FNMA’s Stiff New Strategic Default Penalty
June 30, 2010 by Tom Schieber
Filed under Blog, Featured Posts, Foreclosures, Short Sales
I wrote a couple of weeks ago that stiffer penalties were coming for borrowers who participated in a “strategic default” – now FNMA has made it official.
Fannie Mae recently announced policy changes designed to encourage borrowers to work with their loan servicers and pursue alternatives to foreclosure. Under the new policies, borrowers who strategically default on their home loan despite having the capacity to pay and those who do not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.
Fannie Mae also will take legal action 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, Fannie Mae will instruct its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years or in as little as two years depending on the circumstances.
Contact me directly for information on the federal government’s HAMP (Home Affordable Modification Program) loan modification/home retention or HAFA (Home Affordable Foreclosure Alternatives) foreclosure alternatives including expedited HAFA Short Sales and DIL options.
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