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St Louis Mortgage Lenders Say Industry Will Be Tough On Those Who Walk Away

By Floyd J. Tapia

New legislation coming from Capitol Hill will allow Fannie Mae to take legal action against mortgage owners who did not make their house payments although they were fully capable of making them.

The situation has imploded to the point that there may be more than 2.4 million foreclosures that will occur. And this doesn’t include the millions of homeowners who are upside down on their homes.

The real problem lies in the fact that these consumers are committing what is now called a strategic default. They feel that they are totally blameless even to the point of not having to workout some type of payment plan. Fannie Mae feels differently and will not allow these ones access to government funds for seven years.

There will be lawsuits filed against homeowners who have in essence committed lending fraud due to refusal of payments by many of these disgruntled lenders. Any court order or winning lawsuit will force the buyer to pay any unpaid amounts or balances that are left after the house is sold.

In the state of California, a bank or mortgage lender can only obtain a court ordered deficiency judgment if the home loan was used to refinance a home but not if it was used to fund a purchase.

And as regards the ability for future borrowers who have purposely defaulted on their current mortgage to attain another government-sponsored home loan?

Think about it for a moment: What if Fannie Mae took the stance that any government sponsored loans such as a FHA loan would not be available for ones who simply walked away from their home loan?

Especially if it can be proved that they engaged in a “strategic default” or the abandonment of their home to foreclosure not because the payments were unaffordable but because the home buyer became upside down on their St Louis loan. In other words, the mortgage loan is larger than the value of the residence.

How long will this borrower be in financial limbo? Well, according to Fannie, they would not buy or guarantee another home loan for these fraudsters for seven years.

The research firm CoreLogic interestingly points out based upon their recent data that homeowners will more often than not continue to pay on their mortgage even if their house value drops if they have the money and income to do so.

But borrowers on both a local and national level are more likely to walk away from their St Louis home mortgage loan when the home’s value is at least 25 percent less than the original home loan amount.

Just a few months ago in March, about 31 percent of foreclosures were described as strategic walkaways by the borrowers themselves which was compared to only 22 percent in March of 2009.

However, many are now questioning why it took so long for Fannie Mae to make these debtors finally owe up to their financial responsibilities?

The period or time frame that one should be blacklisted for is being debated by consumers all over the nation. Some feel that seven years is no where near the allotted time for punishment and others feel it is just too much.

The problem seems to have gotten totally out of hand when the fundamental idea of buying a home to live in now became simply, an investment.

Thus, it is probably time that these greedy homeowners who thought nothing at the moment of refinancing their homes to the hill should be held accountable and taught a valuable lesson that one’s home is for living in and not for entertainment or investment purposes.

But the losses may continue to mount for these homeowners. Fannie Mae plans on taking additional legal action by seeking deficiency judgments from these ones who walked away from their home loan payments.

Many are now considering why the current Administration seems to be sweeping this issue under the political carpet as if this is not a serious problem when in reality it is of huge importance especially since Fannie Mae has taken such a strong stand against these homeowners.

Visit this website to learn more about St Louis mortgage refinancing loans. Stop by Floyd J. Tapia’s site where you can find out all about St Louis finance and what it can do for you. We invite you to call us at 877-334-0210 or 314-334-0210.

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Article Citation
MLA Style Citation:
Tapia, Floyd J. "St Louis Mortgage Lenders Say Industry Will Be Tough On Those Who Walk Away." St Louis Mortgage Lenders Say Industry Will Be Tough On Those Who Walk Away. 26 Aug. 2010. 24 Aug 2015 <>.

APA Style Citation:
Tapia, F (2010, August 26). St Louis Mortgage Lenders Say Industry Will Be Tough On Those Who Walk Away. Retrieved August 24, 2015, from

Chicago Style Citation:
Tapia, Floyd J. "St Louis Mortgage Lenders Say Industry Will Be Tough On Those Who Walk Away"

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