First let me explain what a strategic defaulter is. A strategic defaulter is typically an "underwater" home owner who has walked away from a mortgage commitment while still having the ability to pay. The housing market has been inundated with foreclosures over the last few years, but credit repository Experian has estimated that 20% of those foreclosures were the result of walk-aways (or Strategic Defaulters). Well now it is payback time! The Office of the Inspector General at the Federal Finance Housing agency is cracking down and taking action against these so called "strategic defaulters" by seeking them out and collecting on what they still owe. The Office of the Inspector General assumes that there is nearly $1 Billion owed to Fannie Mae and Freddie Mac and it needs to be collected.
If that is not bad enough news for any strategic defaulter, there is more! Not only are they being sought out for the money that they owe, but anyone who is a strategic defaulter and did not mention that fact on any mortgages applications after they walked away will be considered to have made MORTGAGE FRAUD. The Office of the Inspector General intends on referring these individuals for criminal prosecution. "We are working with Fannie and Freddie to build a mechanism" to identify strategic defaulters, Wolfe said at a recent mortgage industry conference. So if you walked away from one property and bought another, chances are fairly good that the OIG is going to find you.
"We're not just going to demanf repayment," says Heather Wolfe, OIG assistant inspector general for audits. "We're going to lock [people] up."
*source: Chicago Tribune
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