Thinking about strategically defaulting on your mortgage and seeing how long you can live in your home without paying?
Think about what Heath Wolfe, a government official has to say in Lew Sichelman’s syndicated column in the Chicago Tribune.
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.
If you conveniently left off the fact that you have an outstanding mortgage you failed to pay, or that you have a deficiency judgment against you for the difference between what you owe and what the house sold for at foreclosure, you’ve committed mortgage fraud.
“Debts that haven’t been repaid don’t just go away,” said a Treasury Department official who asked not to be named. “It doesn’t matter whether it’s on your credit report or not.”
If there is any indication that you falsified information on your new loan application, the OIG is “absolutely” going to refer you for criminal prosecution, Wolfe said. “We’re not just going to demand repayment,” he said. “We’re going to lock (people) up.”
Who would you rather see locked up – the deadbeats who lied on their mortgage applications or the real estate agents and mortgage brokers who counseled them to do it?
Corporations can do it, but people can’t. Some firm deafults on an office building and hands it back to the lender but has other buildings it owns and buys other buildings in the future and it is OK, but if a person does it it is a criminal offense that includes jail time.
Simon,
Sigh! Corporations / developers bargain for non-recourse financing and pay for it in the form of higher interest rates and greater equity in the building.
It’s an entirely different thing than a homeowner who has personal liability on a note. As different as apples and rocks.
And, it isn’t the default that’s criminal, but lying about it in connection with another loan application.