A Disturbing Trend in Real Estate
I have been reading more and more about a trend in real estate that I find extremely disturbing. Strategic defaults are on the rise, and that is not a good thing. Just the fact that the practice has been given a name which now makes a quantifiable index scares the heck out of me. First lets define what a strategic defaults is, by definition a strategic defaulter is someone who has missed 6 months or more of mortgage payments, but has not missed any payments on other loans.
This has the potential to adversely affect a slowly recovering real estate market. Fannie Mae has been working on making strategic default a serious offense. The mortgage giant has threatened to legally pursue any borrowers who walk away from their loan when they had the means to continue paying. Borrowers will need to prove that they suffered hardship and could no longer make payments loan, without proving that borrowers will have wait an additional 2 more years on top of the 5 already in place before they would be able to apply for another loan.
While I understand that some people are upside down on their mortgages, I understand that some people have suffered a catastrophic medical or work issue which in turn affects their ability to pay their mortgage. Those are not the people who I am talking about however, I am talking about the people who are using this method of strategic default as a bonafied financial practice.
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