue for the deficiency, Fannie Mae is getting into the game as well:
In the press release, Fannie Mae, said it will also sue to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and make recommendations for strategic default cases that warrant the pursuit of deficiency judgments.
So before deciding to simply just walk away, you should seek the advice of a trained professional and you should get a CDPE by your side. Call Round Table Realty and ask for a CDPE and visit our CDPE information site (www.ShortSalesofJacksonville.com)