Reflections

If You Can Pay But Walk Away, Fannie Mae Will Follow

Posted by on Jun 24, 2010 | 11 Comments

Fannie Mae is going to go after homeowners who walk away from their home loans if they have the ability to pay what they owe. The government controlled agency that needed to a massive bailout using our tax dollars now wants to go after the delinquent borrowers who simply do not want to play the game of Monopoly now that housing prices have fallen.

An article in the L.A. Times states:

Fannie Mae’s get-tough policy on so-called walkaways is the latest fallout from the housing meltdown, which has eroded the once widely held belief in homeownership as the path to household wealth.

Foreclosures continue at a rate of 2.5 million a year, Federal Deposit Insurance Corp. Chairwoman Sheila Bair said, and some 11 million households owe more on their mortgage than their home is worth.

Fannie Mae’s new policies are designed to prod borrowers into pursuing alternatives to foreclosure, including short sales — transactions in which lenders allow a home to be sold and cancel the debt while accepting less than full payoff of the mortgage.

But should Fannie Mae be allowed to go after those who walk away?

What do you think?

Comments welcome.

Source – LA Times

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  • krazdkiller

    i for one am not going to feel sorry for these home owners. there are as many who took out loans know they could not afford them as there are who got tricked into taking out loans they really could not afford. the ones that have the ability to pay should be gone after. they after all are as guilty as the banks and wall street for the housing market collapse.

    • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

      Don’t forget the Feds for bailing out all of these idiots!

  • D

    How about needing to find an additional way of paying those bonuses. Heaven forbid the executives don’t get their millions for doing nothing but having their name listed.

  • Bob Smith

    Not everyone who walks away is an idiot. I for one walked away from my house… No I could not afford it, but at the time when I bought it I could afford it just fine. Things happen in your life where you are not where you were financially when you make commitments.

    If Fannie Mae goes after these people, the next big statistic you see will be the bankruptcy rate increasing. Because that would be my only option, and I am sure others feel the same way.

    • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

      Hi Bob,
      I sincerely hope that you did not take my ‘idiot’ statement to reflect on borrowers. I was referring to Fannie Mae.
      Like yourself, I have family and friends who have lost their homes dues to job loss or illness.

      Another thought. This may be just a scare tactic to slow down those who are considering walking away.

  • http://cymonsgames.com Joe Larson

    I think Fannie Mae should be allowed to pursue those who can’t afford to pay. But if they do the government should go after them for the bail-out money. Tax them into non-existance.

  • http://www.linkedin.com/in/hawks5999 hawks5999

    krazdkiller, you are missing a key point here called “contract law”. A mortgage is a no recourse loan in most states meaning that if I don’t pay the loan then the bank can and only can take the collateral for the loan – in this case the house. The bank gave out the loans knowing they could only recoup the collateral but also knowing that they would slice and dice and sell off the loan through their derivative CDO’s. FNMA is trying to trample contract law through this action and there should be an outcry from people about a federal agency trying to override contracts legal in the several states.

  • Cliffystones

    Like others have commented, I have mixed feelings as well. I would like to squeeze more cash out of those who could full well afford the payments but simply chose not to. And for those who fell on hard times, they should be off the hook.

    What really teed me off was those rebate programs for new home buyers the the Feds set up. How about rebates for those of us who live within our means, always file and pay our taxes, and otherwise don’t burden the system? Gee, what a novel idea!

  • Ryan Thompson

    At least we won’t be homeless!

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