It's no wonder that we've seen Fannie and Freddie examine heavier penalties for simply walking away from a mortgage. The most recent housing statistics indicate that we may be in for a double-dip recession at worst and a very long, painful recovery at best.
The number of newly delinquent home loans has increased for the last two quarters. At the same time, the number of severely delinquent home loans has been on the decline. Some of this may be related to the fact that banks have already successfully foreclosed on those mortgages. Other observers also attribute the decline to the spike in home sales that were linked to the administration's home buyer tax credit. This allowed some people to get out of their mortgages via short sale.
Also interesting is that the number of properties facing foreclosure (4.5 million, nationally) is the same as the number of properties currently available for sale. As loan modification programs continue to under-perform based on expectations, many of those 4.5 million properties will ultimately go into inventory. Unless employment numbers improve, we may see even more mortgages ultimately go into foreclosure.
What this ultimately means is that as more home owners attempt a strategic default, they may have fewer options. Moreover, it may be a long time before they can obtain a mortgage, especially if they simply walk away from the property. The moral here is that borrowers seeking a strategic foreclosure need to focus on the deed in lieu and consent foreclosure options. These options carry smaller penalties and can protect you from a deficiency judgment.
As always, avoid debt workout companies that demand money in advance, and consult with an experienced attorney before taking steps that may put you in a worse position.
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