A Disturbing Trend in Real Estate

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Education & Training with Glasswork Media Arts

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.Foreclosure

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.

Foreclosure NoticeWhile 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.

If you find yourself in a foreclosure situation there are programs that can help. Feel free to contact GettysburgGerry for assistance.

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Rainmaker
249,104
David Monsour
ABR - www.realty-insights.com
Coldwell Banker Select Professionals

I wonder how the verbage in the note will hold up to some sort of persuit by Fannie Mae?  The trend is certainly not a good one, but it's seemingly the best option for some people.  I can think if a few scenarios where it would make a lot of sense (I don't agree with it but...).

July 19, 2010 06:55 PM
Rainmaker
863,369
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

I find also find it disturbing.  The minute you take your brand new car of the lot, you are upside down and that car is going to continue to go down in value to almost nothing.  A house is eventually going to come back up and that house presumably was bought for you to live in and make a home.  So what is the justification for jumping ship because for the time being it has lost some value?

July 19, 2010 11:05 PM
Rainmaker
484,596
Cal Yoder
Homes For Sale in Lancaster PA - 717.413.0744
Keller Williams Realty Lancaster

It is tough to understand. The question may be, "What is someone who needs to move for job or family responsibilities supposed to do?" I guess set up a payment plan with the lender or come up with the cash for settlement. Or if they turn it into a rental what will the response of the lender? to strategically default does not make sense to me, but individual situations may be a bit more complicated than it first appears.

Cal

July 20, 2010 08:01 AM
Rainmaker
770,483
Paula McDonald
RE/MAX The Woodlands, TX 936-203-0279
Chevaux Group, PLLC

Thanks for the clairification on this as I have not heard of it before.  How are you?

July 20, 2010 10:28 AM
Rainmaker
664,829
Will Nesbitt
Nesbitt Realty is a family-run brokerage.
Nesbitt Realty at Condo Alexandria

This always is a sad story. And we have been through so many like this.

July 21, 2010 03:33 AM
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Gerry Michaels

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