Articles Discuss Short Sale Procedures And New Fannie Mae/FHA Policies Toward Strategic Mortgage Foreclosures
Two articles in the news this week are interesting for people trying to get out of mortgages.on upside down real estate. The first article published online on marketwatch.com addressed people's frustration with the long time it takes to get short sales approved. The article stated that lenders require extensive time in short sale applications to, among other things, verify property value and make sure that proposed short sale is between unrelated, arms-length parties.
The second article in July 19, 2010,USA Today reported that Fannie Mae and FHA were trying to crack down on mortgage defaults by people who financially could afford the mortgage payments- the so-called "strategic defaults." The article did not say that these agencies were now actively pursuing deficiency judgments, as many people publically speculated would happen, but the article did report that Fannie Mae and FHA would be denying new mortgages for many years to anyone who strategically defaulted on a prior mortgage insured by these agencies. The article stated that Congress was about to pass legislation that barred future FHA mortgages to people who were foreclosed when they had the ability to pay.
In my opinion, these policies are reasonable but difficult to apply fairly in the future when someone who previously went through foreclosure applies for a mortgage on a new home. The underwriter will have to investigate the applicant's financial situation many years ago when the foreclosure took place. It may be hard for the applicant to prove financial hardship years after documents may have been lost or destroyed. Most of my clients who consider mortgage defaults accept that future mortgage applications will be difficult. They are more concerned about their current financial difficulty and prospective deficiency claims. I do not think that threats of future financing problems will deter many people considering strategic defaults.
