'Mortgage Cops' Target Strategic Defaulters

DAILY REAL ESTATE NEWS | MONDAY, SEPTEMBER 17, 2012

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)

The Market Gets Competitive for Home Buyers

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 13, 2012

More home buyers are finding they’re losing their power position in the real estate market and that when they submit an offer for a home, they may not be alone in the bidding. In fact, buyers who submit low offers may not even get a courtesy of a callback nowadays. 

One Florida couple says they put in seven offers on homes over two months — most at or above asking price — before they were finally able to get a $365,000 Sarasota home. 

A drop in the inventory of for-sale homes around the country is prompting more competition among home buyers. Inventory in June is 24 percent below year-ago levels. 

"I've had listings get 45 offers," Sin-Yi Chao Lambertson, a real estate broker in Glendora, Calif., told Money Magazine. 

Money Magazine recently offered potential buyers the following tips if they want to get the winning bid on a home: 

Interest Rates

If you are waiting to refinance, it may be time to make your move. Rates are moving up-and could stay higher for a while, experts say. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage climbed to 4.08% for the week of March 22, up from the record low of 3.87% it hit in February. Rates on 15-year loans were up to 3.30% last week from the record low of 3.13% reached earlier in March. Keep in mind that these rates are still below where they were at this time last year. However, if you are considering refinancing, according to the economists, there really is no point in waiting any longer.

Fannie & Freddie must pay Transfer Tax

A federal judge ruled in favor of Oakland County in the first lawsuit in the nation filed to recover millions in unpaid real estate transfer taxes from Fannie Mae and Freddie Mac, who had argued that they were exempt from paying transfer tax upon the sale of real estate owned by them, as quasi-government entities.

US District judge Victoria Roberts ruled that Fannie and Freddie are essentially a privately owned mortgage banker and that a transfer tax is an excise tax, rather than a tax on real property. This ruling could open the door to all other Michigan counties to file suit. Oakland county damages are between $3-4 million and are $11-12 million across the state.

Still Upside Down?

The number of US homes that are worth less than their mortgages is now back to 2009 levels after a rise late last year. More than 11 million of all residential properties with a mortgage had negative equity in the fourth quarter of 2011, according to market research firm CoreLogic. Mortgages with less than 5% equity account for almost 29% of all residential mortgages nationwide.

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