THINK TWICE BEFORE YOU MAKE A "STRATEGIC DEFAULT"
Over the past year, I've noticed a trend of homeowners who are simply choosing to walk away from their home. When I speak with homeowners they sometimes feel that they don't have any other choice but to default and walk away. They feel hopeless and frequently don't seek guidance from a professional to explore their options. Often, they simply give up, walk away, and start over.
Homeowners need to think twice before they make the decision to walk away from their loan obligations. Fannie Mae (FNMA) has announced new guidelines making it more difficult for homeowners to strategically default. Defaulting home owners who have the ability to make their payments, or did not contact their lender to pursue alternatives, will be ineligible for a new FNMA-backed loan for a period of 7 years from the date of foreclosure.
CLICK HERE for Fannie Mae's Selling Guide Announcement.
WHAT IS A STRATEGIC DEFAULT?
A strategic default is when a homeowner chooses to walk away from their mortgage when they have the ability to pay. Typically, their mortgage is higher than the market value and the homeowner feels their options are limited. Homeowners who walk away realize they are damaging their credit records, but are making a calculated decision that sticking it out over the long-term would be worse.
If FNMA determines that you have an acceptable hardship resulting in a short sale, you will only have to wait 2 years before obtaining a mortgage backed by FNMA. Another possibility is "deed in lieu of foreclosure" whereby the homeowner signs over their house to the lender vs. property foreclosure.
For a more detailed explanation of the new guidelines CLICK HERE.
Integrity Residential Brokerage, licensed in both Massachusetts and New Hampshire, would be happy to assist you in your home buying or home selling needs. If you, or anyone you know, is considering buying or selling a property, Integrity Residential Brokerage located in Pepperell, MA, would love to hear from you! We strive to offer you the highest level of professional assistance possible making your desires and goals a reality.
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Catherine Condon, Broker MA & NH