Where is Chicago's Real Estate Market heading?
Currently, Fannie Mae is cracking down on strategic defaults/foreclosures.
Q: What is a Strategic Default/foreclosure?
Answer: When the homeowner simply walks away from their mortgage obligation when in fact they can make the mortgage payment. Granted, the homeowner may owe up to their eyeballs in credit cars, car payments, etc., but the first obligation is the mortgage payment. The other items are considered luxuries.
Q. Why would a homeowner even consider a strategic default?
Answer: The value of their home has dropped substantially below what they may owe on their mortgage. The general feeling today amongst those who walk away from their homes, their mortgage commitment is because they feel it will take a ton of years before they will ever see that equity again.
Fannie Mae has and is implementing measures that will lockout those who use the strategic default/foreclosure process from being able to buy within the next 7 years. Your credit will be tarnished ... okay, basically ruined and it won't be easy to get it back up to accountability or accreditability with any bank because you simply just gave up the ship ("the house") because you didn't want to make a commitment and follow through on your obligation within the guidelines of your mortgage and/or better, the note.
Those homeowners who walk away, who had the ability to pay the mortgage or did not complete a workout alternative will be ineligible for a new Fannie Mae backed mortgage loan for a period of seven years from the date of foreclosure.
Currently, over 15 states right now, including Illinois have put a stopped to the foreclosure process because of unverified information from the Loss Mitigators or Loan Servicers not performing their jobs like they should. At the same time, the Federal Government has allowed a $1,500 Bounty offered to any real estate agent who can right an offer on a REO/Bank owned property after September 23, 2010 and that closes within 60 days of the accepted offer but closes before December 31, 2010. Not bad, yet, the problem is that the title companies are concerned with underwriting guidelines and potential lawsuits because of possible failure to follow procedure by the Loss Mitigators or Loan Servicers and hence, will there be a "marketable title" to those foreclosures?
It just seems to me that that are better alternatives then walking away from a mortgage or allowing foreclosure. An incentive that the U.S. Government is giving the home seller is a $3,000 relocation credit at closing or within 5 days after closing if they sell their home as a Short Sale or Deed in Lieu of Foreclosure. However, most will require that the homeowner attempt the short sale and show that they made effort to sell before the bank will accept a Deed in Lieu of Foreclosure.
There is a huge amount of homeowners out there that are in default, thinking about defaulting because of the monthly commitments that lay ahead or the homeowners who are current on their mortgages but owe more then their home is worth. I think the marital commitment and 50% divorce rate is flowing into the mortgage arena. What do you think?
I think we need to get back to basic values.
Comments(0)