Thursday, October 17, 2013
The Chicago Tribune runs a story indicating that Freddie Mac and Fannie Mae will start pursing foreclosure deficiency judgements more aggressively:
Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That's called a strategic default, and many borrowers are taking that step — typically throwing in the towel because their homes are no longer worth as much as they owe.
But when their homes are sold at foreclosure and the proceeds are not enough to cover their outstanding loan balances, it creates a deficiency for which many defaulters either don't realize they are liable or don't care.
To date, the two government-sponsored enterprises, which are now highly profitable after five years of running in the red, haven't done a particularly good job at pursuing deficiency judgments, according to scathing reports from the Office of the Inspector General at the Federal Housing Finance Agency. But the agency says it is going to make the enterprises clean up their acts. And that should serve as fair warning to those who can pay but fail to do so.