More people who find themselves unable to make the mortgage are deciding to walk away. They simply stop paying the mortgage, live there for a few months and then when the lender begins to start legal proceedings mail the keys bank and leave.
Not a good idea at all. In March, Fannie Mae responded to this growing stroy by issueing new guidelines to lenders. Applicable to all walk aways and foreclosures. Owners who have walked away or foreclosed will not be able to borrow from Fannie Mae for 5 years. After that, they will need a 10% down and a FICO of 680 or better.
No says Freddie Mac.
They view walk aways as severely as bankruptcies and will hinder you from getting credit cards, auto loans for 7 years. If you are thinking of walking away, they will chase you. In some cases pursuing legal action to be sure that preserve their deficiency rights. In some states its legal for the lender to sue for the difference between the loan and the foreclosed price. In California, powerful anti-judgment protection for borrowers, what happens to the loan that the lender made? In short, the lender takes a loss on the loan, and the borrower, while immune from lawsuit, gets a very serious negative mark on his or her credit.
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Your Property PathSF
A blog focused on trade talk for owners and managers of San Francisco property
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