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STOP STRATEGIC DEFAULTSFannie Mae announced today that they will make people who can make their payments and who do a strategic default will make them wait seven years before they are eligible for a Fannie Mae loan. It is estimated that there are 11 million homes across America who are under water. That means the home owner owes more on the mortgage than the current market value of the home. We are facing the worst real estate bubble in the history of this county. There were predictions that we could have up to 21 million households upside down in their house in three years. I believe Fannie Mae is taking an early position to make people think twice before they perform a strategic default.


This is when a home owner is walking away from their mortgage that they could pay but have decided not to because they owe more than their house is were worth at the current time. Home owners are not seeing any hope. So, their ideal suggestion is to give up and start all over.

Furthermore, Fannie Mae stated that they will pursue deficiency judgments in states that allow this by law. Please contact Harry D'Eliato learn more about your option in Arizona. Do you want to be on this list? Strategic defaults are continuing to rise because people have lost hope in the American Finance Machine. People on Wall Street continue to receive big bonuses at Christmas time and the American home owner is losing their home. Where is the balance? Who is monitoring Wall Street?

Fannie Mae will look at each hardship as it crosses it desk. A person with an acceptable hard ship or an approved short sale will only have to wait two years before obtaining a mortgage backed by Fannie Mae. Another option for home owners is to sign over their house in a "deed in lieu of foreclosure" to avoid a lengthy foreclosure process.

Statistics show that 7 out of 10 people who were foreclosed on their home did not seek a real estate professional for assistance. The Real Estate and Beyond Teamis here to serve the Phoenix, Arizona. We have professional lawyers, CPAs and tax attorneys waiting to assist you during your time of need. Would you like to know your options? If you cannot sleep at night, then please contact Harry D'Elia.

Harry D'Elia recently acquired another Realtor Designation-




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Re-Blogged 16 times:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 06/23/2010 11:40 AM
  2. Renée Donohue~Home Photography 06/23/2010 12:06 PM
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  15. Eric Villaverde 06/26/2010 01:41 PM
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Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Dennis:  Are you sure that was the case and did you confirm that with bank?  They DENY loan mods because people make too little.  It's like re-qualifying for a loan.

Jun 24, 2010 03:31 PM #140

WOW--So many great posts here. I personally know of a few people who are doing the strategic default thing and they know exactly what they are doing. They not only can afford the payments they could pay off the whole mortgage and not skip a beat--these a investment homes and it just interferes with their lifestyle and they don't want to do it anymore. I have no sympathy for these folks. Another one is trying to do a short sale on a rental, same good finances. Something missing here??--How can they do a short sale when there is no hardship, that's easy, just create one by hiding assets, not including income on the income statements, etc., They are working harder trying to commit fraud against the lender than they ever did in their working careers. As you can tell, I'm totally infuriated with people like this--OH--I forgot, it's all the bank's fault not theirs. It's about time for Fannie Mae--I say go after them.  I get so tired of interviewing prospective short sale sellers and them asking me how they can hide the money from the bank

Jun 24, 2010 06:24 PM #141
Mary Brown, New Castle, DE
If the banks had step and did the right thing people would not be in the situation that they are in now. If they had begin to refinance the loan and lowered the interest rate at the beginning When things started getting out of hand. They could have stop the bleeding. The CEO's of these banks need to be ashame of themselves when so many people are suffering because of their greed. Need to pray because it may get even worst before it's better. Unfortunately know one knows how long it will be before this housing market will really turn around and the prices of these home will start getting back where homeowners will see that it is profitable to keep their homes.
Jun 24, 2010 09:07 PM #142
Mari Armstrong
DiSalle Real Estate Co. - Toledo, OH

I am a Real Estate Agent AND a Property Manager for a large national company. Lately we've seen quite a few applicants coming to us that are going through foreclosure. I think many people who are in the midst of a foreclosure, whether strategic or otherwise, know that they can rent for as long as needed to "get back on their feet". Even though home ownership has always been looked at as "the American Dream", renting really isn't all that bad!  And, in our market, there are some great rental rates out there -- far less than a mortgage (and someone else will take care of the maintenance and repairs, saving them even more money!)

Jun 24, 2010 11:41 PM #143
Joni Gordon
Leisure American Realty/Jakus Realty Team - Fort Myers, FL

378 Bill,  I couldn't agree more.  I guess having moral integrity these days is considered "old fashioned values".  How sad.

Jun 25, 2010 12:02 AM #144
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

It seems we have some people against it and some people for it. We will see what happens over time.

Jun 25, 2010 02:19 AM #145
Peter Rozsa
Cupertino, CA - Cupertino, CA

Businesses are there to make a profit! Banks have to make a profit! YOU have to make a profit! If the Broker you work for does not make a profit from your split, then he's out of business and you'll find yourself looking for another broker! In other words, if your expenses are greater than your income, you're BROKE!

Profit is what drives this world, even the Communist Chinese discovered this decades ago. Without profit, any economy will collapse. Look at the socialist countries in Europe. They are all broke because they were driven by the whacko leftist socialists who thought they had a right to everything without working for it! Pretty soon when everyone takes and nobody gives, something has to break.

If you bought a car 5 years ago and borrowed $40k to purchase it, and today you got into an accident and totalled the car, and you didn't have collision insurance, would you quit making payments to the bank? The loan you got for the car has nothing to do with the value of the car! It was used as collateral in case you defaulted, they repossesed the car. Just because it's now worth less doesn't mean you stop making payments for the car loan.

The loan you made to buy the house has nothing to do with the value of the house and the contract you signed with the lender! The house is used as collateral, and if the house burns down and you have no insurance, you still owe the money you borrowed from the bank!

Everyone assumes the house and the loan are married. The loan is to you not to the house. You owe the money to the bank! It's your tough luck that it's now worth less than the balance of the loan!

Suppose you bought a house in 2003 for $250k and in 2006 the value increased to $500k. What would you do if the bank said now that the house is worth more than when you got the loan, we want you to increase the loan amount to maintain 80% equity. In other words, they want you to now owe the bank $400k. I think this is only fair, since when the value goes down, you want to pay less (loan mod).

If you buy stocks on margin and the value goes down, I've had margin calls often and if I couldn't come up with the extra cash, they automatically sold the stock. Maybe this would work also for real estate! If the value of the house goes down $50k, maybe the owner should be forced to come up with $50k cash to offset the value of the collateral. If the owner can't, the bank would sell the house to get their cash. At least the way it's structured now, they are letting you stay in the house.

Also everyone fogets that over time, most all real estate appreciates. If the borrower waits 5, 10, 15 years, the equity will return and they are still homeowners.

Also most everyone forgets why we are in this situation. Our fair minded government under both Clinton and Bush decided that everyone should have a house, whether they can afford it or not! They forced the banks to lend to people who obviously could not afford the payments. They created the "SISA" model: Stated Income, Stated Assets subprime loan. I sold many homes to contractors and people who had no jobs! The lender placed a finger on their wrist, and said you've got a pulse, you are now qualified for a $500k loan!

So don't blame the banks for this mess! They were forced (yes forced) to loan money to unqualified borrowers, or they would not get fed funds.

I think everyone knows how I feel about this situation. This is what happens when your government said: "Trust me, we're here to help you".


Jun 25, 2010 02:41 AM #146
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Hi Harry - I have written an article about strategic mortgage defaults over at my wordpress blog. I would love to have you drop by and post a comment:)

Jun 25, 2010 04:25 AM #147
Kurtis Kooiman
One cannot blame another for making important business decisions about an INVESTMENT that they made. The bank took a risk to lend and they said that should this risk not pay off, we will take back our collateral. This is not about ethics, as the banks would want you to believe people. It's not! They are just trying to scare you into not exercising your legal rights. Come on now! You're on big corporates side here?! Seriously??? Someday if you're faced with a decision to be made that will affect your income and assets for YEARS, trust me this, Tull walk away so fast your head will spin. Don't believe me? We will see.... Investments are business decisions, not emotional ones. If an investment isn't paying off, staying in them isn't just stupid, it's just plain ignorant. Good luck with that...
Jun 25, 2010 05:01 AM #148
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Is it ethical to walk away and give back the asset to the bank?

Jun 25, 2010 06:01 AM #149
Judy Orr
HomeSmart Realty Group - Orland Park, IL
SW & Near West Chicago suburbs

Kurtis (#149) - I agree that it's not an ethical decision - it is a personal business/financial decision to walk away even if you can afford payments.  I've received different answers to and don't know the truth about if you do this is in deficiency states, will they come back after you?  Is there a statute of limitations?  How long will strategic defaulters have to be looking over their shoulders?

Jun 25, 2010 07:50 AM #150
Eric Villaverde
DoubleTree Home Inspection Services L.L.C. - Phoenix, AZ

Thanks for another informative post this week. Have a great day.

Jun 26, 2010 01:42 PM #151
Elizabeth Baklaich
Virtual Assistant to Steve Baklaich RE/MAX Realty Source MN - Saint Cloud, MN

Harry, I started to read all the way through the comments but will have to come back later and finish. This is such a great post, very thought provoking!  The views expressed in this comment are mine and in no way reflect on anyone else, I take full responsibility for what I am about to type. 

I am bothered to my core by the term Strategic default, I think it is disgusting when people think that it is ok to have others cover for their decisions, if they can afford to pay then do it. They signed a contract, freely and without coercion, They made a deal, period, if it had worked out the other way would these same people be willing to give up all of their proceeds to others? NO, then they should not expect others to bail them out either. I am beyond repulsed at this kind of thinking and behavior, none of us is owed anything just because we are here. Work for it, and if you fail, then take the lesson and do not repeat it. Read a page from Hershey, yes the chocolate man, who failed several times and learned each time he did, and look at what he created through those lessons. 

What happens when this becomes socially acceptable? Should it be ok for me to go buy a new car, drive it for a year, then turn it in because it is not worth what I am now paying, NO!!! Morally wrong, ethically wrong, and it needs to remain socially WRONG! Do not make this ok, ever, it is not! Where is the pride of doing what is right? Where is the personal responsibility? Who raised these people? And why should I be forcibly put in a position of having to cover their failings of convenience?


Jun 29, 2010 05:19 AM #154
Francisco Garcia, Jr.
FG Real Estate - Scottsdale, AZ

For a minute Elizabeth I thought you were talking about the banks, but I guess it has become socially acceptable for the banks to be bailed out for mistakes in the "investments" or "contracts" they made? At least the CEO's got they package deals they deserved

Jun 29, 2010 06:11 AM #155
Elizabeth Baklaich
Virtual Assistant to Steve Baklaich RE/MAX Realty Source MN - Saint Cloud, MN

Hi Francisco, I was addressing the topic at hand on this thread. I could go on for days about the garbage with the banks, but I will be brief: I was calling my rep BEFORE  they even started to discuss the possibility of doing any of the "stimulus" packages telling her to say "NO!!!", (I knew it was coming down the line, and I do not believe that there should be bailouts of any kind, tear the band-aid off and be done.) I was writing, calling, emailing and getting others to do the same, my rep did vote no on all of these packages. Also I follow the Ludwig Von Mises Institute blog for economics, and if you want to really understand what went down I strongly suggest to anyone interested to read "Meltdown" By Thomas Woods :)

Jun 29, 2010 06:50 AM #156
Robert Toloy


How hard is it for a homeowner, hardship or not, to make a simple phone call to their lender and request a loan mod, if not qualified, a short sale, if not qualified for that either, a DIL request, if not qualified for that either, at least a good faith effort was initiated by the homeowner...isn't that what Fannie Mae wants?  A good faith effort to avoid a default? 

Now what will Fannie Mae do?  Insist the homeowner stay?  Wow...this is getting crazy. 

Jun 29, 2010 06:52 AM #157
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

People continue to comment on this post. It seems many people are disturbed about strategic bailouts. Keep adding your comments

Jun 29, 2010 08:50 AM #158
Chris Richter
Wintrust Mortgage - Chicago, IL

Why does this have to be a moral/ethical question?

That's certainly not how the underwriting engines are looking at it.  It's either a foreclosure event or a preforeclosure event and there is, increasingly, no distinction between the two.

The "hammer" for shorts/preforcelosure sales/deed in lieu, etc. is a matrix time vs. down payment. 

Short sales are 2, 4, or 7 years with 20%, 10% and less than 10% down payment, respectively.  And, realistically, those are going to tighten before any of today's defaulters are eligible again. 

I don't know the matrix for strategic defaulters yet, but there's no way that it will be less punitive than the short sale or preforeclosure matrix.   Seems like it takes the "strategic" right out of the default if it is a 30% down payment 7 years later and you get a rate that is 1.5% over market.

Jun 30, 2010 04:34 AM #159
Stephanie D'Elia
Real Estate and Beyond LLC - Tempe, AZ

I loved reading your post today when it comes to this issue. Have a great weeekend

Jul 16, 2010 02:02 AM #160
Cypress electrician

I am thoroughly convinced in this said post. I am currently searching for ways in which I could enhance my knowledge in this said topic you have posted here. It does help me a lot knowing that you have shared this information here freely. I love the way the people here interact and shared their opinions too. I would love to rack your future posts pertaining to the said topic we are able to read.

Jul 29, 2012 03:03 PM #161
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