FHFA should help pursue Fannie, Freddie strategic defaulters: Report

The Inspector General for the Federal Housing Finance Agency concludes that Fannie Mae and Freddie Mac would benefit from getting some help in pursuing those who walk away from their mortgage, despite their ability to pay.

In 2011, the recovery rate for the GSEs stood at 0.22%, which is equal to $4.7 million in clawed back losses. This is out of a potential pool of 35,321 deficiency accounts worth $2.1 billion.

This should be a concern for people that walked away from an underwater mortgage. Right now, the banks are giving financing for people that had a foreclosure after 3 years as long as they take a course with some government program. I don't know what the program is, but I have had a few buyers building a new home go through it. I sell for a builder, but do not handle the financing side of things, as that is the job of the lender. Many of these folks have already built new homes and are going on with their life unaware that the government is supporting pursuing them.

"Further, with 1.1 million seriously delinquent mortgages looming on the foreclosure horizon FHFA's timely guidance on deficiency management process may help the Enterprises recoup future losses and protect taxpayers' investment in their financial health," the report states..

This is something to keep aware of and warn anyone that is thinking of walking away from their underwater loan (house is worth less than what their mortgage is) that they could be pursued for the loss.

The Inspector General suggests the FHFA begin to routinely gather info related to deficiencies at the GSEs. After analyzing the data, the FHFA should then manage the deficiency collection process.

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I can see both sides of the coin and they did commit to the mortgage. The home value will regain some of what was lost in the financial disaster, but probably not to a level it was at when the market bubble burst.

Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases

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The Federal National Mortgage Association (FNMA; OTCQB: FNMA), commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It is a government-sponsored enterprise (GSE), though it has been a publicly traded company since 1968.[2] The corporation's purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS),[3] allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on thrifts.

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It would come as a rude awakening for someone that has purchased a home and struggling to make it in this economy and then be sued for the loss on the loan they walked away from with what to me sounds like government help pursuing these folks.

This is stupid. The bank loses nothing on a foreclosure. Infact they make more money that way unless you deliberately trash the house. And dont you remember all the foreclosures made in bad faith? the banks lie, wont accept payments, etc, to make you default.

This should cause an armed revolution.