Get a load of this crap…
From Freddie Mac’s “blog”
A Perspective on Strategic Defaults
Some excerpts…
As the mortgage industry works through a large volume of loan delinquencies, a new and growing concern has emerged: strategic defaults. In other words, borrowers who have the financial means to make monthly mortgage payments, but choose not to do so and, instead, purposely default on their loan.
Knowing the costs and factoring in the time horizon, some borrowers have made the calculation that it is better to purposely default on the mortgage. While I understand how that might well be a good decision for certain borrowers, that doesn’t make it good social policy. That’s because strategic defaults affect many other families and communities. And these costs – or as they are known in economic jargon, externalities – are not factored into the individual borrower’s calculations.
Let’s start with the neighbors. When strategic defaults occur, homes go into foreclosure and sit vacant for some period of time. We know from experience that foreclosures and vacancies drive down the property values of everyone else in the neighborhood. Thus, strategic defaulters, in effect, deplete the personal wealth of their neighbors.
more strategic defaults could tip a fragile housing market back into one of further price declines. Even more families harmed.
The likely impact on future homebuyers: the cost of a mortgage will go up and credit terms will be less flexible. Thus, the impact of strategic defaulters on still more families might be more expensive mortgages and loans that are more difficult to obtain.
In the end, borrowers considering a strategic default should recognize the damaging impact their actions can have on others. While a personal financial strategy might argue for a strategic default, entire communities and future homebuyers can be harmed as a result.
But, wasn’t WAMU, Countrywide, IndyMac, etc, strategic defaulters too? It seemed OK for them….. and the Supreme Court just recently ruled that a Corporation and a person have the same rights, right?
Hey Don,
Just wanted to comment on your comment in regards to people that walking away and how it effects the neighborhood and community. It’s ok when you come in or your company and take peoples homes. A lot of times illegally with blatant fraud from the originator on down to the appraiser, Title companies and wall street the biggest pirates of the whole scheme. That ok with thge option arm products and you guys also had stated income loans in which brought people to forclosure.I did not see your comments on that and anything that you guys did that helped a lot of people but you guys took a huge amount of bailout money to bail yourselves out. Who paid that?Did not hear you mention it in your poor me article.
http://www.homesteps.com
I’d like to hear Freddie Mac acknowledge the “damaging impact THEIR actions can have on others” The spread of distressed properties to those that have struggled to keep up with their obligations until this point is partly due to the fact that banks and agencies failed in their initial response to the real estate crisis. Stalling short sale approvals and harassing homeowners is what has left properties abandoned and hurt communities. We are so past passing judgment on hard working homeowners that need to make hard decisions as a result of this market. It is never an easy or voluntary decision to default on a mortgage. It is a smart and responsible decision to face the reality of the true real estate crisis and protect whatever can be maintained of a family’s financial security. I have seen too many families rack up all their credit cards, deplete all their reserves (sometimes even Retirement Savings!) and forgo spending money on needed health care among other necessities because they were shamed into keeping up with their mortgage payments at all costs. That is the true immoral act. It’s egregious and border line illegal to make distressed homeowners believe that they should continue to deteriorate their financial resources until they inevitably cannot continue and end up in foreclosure irregardless. “Strategic Default” is one of the buzz terms of the propaganda that is misleading homeowners. Because of the banks efforts that work against any real solutions for distressed homeowners, the crisis continues and escalates to new homeowners every day. Just because it “seems” that someone can continue to pay their mortgage doesn’t mean that they are not in distress or soon to be facing escalating hardships. This whole line of reasoning is misleading and causes more harm.
Now they’re worried about “social policy”?
They want to set some good social policy, then head a national moratorium on all foreclosures until the regulatory and criminal investigations result in indictments and the criminals are not rewarded for their misdeeds and wrongs perpetrated upon society.
ForeclosureHamlet.org