'Mortgage Cops' Target Strategic Defaulters
The Office of the Inspector General at the Federal Housing Finance Agency is trying to find strategic defaulters and collect on what they still owe. Strategic defaulters are often underwater home owners who walk away from their mortgages even though they still have the means to pay.
Experian has estimated that 20 percent of all foreclosures are from startegic defaulters. The OIG estimates that strategic defaulters owe more than $1 billion to Fannie Mae and Freddie Mac, and they’re ready to start collecting.
The OIG is reportedly working with Fannie Mae and Freddie Mac to develop a mechanism for identifying strategic defaulters.
"Debts that haven't been repaid don't just go away," an unnamed Treasury Department official told The Chicago Tribune. "It doesn't matter whether it's on your credit report or not."
The OIG has an even harsher warning for strategic defaulters who have failed to disclose that they walked away from a previous loan on any new loan applications. The OIG says such walkaways have constituted mortgage fraud, and the OIG plans to refer them for criminal prosecution.
"We're not just going to demand repayment," says Heather Wolfe, OIG assistant inspector general for audits. "We're going to lock [people] up."
Source: “Mortgage Cops Taking Tough Stance,” The Chicago Tribune (Sept. 16, 2012)
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