Martin Andelman, ML-Implode

A few weeks ago, Fannie Mae issued an outright threat to homeowners in this country, creating a new rule that would punish anyone who stops paying their mortgage and walks away from their home, referred to as a “strategic default,” by not allowing those who choose that path to get a Fannie Mae loan for seven years.

They call it their “Seven-Year Lockout Policy for Strategic Defaulters,” and if you haven’t realized it already… look what’s been accomplished here: Homeowners have scared the heck out of industry giant, Fannie Mae.  I mean… these guys are shaking like leaves, absolutely running scared.  I know homeowners have been feeling like they have no power against the bankers, but this should prove otherwise.  It’s like we pushed the bully, and the bully ran home and got his Mom to come lay down a new rule in response.

On Fannie’s Website, Terence Edwards, Executive Vice President for Credit Portfolio Management has the following to say about the new rule:

“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting.”

Bad for borrowers, Terrence?  Really, how so?  Are you trying to say that people who walk away from their underwater mortgages are doing it because it’s bad for them?  Because I don’t think they think that, Terence.  I’m pretty sure that those that choose to walk away from their mortgages do so because they’ve figured out that it’s better for them… in their own best interests, as they say.

Hey Terrence, you disingenuous prick, I understand that my walking away from my mortgage is bad for you, but that’s only because my house is now worth half of what I owe.  You wouldn’t mind if I walked away from my mortgage if I had equity, right?  So, in other words, you want me to lose the couple hundred grand instead of you, does that about sum up your position here?  Yeah, well… I’m sure you do.  But I, on the other hand, would prefer that you lose the money instead of me.  Sorry about that.

Terrence, last I checked you’re just a giant failed mortgage lender who is as much a part of why we’re in this mess as any, and you’re going to need $1.5 trillion in taxpayer dollars to bail you out.

I’m a taxpayer, Terrence… isn’t that enough of a loss for me to take on your behalf?  You want me to contribute my tax dollars and probably my child’s future tax dollars to your $1.5 trillion bailout.  And on top of that, you also want me to eat the loss of a couple hundred grand on my house?

Geeze… when are you guys planning to kick in on this?  Your CEO gets a $6 million a year salary, I looked it up, and best I can tell he gets paid to say “yes” to just about everything.  I don’t know, Terrence, but I’m pretty sure that I could have bankrupted Fannie Mae for a lot less than $1.5 trillion.

Walking away from a $500,000 mortgage on a house that’s now worth $250,000 isn’t bad for the borrower, it’s good for the borrower… it makes all the financial sense in the world, for the borrower.  I mean, would you recommend that someone hold onto a stock that’s lost half its value.

Then you say it’s bad for communities, Terrence, why do you think that’s the case?  I mean… bad is a relative term, wouldn’t you agree.  And, in terms of doing bad things to communities, aren’t you guys at Fannie Mae pretty much the poster children?  Like if the Olympic Games had a “Damaging Communities” event, wouldn’t you guys at Fannie be like the Michael Phelps of gold medalists, at the very least?

Yes, I’m afraid you would at that, Terry my boy.  You guys are responsible for wiping out more communities than say… I don’t know… Joseph Stalin comes to mind.  So does the bubonic plague.  So, now you’re all of a sudden so concerned about my community, are you?

Terry, my home appraised at the peak of the insanity at $925,000.  Last week, we heard there was a short sale about eight homes down from us.  Any guesses, Terry?  Well, I doubt you’d come close to $360,000 Mr. Fannie Mae spokesperson and executive VP.  I bought this house in 1990 for $340,000 you insensitive jackass.  Your incompetence has cost me a fortune.

You and your peers owe me money… or at the very least an apology… or something else, but how dare you attempt to “punish me” should I decide to become a productive member of society sooner by choosing not to take $300,000 and set it on fire.  And what would you like me to do, Terrance, if I spend the next twenty or thirty years paying for this house only to find out that I’m still under water by some amount at that time?  Any thoughts on that, you housing genius?  Maybe, try to do better in my next lifetime, Terrence?

How exactly will my strategic default harm my community?  How exactly, Mr. Edwards?  Because I’m thinking two things here:

One… If I let the home go into foreclosure, it’ll be an REO and the bank will resell it at the market price, or maybe a little below.  But, no one is going to give it away for free, right Terry?  The market price is the market price, right you mumbling mathlete?

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